Blair Horner's Capitol Perspective

Governor Hochul and State Lawmakers Wrap up the Budget

Posted by NYPIRG on April 11, 2022 at 9:54 am

Early Saturday morning, the Legislature approved the state’s $220 billion budget.  The budget agreement was eased by billions in federal governmental financial support, as well as swelling state tax revenues.  The state’s huge budget surplus made the budget negotiation process easier to manage, but it was still late – and Albany had to resort to its bag of tricks to get it done.

Governor Hochul’s first budget agreement mimicked the worst legislative processes: While meeting the state’s minimum legal requirements, the budget was negotiated in secret.  Rank and file lawmakers were largely cut out of the discussions, with the major decisions hammered out by the governor and the legislative leaders and their top staffs.  Once the agreements were finalized, the governor granted the leaders “messages of necessity,” which suspend the normal review period allowing them to force votes on the budget bills with little or no time for lawmakers – or the public – to review the details.  And the final votes were cast in the wee hours of Saturday morning.

Yet, with so much available money, the final budget added billions in spending that made many groups successful in getting some of what they wanted in state support.  Despite that, the budget fell short in at least two critically important areas: climate change and ethics.

On the climate change front, lawmakers were debating the budget at the same time the world’s experts issued their most alarming call to date.  The Intergovernmental Panel on Climate Change (IPCC) issued a report saying that the world has very little time to act to avoid climate catastrophe.  As one author put it, “This report finds that the impacts of climate change are here. In many cases they are worse than expected, and they’ve been hitting every area of the world.”  The IPCC called on the world to act, and to act now.

Yet in Albany, the most significant actions to tackle climate change were kicked out of the budget.  The most positive aspect of the budget agreement was approval of a $4.2 billion Environmental Bond Act, the fate of which will be decided by voters in November.  If approved, the Bond Act would provide $1.1 billion for flood risk reduction, $650 million for open space land conservation, and $1.5 billion for climate mitigation.  While those would be significant investments, they fall far short of what’s needed – some estimates state that New York will need to spend upwards of $10 billion annually to deal with the impacts of global warming. 

On a more concrete level, the budget requires that all new school bus purchases be zero-emissions by 2027 and all school buses on the road be zero-emissions by 2035.  If approved by the voters, the Environmental Bond Act will provide $500 million to support school districts in purchases of zero-emission buses and related charging infrastructure, including charging stations. The budget appropriated $500 million to develop the state’s offshore wind supply chains and port infrastructure.  The budget also creates a geothermal tax credit to help homeowners shift away from reliance on fossil fuel heating.

But despite the alarms being sounded by the IPCC, the most dramatic moves to shift the state from reliance on fossil fuels – such as the proposal to require that all new building construction rely on electricity for power – were removed.

Another big failure was in the area of ethics. 

Relying on the old Albany tactic of “applying a fresh coat of paint to a rotten building,” Governor Hochul and state lawmakers agreed to get rid of the much-derided Joint Commission on Public Ethics (JCOPE) and replace it with something that is essentially the same thing

The fundamental flaw in the new ethics watchdog is that the new commission – like the old one – is not independent from the elected officials who it is supposed to oversee.  The leaders still directly choose the commissioners, but they added a new wrinkle: requiring that the state’s law school deans review these direct appointments prior to final selection.

The vetting process involving law school deans or designees does not add any independence to the selection process, nor does it even create the appearance of independence.  The new law says the deans will not nominate or select candidates; they will simply screen their eligibility.  Just like in the current, broken system, elected officials will directly select and appoint the ethics commissioners who will pass judgment on their actions.

Under this flawed structure no member of the public can put forward a person whom they think should be considered among the pool of candidates, which other states do for independent commissions.  The regulated have monopolized the identification of the persons who should regulate them.  

While the law includes measures that allow the new agency to perform more efficiently and, in most instances more openly, what matters most is the agency’s leadership.  The ethics commissioners will make the ultimate decisions about whether or not to enforce the state’s ethics laws and whether lawmakers, agency personnel and lobbyists have passed an ethical line.

Lawmakers have until June 2nd to finish up their work.  All New Yorkers should hope these two big issues – and others – are substantially addressed before lawmakers go home to face the voters.

