Archive for March 2022

The State Budget Debate Wraps up This Week

Posted by NYPIRG on March 28, 2022 at 10:17 am

This week, Albany may well finalize a deal on the state’s upcoming budget, an agreement that is supposed to be in place by April 1.  The final budget will clock in at some $216 billion – the largest in state history.  This year’s budget negotiations have been one of, if not the most, secretive in memory.  The information black-out makes it essentially impossible for even the most astute Capitol-watcher to know how the budget deal will play out.

Here are some of the ways to see how the new budget will impact New Yorkers.

  1. How much money will the state spend?  Given the enormous infusion of funds from the federal government and state tax revenues that have exceeded expectations, budget forecasters have predicted massive surpluses for the upcoming state budget fiscal year.  Governor Hochul has proposed to set aside 15% of the state’s record surpluses as part of her $216 billion budget plan.  Her spending plan advanced a projected balanced budget for each of the next five years and added over $5 billion to total cash reserves, bringing them to $8.9 billion.  The Senate and Assembly plans would spend billions more than the governor.  We’ll know soon how much of the governor’s proposed “rainy day funds” make it into the final agreement.
  2. Will the budget give the governor and the legislative leaders a blank check?  The governor’s proposed budget gives her broad and unilateral spending and borrowing authority that are unnecessary, especially given the progress made in pandemic response.  Outside experts put that spending – much of which is also outside the scope of the state Comptroller to review – in the billions of dollars.  The Senate has rejected much of this unfettered spending and itemized it in its plan.  Will the final agreement do the same?
  3. What programs will any additional spending be targeting?  Governor Hochul’s executive budget was widely viewed as the most generous advanced by any governor in many years.  Yet, advocates argue that the limits on spending applied during the Cuomo Administration starved needy programs and more spending is necessary to address the damage.  For example, while the governor’s higher education budget helped balance this year’s college costs and expand students’ financial assistance, advocates argue that many colleges are teetering on the financial brink and the governor’s budget doesn’t provide the necessary lifeline. 
  4. What will the state do to address the costs of climate change?  Last year, the state agreed to place on this November’s ballot a vote on whether the state should borrow $3 billion to help offset the state’s costs resulting from climate change, as well as other environmental needs.  Governor Hochul’s budget bumped that number to $4 billion.  The state Assembly has gone one step further and advanced a $5 billion bond act.  The Senate has topped them all with a $6 billion plan.  Whatever the final number the governor and legislators agree upon, whether to borrow the money will be ultimately a question put to the voters this fall. 
  5. What “non-budget” items are part of the agreement?  Under New York law, the executive dominates the budget-making process.  Historically, governors have used this enhanced power to drive policy changes that they want.  Governor Hochul is no different.  The state Assembly has argued that policy changes should not be part of the budget (unless they are policy changes that the Assembly likes) and the Senate has also advanced a budget plan that strips out many of the governor’s policy initiatives – although to a lesser degree than the Assembly.  One example is ethics enforcement.  Governor Hochul has pledged to eliminate the much-maligned ethics watchdog and establish a new, independent, one.  Neither house has advanced an alternative, with some legislative staffers arguing that eliminating and replacing a state agency should be done outside of the budget.  How ethics is treated in the budget will be an indication as to how far policymaking will go within the state budget process. 

Last week, the governor advanced a plan to change state laws dealing with bail for individuals charged with serious crimes.  Her plan is added to a growing list of policy items – such as the control of New York City’s school system by the Mayor, the acceleration of downstate casino licensing, health insurance for undocumented New Yorkers, housing vouchers for homeless individuals, relief for drivers and homeowners dealing with soaring energy prices, a big public subsidy for a new stadium for the Buffalo Bills, among other topics.

One week from now, we should have some answers when a final state budget should be in place.  New Yorkers will have been cut out of the process but should know by next weekend and after-the-fact what is in store for them. 

How Big Will New York’s Environmental Bond Act Be?

Posted by NYPIRG on March 21, 2022 at 7:38 am

New York State lawmakers are moving closer to a final budget.  Both the state Senate and state Assembly have separately advanced budget plans as countermeasures to Governor Hochul’s proposed budget.  Last week, both houses began the process of harmonizing their plans in order to meet the March 31st deadline for a final agreement.

One of the interesting debates between the houses (and the governor) focuses on the size of an environmental bond act to be placed on the ballot this November. 

Under the New York State Constitution, any direct borrowing by the state must be approved by the voters.  The Constitution states that “no debt shall be hereafter contracted …  unless such debt shall be authorized by law . . .  No such law shall take effect until it shall, at a general election … have received a majority of all the votes cast.”

For the last few years, lawmakers have debated whether to put such a proposal before the voters.  The focus of their plans has been the environment, specifically the costs the state faces from a planet that is rapidly heating due to climate change.

Last year, lawmakers agreed to a $3 billion environmental bond act and put it to a vote this November.  At that time the former governor said the bond act would “fund critical environmental restoration projects in every corner of the state to ensure New York is able to withstand the threat of more intense and frequent storms fueled by climate change.” 

