....October 2, 1:33 PM
 
 
 
The Commuter Tax: The Players and Politics

By MICHAEL SCHENKLER

There are a handful of votes by legislatures which can clearly pit politics against principle. No, we are not talking about the City Council members’ ugly consideration of self serving legislation to extend their own terms.

There is an uglier vote on record. The 1999 repeal of the NYS Commuter Tax was a vote motivated by politics and not principle. And the issue is back on the table and I fear that politics may kill it again.

In 1999, Assembly Speaker Sheldon Silver steamrolled the repeal of the Commuter Tax through the NYS Assembly. People who worked but did not live in the city were taxed at a rate of 45/100, one percent (.0045) of their salary earned in the city. The rationale was that these commuters received police, fire, sanitation and other services while they were in the city, and should therefore pay a small share (about 10 percent) of what city residents pay.

Since its repeal, approximately half a billion dollars per year in City revenues has been lost. The total lost is rapidly approaching $5 billion dollars.

In 1999, the Republican Governor and the Republican controlled State Senate might be expected to shortchange the Democratic city. However, the Assembly was overwhelmingly in the control of the Democrats – a majority of whom were from New York City.

The absurd political game played by the Speaker coupled with his personal animus for then Mayor Giuliani was absurd justification for the fiscal harm caused the city by the repeal of the commuter tax. It was the most memorable, vile and shameful vote made by any member of the New York City delegation and their Manhattan Speaker.

Almost $5 billion later, this paper will not forget the names of the Queens members still involved in politics, who sold out the city. You should remember them too. Voting clearly against the interests of Queens and city were: Assem-blymember and Borough President wannabe Audrey Pheffer, Assembly-members Vivian Cook, Marge Markey, Cathy Nolan, Bill Scarborough and former Assembly-member and Councilman wannabe Mike Cohen.

They clearly did us wrong.

But the issue has arisen again and it appears that politics not reason, may just kill it again.

The financial crunch, specifically the antcipated decreasing city tax revenue has caused Mayor Bloomberg to again call for the legislature to bring back the commuter tax.

And the devil from 1999, Speaker Sheldon Silver, appears to have finally flipped-flopped in the right direction. We assume even the five Queens members will have no trouble doing the right thing after living in ignominy for the past nine years. However, in the present scenario, the Assembly won’t be the problem. Securing passage of the Commuter Tax from the State Senate is the challenge.

The Republicans – at least until the November election – have a one vote edge in the Senate. And who is their new leader? Dean Skelos, the very man who sponsored the original Commuter Tax repeal legislation. Skelos has already dismissed the idea of considering reinstating it.

But Skelos’ margin of control – a single vote—is up for grabs with the Democrats nipping at their gerrymandered heels.

But all is not so simple. The Senate Democrat’s leader, Malcolm Smith of Southeast Queens has been quoted about reinstating the Commuter Tax: “Now is not the time to be talking about raising taxes.”

We fear that again politics, not principle, may be at work here. Smith needs the Dems to take two new seats in order to take control of the Senate. Perhaps he fears that either the Suffolk County Foley- Trunzo race or the challenge to Northwestern Nassau’s Criag Johnson could be affected by the commuter tax debate. Or perhaps Smith is counting votes to insure he has caucus control to elect him leader after the results of the November election.

Yes, becoming Senate Majority Leader is the current focus of Malcolm Smith. But we can’t believe that the Malcolm we know would then sell out the city and its people in the interest of politics.

Our advice for the Commuter Tax advocates – the Mayor and the Speaker: let the issue rest until after the November election and then lobby the Senate with all you got – like the City’s future depends upon it.

It’s quality of life just might.

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Fiscal Disaster at the Gates? Open Them To Find Out 

By Henry J. Stern

The world is spinning rapidly, and it cannot be stopped to let anyone off.

Since the President addressed the nation, the leaders of Congress went to the White House, and the parties negotiated some plan should have been presented before presstime.

