August 24, 2013 by James Stuckey

Why Do We Need A Full Time New York City Council?

I recently read that a number of New York City Council Members are seeking to pass local legislation that would add 10₵ for every plastic and/or paper bag one uses to take things home from supermarkets. Brad Landers, whose life experience before becoming a Councilman consisted of teaching urban studies, was leading the charge. I can’t begin to tell you how incredibly dumb this idea is; it’s clearly the product of too many elected officials with too much time on their hands. They believe this will help clean up the environment, but it’s really just a hidden tax like all those surcharges on your telephone, cable and wireless bills. Now I ask you, how many people go to the supermarket, load up their carts with perishable and non-perishable items, and then carry them home by hand? Very few. Just think, six cans of soda – one bag; a few rolls of toilette paper – one bag. Twenty bags, four additional dollars. Are they nuts?

This got me thinking about why New York City needs a full time City Council. There are 51 Council Members and 35 Council Committees. They spend over $600 million a year on discretionary and “member items”. This doesn’t include their salaries and benefits, or those of their staffs. However, what’s worse are the dumb laws they pass. Think about this. There are full time legislatures on the federal, state and city level, and they all pass laws all the time. Some laws are clearly necessary, like making murder a crime. I think that one has been passed already. How many laws do we need? Doesn’t every law essentially state that you “can’t” do something. And, doesn’t every law result in volumes of implementing rules and regulations? Do we really need three full time Legislatures thinking all the time about new things that we can’t do? How many things can we possibly not do? And who creates all of these new laws? Why lawyers, of course. And who is exempt from most of these laws? Usually, the legislators who passed them. Doesn’t it make you feel good that while UPS is taking 17,000 of their workers’ spouses off their health insurance plans because of Obamacare, Congress has voted to exempt itself from the new healthcare mandates? Why? Because they can.

So why do we need a full time City Council? Why can’t there be a part time Council? Why can’t they meet three months a year, and have a process that that would allow them to be called into session for emergencies? Given that New York has a Comptroller, the courts and other oversight bodies, they certainly don’t add much in this area. Let’s be candid, most Council Members don’t understand the majority of things they preside over. The vast majority are political hacks that never had to make a real living. They feed off the public trough, and then disperse $600 + million in discretionary funds back to their district favorites. So why can’t they do that part time? New York, like most cities in the United States, needs to make some tough decisions going forward. Cutting spending, overhead, and unnecessary laws, rules and regulations are essential to the city’s long term health and survival. This can’t possibly be accomplished with crony Council Members who fill up their days thinking up silly laws to help them “look good” to a select handful of “constituents.”

August 19, 2013 by James Stuckey

New York City’s Mayoral Race

Let me start by saying that I can’t vote for the Mayor of New York City since I’m no longer a resident. Many of my friends, however, have been asking me what I think of the candidates, and who I would support. I know virtually all of them, and have had business, personal and social relationships with most. The majority are good people, who I generally believe started in politics for the right reasons. But most of them over the years have drunk the Kool-Aid, and have allowed themselves to be owned and manipulated by the special interest “constituents” that they believe they represent.

There really are two races: the Democratic primary and the general election. First, lets start off with the Democratic primary. Few of the candidates have real executive experience, except for Bill Thompson who was the former City Comptroller and Brooklyn Deputy Borough President, and John Liu, the current Comptroller. Virtually everyone I know that has done business with Liu walked away feeling like they needed to take a bath. His campaign has been surrounded by multiple investigations, and he has no record to point to as Comptroller. Most people feel he is untrustworthy, disloyal and manically egotistical. Bill Thompson, on the other hand, is known to be a thoughtful, genuine person, whose major fault is that is that he doesn’t talk himself up enough. He is a nice guy, and nice guys usually finish last – especially in New York.

Bill De Blasio is the current Public Advocate, but I hardly consider that an executive position. The Public Advocate’s Office was a vestige of the New York City Charter reform that took effect after the Koch administration. It has no real power other than to make noise and issue press releases, and is supposed to act as the public’s ombudsman in government. This is an oxymoron, because that’s what all the elected officials are supposed to do, isn’t it? Prior to that, De Blasio, like Anthony Wiener, John Liu and Christine Quinn, came out of the legislative branch of government. As we have seen with Professor Obama, legislators don’t lead – they have no clue how to make executive level decisions. They believe that governing involves making compromises, scratching backs and giving the appearance that they have done something. All of the Democratic candidates have supported ridiculous laws governing work rules, pay rates, sick leave policies and other labor loved initiatives that will severely damage the city’s economic health.