Since New York will be facing billions of dollars in costs to adapt to global warming and mitigate its damage, lawmakers were correct that revenues would be needed.  Yet, the price tag for these costs will run into the billions annually and a $3 billion bond act, while helpful, is not enough. 

Recognizing that, current Governor Hochul advanced a budget plan to increase the amount of the bond act from $3 billion in borrowing to $4 billion.  Her plan closely follows last year’s and finances environmental improvements that reduce the impact of climate change by funding projects that restore habitats and reduce flood risk, improve water quality, and expand the use of renewable energy.

The Senate has advanced its own plan that would increase the bond act proposal to $6 billion.  The additional monies would fund renewable heating and cooling, weatherization of low-to-moderate income households, funds for electric school buses and transit buses, as well as the installation of bus and passenger car electric-charging infrastructure.

The Assembly landed right between the governor and senate proposals with a plan that pegs the future environmental bond act borrowing at $5 billion.  The Assembly offered a detailed proposal that earmarks revenues for energy efficiency and renewable energy projects, measures to address air and water pollution threats to low-income communities, and $450 million for climate adaptation and mitigation projects, including land acquisition and wetland protection.

There is no doubt that the funding is needed, but the state of the economy is far less certain.

Inflation and the Ukraine crisis are forcing up interest rates.  Those interest rates could have an impact of the costs of state borrowing for the bond act, impacting voters’ view of the proposal.

One way to enhance the public appeal of whatever environmental bond act is on the ballot is to make sure that it contains items that have broad support.  For example, the $450 million that the Assembly has included for land acquisition and wetlands protection would be a real boost in efforts to protect freshwater and drinking water supplies.

Another way boost public approval is to put the oil and gas companies more on the hook for covering the costs of climate change.  As mentioned earlier, the state may well need to spend more than $6 billion per year to deal with the costs of climate change.

The responsible parties for the climate crisis are the oil, gas, and coal industries.  Those industries knew for decades the dangers of global warming from the burning of fossil fuels.  Those industries spent money on a disinformation campaign to combat measures to curb greenhouses gas emissions that form the “blanket” contributing to the heating up of the earth.  And now we’re paying the price.

As state lawmakers and Governor Hochul cobble together a final budget plan, an environmental bond act is a good idea and worthy of support.  It will be far more popular when it goes before voters if it contains clear, identifiable project spending.  That plan will be even stronger if it ensures that the oil, gas, and coal industries are on the financial hook, not just taxpayers, for the looming climate catastrophe.

Pain at the Pump, Will Albany React?

Posted by NYPIRG on March 14, 2022 at 9:49 am

By now we are all feeling the rising costs of energy.  Gas is heading toward $5 per gallon, home heating costs have risen, with some using oil having their prices jump to nearly $6 per gallon.  Utility bills have soared.  President Biden argues that these hikes are a “Putin tax” – referring to Russian “mob boss” Vladimir Putin’s unprovoked aggression in Ukraine.  And while there is a lot of truth to the President’s description, it doesn’t answer one question: Who benefits from this “tax”?

When we pay taxes, we know where it goes.  Federal, state, and local governments charge taxes for the delivery of public services.  Taxes are the cost of paying for civilization.  But when it comes to the “Putin tax” that we pay at the pump, who gets it?  Clearly, it’s not the Russian leader, the US has blocked oil and gas imports from Russia.  No, those “taxes” are going to oil companies, who are seeing a surge in their already fat profits.

With oil prices pushing toward $130 a barrel last week — a stunning increase from a low of $18 a barrel just two years ago — oil and gas companies have hit the jackpot.

Exxon Mobil made $23 billion in profit for 2021.  Chevron had its most profitable year since 2014, reporting that it made $15.6 billion in revenue for 2021.  BP reported it made $12.85 billion in 2021, with $4.1 billion being made in the fourth financial quarter, the company’s largest quarterly profit since 2013.  Shell earned $19.29 billion for the year, up from $4.85 billion in 2020 with $6.4 billion in profits in the last financial quarter of 2021, its largest since 2014. 

The Ukrainian invasion is likely to swell those profits even further as energy supplies get squeezed by global sanctions on Russia.

The “Putin tax” really means Americans are forking over even more money to oil companies to fatten their profits.  And let’s not forget that the reason that the world still relies heavily on fossil fuels – and the revenues that are Putin’s source of military strength – is because the oil companies have fought tooth-and-nail to block efforts to shift the world toward renewable energy sources, including decades of lying about the dangers of global warming.  Beyond their profiteering from global crises, their actions on climate are among the worst in the history of the world.

So shouldn’t some of those profits be diverted to pay for pressing needs, including the costs of dealing with climate change?

At the national level, members of Congress have introduced legislation to enact a “windfall profits tax.”  The bill would levy a 50 percent tax on the profits oil companies earn above the price of $66 per barrel, which was the average oil price from 2015 through 2019.  The legislation then sends half the tax collections back to consumers in the form of a rebate, which the sponsors say would amount to a $240 payout to single tax filers and $360 for joint filers next year, if the price for oil remains at $120 per barrel.