As of this writing, it appears that Mr. Bush’s problems come more from his own party members in the House than from Democrats in either chamber. The issue is unresolved, but agreement may have come in over the weekend, or not at all. People may be waiting to see if the Dow breaks 10,000 on the way down.

Last week on our website (www.nycivic.org) we posed 24 questions as to what was happening and why.

Our View

Mr. Bush has been President for seven and one half years, and his appointees have regulatory authority over the markets. They have not asked for new powers in this area. Their failure to act, or even to recognize a clearly impending disaster of titanic proportions, is a major cause of today’s crisis and the collapse of financial institutions.

We should not yield, however, to the impulse to blame the government for everything. The errors in judgment by the principles of major and minor investment and commercial banks had a great deal to do with the destruction of wealth that followed.

Owning a home provides psychic income. “A man’s home is his castle,” goes back to1644 and English jurist Sir Edward Coke. Individual home ownership consumes 650 to 1000 gallons of heating oil in a normal winter in the Northeast, so it is a highly inefficient way to keep people warm. Americans are used to phrases like “A chicken in every pot,” which was the Presidential campaign slogan of Herbert Hoover in 1928, along with “A car in every garage.” Although a pot only requires a kitchen, a garage suggests home ownership.

How do you provide homes for people who cannot afford them? Public housing was the answer from the 1930s on. However, starting with the Jimmy Carter administration, government support for housing construction waned. Later, Reagan did not believe the government had any business building houses for individual citizens. Part of the problem was due to the fact that public housing projects were becoming minority ghettos, with increases in drug use, vandalism and crime. Large numbers of welfare recipients were placed in public housing, as well as single teen-age mothers, who could then open their own cases as clients apart from their mothers’. More stable families were driven from some projects by income limits.

Some Federally built housing had to be demolished because it was unsafe to inhabit and uneconomical to repair (starting with Pruitt-Igoe in St. Louis built in 1954, torn down in 1972-74) The development contained 33 eleven-story buildings. Subsequently projects in Chicago, Atlanta and Newark were razed. Some were dynamited. Katrina-damaged public housing is being now taken down in New Orleans, over the objections of preservationists. Abandonment of projects, however, did not happen in the City, thanks to our Housing Authority, who fought the HUD and the Federal courts, in its effort to get drug dealers out of public housing.

Privately owned housing creates more stable communities than public housing. There are valid social reasons to encourage and to assist people of moderate income to own homes. But, luring people with bad credit — or no credit -- to take out mortgages that carry adjustable rates or balloon payments is certainly not the solution.

As long as housing prices continued to rise, the banks could foreclose and resell the property to another sucker. When housing prices fell, however, the value of the mortgages fell even faster. As they were bundled together for resale, it was impossible to tell the good packages of mortgages from the bad. The whole market froze and disappeared, along with the triple-A auction rate securities that were widely sold as the equivalent of certificates of deposit.

This is one disaster that cannot be blamed on Osama bin Laden, Islamofascists, Chinese competitors, or any other external force. We did it to ourselves, under the eyes of regulators, starting with the great Alan Greenspan, who failed to see the consequences of what was happening before them.

Now we must pick up the pieces, which is what the bailout is trying to do. If it had come sooner, the price would have been lower. If we delay further, we do not know how costly it will be in the end. In malignancies, spontaneous remissions are rare. We would not rely on the problem resolving itself without intervention of some sort. Tincture of time is unlikely to restore lost billions. Our hope today is that the process will not be further impeded by Presidential politics, and that insolvent banks receive enough assistance to survive and continue to lend, but not be enriched as if they had no responsibility for this near-death experience.

You can call this series of dramatic fiscal events the “September surprise.” We wait to see what surprises October will bring.

P.S. Since the national debt is rising constantly, we thought you should be able to follow it at: www.brillig.com/debt_clock. As of 1:30 Saturday afternoon, the sum is $9,853,456,768,63. The estimated population of the United States is 304,805,190 so each citizen’s share of this debt is $32,327.06.

The National Debt has continued to increase an average of $2.32 billion per day since September 28, 2007!

StarQuest@NYCivic.org

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