Let me give you an example. Most municipal labor unions in New York City have worked without a labor agreement since 2008. To some people, this sounds terrible. Remember, however, that after the market crashed in 2008, hundreds of thousands on New Yorkers in the private sector lost their jobs, and people across the board saw their pensions and investments go down by an average of 30%. Municipal workers didn’t lose their jobs, and their pensions weren’t affected, because they are guaranteed by the city under prior collective bargaining agreements. While everyone else was greatly suffering, their biggest hardship was they got to keep their jobs and their pensions, but didn’t get a raise. Now keep in mind that these same municipal workers start off with three weeks vacation per year (and get an additional day for each year served), twelve “sick” days per year, and incredible health benefits. Not a bad deal.

What is absolutely insane, however, is that all of the Democratic candidates are pledging to their union boss buddies that once they are elected Mayor and the new collective bargaining agreement is negotiated, they will pay all 200,000 city workers the money and benefits they didn’t receive, retroactive to 2008! The cost of doing this is estimated at $7.0 billion, and would bankrupt New York City. De Blasio at least offered a method for paying the cost – tax the rich. Sound familiar? All of these candidates claim they are supporting and speaking for the middle class, but in reality they are pandering to any cause, special interest group, or lobby that shows up at their door. And the business community donates to all of their campaigns for fear that they will lack access or be on the wrong side of whoever ultimately wins. Don’t they realize they are already on the wrong side, and just paying for their own executioners?

These candidates stand for everything, which means they really stand for nothing. The fact that they are liberal doesn’t bother me – I strongly believe we need to assist those truly in need. The fact that they are spineless and unable to make decisions, seriously troubles me. Again, I believe the Democratic exception to the rule on most issues is Billy Thompson, but shouldn’t he know better regarding the collective bargaining costs as a former Comptroller?

Joe Lhota

Now let’s turn to the general election. Whoever wins the primary will in all likelihood face Joe Lhota as the Republican candidate. I really hope Joe wins. Lhota is a former Finance Commissioner, Director of the Office of Management and Budget, and First Deputy Mayor (which essentially made him the city’s Chief Operating Officer). Most recently, he was the Chairman of the MTA and incredibly restored the system in record time after Hurricane Sandy. I know from my work in Haiti after the 2010 earthquake how hard it is to reconstruct infrastructure while trying to keep the system functioning. Joe’s father is a former New York City policeman, and his grandfather a former fireman. Joe worked in the private sector and has a Harvard MBA. I’ve negotiated on the other side of Joe, and can tell you he is no pushover (and I can promise you, with over $25 billion in completed real estate development projects under my belt, I’m not an easy negotiator). Joe will do what’s right for all New Yorkers. Joe is middle class; he doesn’t have to pander to the middle class. Lhota can hit the ground running. He will protect the city. He will lift it up.

If I were still able to vote for the Mayor of New York City, I would cast that vote for Joe Lhota. I strongly urge my New York City friends and readers to do the same.

July 31, 2013 by James Stuckey

What Should We Do With Detroit?

One of my earliest jobs after graduate school was to join the Koch Administration doing economic development. It provided a wonderful and exciting opportunity to use the skills I had learned as a student with degrees in both psychology and business . The chance to create employment and business opportunities, especially in distressed areas of the city, appealed to my desire to help others. It was a challenging time, with the city teetering on the brink of bankruptcy, and President Ford’s famous “drop dead” attitude towards bailing the city out. I spent twelve years working with Ed Koch while he was Mayor, the last four of which as his appointed President of the New York City Public Development Corporation (http://www.nytimes.com/1986/05/24/nyregion/2-are-named-by-koch-as-chiefs-of-agencies.html).

Even after the Koch years, I’ve always felt a strong affinity to work in and with the public sector, serving on: the Municipal Water Finance Authority during the Giuliani Administration; the NYC Design Commission as its President for eight years under Mayor Bloomberg; and, being appointed by former President Bill Clinton and current Republic of Haitian President Michel Martelly as a member of the Presidential Advisory Council on Economic Growth and Investment to help restore Haiti after the 2010 earthquake (http://www.pacihaiti.org/members/). As the late Mayor Koch said, “Public Service, if done honestly, is the noblest of all professions.”