New York’s Budget Deal Runs Late

Posted by NYPIRG on April 4, 2022 at 1:28 pm

Like many of New York State’s budget deals, this year’s is late.  How late is anyone’s guess, but if recent history is any guide, an agreement will come soon.  Among the major contributing factors to the missed budget deadline are the governor’s last minute demands for changes to the state’s criminal justice law and her agreement to use hundreds of millions of tax dollars to pick up the lion’s share of costs for a new stadium for the Buffalo Bills NFL franchise.

Assuming that the state’s political leaders come to an agreement within the next few days, it looks like the deal will end up spending more than Governor Hochul’s proposed $216 billion, maybe even a lot more.  Yet, given that the state is flush with cash – thanks to federal bailouts and better-than-expected state tax revenues – it’s not surprising that a lot will get spent. 

A bigger question is what policies will go along with the budget agreement?

Usually a state budget is a mix of spending plans and policy changes that often go along with those plans.  Often the budget agreement includes policies that have little to do with the state spending, but are included as another piece of the budget puzzle that the governor and legislative leaders piece together to forge an agreement.

One example of such an issue is the state’s climate change plans.  Of course, the state has spent – and will continue to do so for decades to come – monies for the mitigation and adaptation costs of reacting to a rapidly heating planet.  Under the best of circumstances, the state will spend billions annually to confront climate change.

So addressing the worsening climate catastrophe has budget implications, but not all climate plans are directly attributable to state spending.  For example, in her budget the governor proposes that the state’s housing code drastically restrict the use of gas (or other fossil fuels) in new building construction.  Her plan is modeled on a new law in New York City – likely the building capital of the world – which bans the use of gas power for cooking and heating in new buildings as of 2024.

Hochul’s plan is similar, but goes into effect in 2027.  Environmentalists are pushing back, arguing for a 2024 deadline that tracked New York City.

Opponents, led by the American Petroleum Institute, have launched a campaign of misinformation to confuse lawmakers.  As we all know, the oil, coal, and gas companies have been very successful in undermining environmental legislation that would have reduced the likelihood of climate catastrophe.  The fossil fuel industry also worked to install political toadies in federal, state, and local elected offices to stop climate protection legislation.

As a result, sea levels are rising, ice caps are melting, famine is spreading, wildfires are huge, and storms are staggeringly – and unprecedentedly – dangerous.

The oil lobby and their allies are using the same playbook in New York.  One argument that they have been using to great effect is to attack the science behind “heat pumps.”  Heat pumps offer an energy-efficient alternative to furnaces and air conditioners for all climates.  Like your refrigerator, heat pumps use electricity to transfer heat from a cool space to a warm space, making the cool space cooler and the warm space warmer.  During the heating season, heat pumps move heat from the cool outdoors into your warm house.  During the cooling season, heat pumps move heat from your house into the outdoors.

You would think that on its face, lawmakers would understand that “heat pumps” have that name for a reason – they heat homes.  But the smokescreen that the oil industry and their pals are arguing is that heat pumps don’t work in really cold places, like upstate New York. 

You’d understand why opponents would ignore the facts, but why would lawmakers ignore the fact that heat pumps operate at more than double the efficiency of gas systems below zero and have been successfully field tested in Minnesota and the Arctic Circle.  More than 60% of Norwegian households use heat pumps as their primary source of heat.  Heat pumps now dominate the market in Europe for both new and existing buildings.  They’re also working well in cold places in the U.S. like Minnesota and Maine – and yes – New York.

Another of the opponents’ arguments has been that New York doesn’t have the electrical capacity to produce the power needed if new construction (and cars) rely on electricity.  The legislation doesn’t go into effect right away, so the additional power needed in the short-term is small. 

The New York Independent System Operator recently concluded that the state “will meet all currently applicable reliability criteria from 2021 through 2030 for forecasted system demand,” which means that they believe that the state has sufficient power to cover its energy needs through the end of the decade.   

We all know that the world has to kick the fossil fuel “habit” and that power will come to our homes from either the electrical grid or personal alternative energy sources.  Requiring that all future building construction rely on electricity for power makes sense and over the long haul will save money.  Constructing buildings in that manner is far cheaper than retrofitting them later.

Inaction has its own costs beyond the cost of housing.  Failure to aggressively respond to the ongoing and growing threat of global warming will have far worse costs than anything imagined for New York’s housing stock. 

The oil companies have bamboozled lawmakers before, this budget (and this session) will reveal if they have done it again.

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.