Of course, the legislation would need to ensure that safeguards exist so that the oil companies simply don’t pass on the cost of the tax to consumers – thus undermining the benefits of the tax.  That’s always the problem – how to enact a tax to claw back unfair profits in a manner that makes it extremely difficult – if not impossible – to pass along the tax costs to the already-overburdened consumer.

Here in New York, there is a growing call for energy tax relief for consumers.  Depending on where you live – sales taxes differ by county – the combination of New York State and local taxes pay when they buy gas can be as high as nearly 50 cents per gallon.  Expect some sort of relief from state gas taxes this session. 

There is another approach – one that diverts oil industry profits and does so in a way that protects consumers.  Policymakers have been mulling a “Make Polluters Pay” program that would assess the largest oil companies for their contribution to greenhouse gas emissions over the past two decades, with the companies paying for their proportional share of the harm they caused.  By requiring only the largest companies to pay, market competition from their smaller competitors would keep prices low, thus making it impossible for Big Oil to pass along the costs of the assessment.  That type of approach seems like the best way to divert excess profits and to fund the costs of climate change.

As policymakers sort this out, there are things that consumers can do now to help offset the skyrocketing costs of energy. 

In the short-term, drive less, keep homes a bit cooler, and conserve more.  In the medium term, see about renewable energy options.  Solar power and geothermal power, if appropriate, can reduce reliance on fossil fuels.  Adding insulation to your home can reduce the need for expensive heating too. 

In the longer term, push lawmakers to make renewable power the clear option for the future.  Petrodollars tend to fund many of the world’s worst actors.  As long as the nation relies on oil, they literally have the world over a barrel.  Kicking the fossil fuel habit will deprive Big Oil of profits and help mitigate global climate change.  And, of course, let’s make the climate polluters pay.

As Lawmakers Begin the Rush to a Final Budget Deal, Where’s Ethics Reform?

Posted by NYPIRG on March 7, 2022 at 11:21 am

This week is a big one in Albany.  Both the state Senate and Assembly will focus on the development of their respective “one House” budget plans.  These are the budget proposals advanced by the Democrat majorities that control each House.  By mid-month, it is expected that the Senate and Assembly will have passed their respective budget plans in each house and will engage in feverish negotiations with the governor to hammer out a final budget deal.

The final budget will appropriate money for the state’s expenses and also contain policy changes that are tied to those expenditures.  Those policy changes are often the most contentious and hardest to finalize since they are not only about spending, but also about permanent changes in law.

Tucked into the governor’s proposed budget was a plan to eliminate the state’s current ethics watchdog – the Joint Commission on Public Ethics (JCOPE) – and replace it with a new entity.  Governor Hochul’s promise stems from how she became governor as the result of the resignation of her predecessor.  The former governor’s resignation stemmed from allegations of abuse of authority, harassment of staff, and misuse of public resources, which followed a long history of ethical controversies and scandals in New York State.

Governor Hochul has correctly pointed out that the failures of the state ethics watchdog enabled a political culture of unaccountability.  The Commission itself has had ethical failings, with confidential votes of its own commissioners leaked back to the former governor in violation of the law. 

JCOPE has been a failure since it was first created – a failure that stemmed from its lack of political independence.  Governor Hochul is reported to have stated that she wants to “blow up JCOPE.”  Editorial pages across the state have long criticized the JCOPE and called for its replacement.

Governor Hochul advanced an ethics reform plan in her budget that – while in need of further strengthening – is an improvement over the disastrous status quo.

Yet, with only a few weeks to go until the final budget agreement, there is little evidence that change is coming.  There has been no public push from the governor to advance her own plan, and silence from the legislative branch.  Based on conversations with lawmakers, it appears that with all that is going on in the world, Albany’s political elite are hoping that ethics reform will be forgotten.

That must not happen. 

Albany’s political culture and its lack of meaningfully independent oversight creates a high risk for corruption – and that’s what New York has gotten from the Buffalo billions bid rigging scandal to the self-dealing of Sheldon Silver and Dean Skelos.  No one defends the current situation, but inaction by the governor and the Legislature to achieve change is an implicit defense of New York’s lousy ethics status quo.

It makes sense that ethics reform be in the budget – after all, replacing one agency with a new one has obvious fiscal impacts.  Further, additional funding is needed to strengthen oversight and improve the ethics commission’s IT systems that enable lobbying and financial disclosure reporting, particularly given the recent hack of JCOPE’s web servers.

Real reform historically occurs soon after a scandal, when the public’s attention is focused.  If this moment passes without action, the opportunity for meaningful change may be lost.

Over the next week and a half, the public will know if the Legislature believes in meaningful ethics reform.  Will the state Senate include an improved version of the Hochul plan in their “one House budget”?  Will the Assembly?

Whether there is or not will turn on what individual legislators demand.  Failure to include reforms, is a vote for an ethics watchdog agency that doesn’t bark or bite.

At the end of the month, whether ethics reforms are included in the state budget ultimately will hinge on what the governor wants to do.  She has the most power over the final budget agreement and it was the governor who pledged to “replace JCOPE with a new, truly independent watchdog with real teeth.”

The public should demand that Governor Hochul keeps her promise of ethics reform.  The state budget isn’t done until JCOPE is eliminated and replaced with an independent entity.