What few people understand, however, are the complexities involved in running a major metropolitan area. There are constant conflicts between what programs should be funded: housing or jobs? Transportation or environmental protection? Parks or sanitation? Highways or subways? Education or police? And, the list goes on. Communities compete for limited resources. Some areas believe they are deprived of schools, but others protest if a new high school is proposed nearby. Some residents want parks that are quiet places to read and meditate, while others seek active playgrounds for their children to run or play ball. Parents and their college age children seek affordable housing, yet area residents protest new developments of scale. In many cities, like New York, there is a decreasing amount of vacant land to build on, and most of that land is in industrial and environmentally challenged areas.

In Haiti with President Clinton (photo by Mark Steed)

There are also endless constituencies, ranging from homeowners to renters, non-profits to religious organizations, labor unions to business executives, students to retirees, and, of course, the press. For virtually every area of government there is a constituent or a lobbyist, and they turn out in barrels whenever there is a bill, law or regulation proposed, considered, or debated. Elected and appointed officials are constantly being hammered by one group or another that focuses like a laser beam on their particular issue, but who rarely consider how that issue fits into a larger picture.

Leaders, however, must look at the big picture. And, when they don’t, you have Detroit. Like many other major cities in America, Detroit has been impacted by elected officials who refused, or didn’t have the fortitude, to say “no” to labor unions and special interest groups. They found creative budgeting techniques to dodge a bullet on their watch, while pushing the disaster off to future Mayors and elected officials. This is no different than New York City under Mayors Lindsey and Beame, who creatively used the city’s capital budget (the money used to pay for bridges, schools, parks, roads, etc.), to fund the city’s expense budget (the money used to pay salaries, benefits, rent, office supplies, etc.). The problem was, the city pledged tax revenue to repay the capital budget bonds (which is normal and customary), and that same tax revenue was to used to pay for the expense budget items. It was a New York City Ponzi scheme. The city at the time had $14 billion in debt, about $6 billion of which was short term. At the time, it was running what is now known to be a $2.2 billion deficit, and shut out of the credit markets. The city also underfunded pensions, and raised money using “revenue anticipation notes”; however, many of the anticipated revenues never arrived.

There are lessons here for Detroit and other municipalities similarly facing bankruptcy. The largest of those lessons is that you can’t spend money you don’t have. The second is that you have to learn to make tough decisions and say no. There are countless good men and women in Detroit who worked hard and honestly for decades. Many of them now face the prospect of losing their pensions and being wiped out. Tell me, did their labor leaders and elected officials really represent them? I think not. Leaders must look at all the consequences of their decisions, intended and unintended, immediate and long term.

Detroit’s elected officials also failed to examine and test new and creative economic development strategies; they did little to educate and prepare their workforce for a changing economy. Forget that they didn’t see the automotive industry’s decline in America, or the fact that modern factories where replacing people with machines. They stubbornly succumbed to union pressure, and blindly turned their eyes on the future. Those union leaders became very wealthy, and now their members may lose it all. What really was gained?

So the question now is what should we do with Detroit? Should we give it to Canada? Should the US government bail it out? Wait, didn’t we do that when Obama bailed out the auto industry? Personally, I think the solution is to study what can be privatized. Throughout the country, states, counties and municipalities are finding ways to work with business to more effectively provide services. What I did under Mayor Koch was an early experiment when we helped correct the New York City fiscal crisis (http://www.nytimes.com/1987/04/04/business/cities-turn-into-entrepreneurs.html?pagewanted=all&src=pm). Officials in Texas are publicly bidding the right to build roads to private developers. The government gets the road, and the the developers keep the tolls for an agreed upon period of time, as well as development rights off some of the road’s proposed exits and entrances. While in the private sector, I worked with Giuliani administration officials to build a new Family and Supreme Court in downtown Brooklyn; had the city done the project itself, it would have taken 2-3 more years and cost hundreds of millions of dollars more, because of public bidding requirements and antiquated work rules.

What’s clear to me is that Detroit, and government generally, can’t keep doing things the same way. America, the great experiment, is failing, because we are failing to experiment.