City Talk; Richard Ravitch, New York State Lieutenant Governor; Sarah Bartlett, CUNY Graduate School of Journalism; Pt. 2 of 2

How I'm Doug Muzio, this is City Talk, New York State, with budgets on months late filling huge gaps with gimmicks and quick fixes, where an irresponsible legislature and ineffective executives are distrusted and dismissed, where the infrastructure is crumbling and where there is no coherent transportation strategy, where fair hikes and service cuts by the MTA are the norm, this is New York State 2010, the state of dysfunction. Welcome back, Lieutenant Governor Richard Ravich.

Mr. Ravich has a distinguished history of public service. He rescued the Urban Development Corporation in the 1970s, is widely credited with saving the MTA as Chairman from 1979 to 1983. He also chaired the 1987-88 charter revision commission. He has also served as Major League Baseball's Chief Labor Negotiator, and in July 2009, he was sworn in as Lieutenant Governor the first ever to be appointed by a Governor. And welcome back Sarah Bartlett. Sarah is the director of the Urban Reporting Program at the CUNY Graduate School of Journalism, where we co-teach a course, and prior to that, she held the Bloomberg Chair at Peru College following a distinguished career as writer and editor on business and economic issues for business week, fortune, and the New York Times. Along with hundreds of articles, she has written two books, Schools of Ground Zero, and the Money Machine, how KKR, manufactured power and profits.

Welcome back, Lieutenant Governor, welcome back Sarah. Last week we talked about Medicaid, which you, as you've put it, has a gravitation opal on New York budget, a destructive gravitational pull. Anyway, I'd like to talk about governance and infrastructure and higher education, what you've been working on as Lieutenant Governor. You've seen Albany from the inside, as they say, up close and personal, described sort of the state of governance in New York and what you as Lieutenant Governor and as a private citizen has been looking at this for decades would advise the next Governor or the people of the state of New York. Number one, I think that the way the government is characterized almost daily by the media is both unfair and inaccurate. I think most state governments suffer from functioning, in effect, in a cocoon.

Most of them are located in other than the population centers of the states. They're inadequately covered by the press and the Picadillos and transgressions are of much more newsworthiness in the light of reporters, because it's a lot easier to write about that kind of thing than it is to delve into the complicated issues of public policy. There is no connection between state government and the world of ideas. Because there isn't a Washington where there are think tanks on the right and the left. So they're very insulated and they're devoid of ideas. No, that's probably unfair, but you have to understand the legislature gets blamed for New York having a history of budget deficits, but in point of fact, all of the one shots in

the last 20 years, that is, asset sales or borrowings that were used to plug holes in the operating budgets, they were all initiated by the executive branch, not by the legislature. But it took the legislature to go along with it. It did, but it's very difficult. If a governor says, I have a way of postponing pain, it's very difficult for a legislature to say, hey, we're willing to impose pain, we're as you say. That isn't necessary to do it. Now, do I wish that the legislature had stood up, yes. But it was also part of the culture that dominated our whole society. We believed as a matter of faith that trees grow to the sky, that there was no problem we weren't smart enough to address successfully, that we had almost a genetic capacity to overcome every obstacle and look at our history for 200 years.

We have done that and look what we did in the last 50 years when we overcame on the whole not totally at a history of racism that was a disgrace for society like ever. We've accomplished extraordinary things, so there was an optimism in American life. People thought bad times were always temporary and the normalcy was good times, which was a rate of economic growth, that would always bail you out of where you were. So when we had very good times instead of providing for reserves for bad times, the government reduced taxes, which the public, what wealthy people clamored for, and therefore when we had bad times, we had no reserves and we had to resort to mimicry. So it was a problem as much of our culture, there were very few people who raised hell

about that, as citizens, for all the reasons I describe it. Well now they're fighting that, right? I mean now they want to throw the bums out and you've got this sort of tea party phenomenon and does that give you grounds for optimism? It gives me grounds for optimism to recognize that there's no point, there's no political game pretending anymore. Obviously I don't think the tea party people have substantive answers to anything. David Stockwin renowned his Ronald Reagan's budget director, Robert P. S. recently, which he said both parties are equally responsible for dragging us to the fiscal bottom as a nation, it's a dramatic way of putting it, but there's a lot of truth in it, and as I've said there's a whole new paradigm out there and people are going to have to deal with it.

What's your estimate of how big the budget deficit for New York State will be next year? Over $10 billion. How do you close that? Well don't you close it, that's a very good question, I think that there are only a couple of ways of closing a budget and that kind of oneness through cuts and the others through taxes. They're no far away, they're no fairy godmothers. Well one of the things you proposed was too borrow, but to accept some responsibility and independent body that would force out the budget. Well I proposed it, actually what I proposed was exactly what we did in 1975 in the city when we created Mac, we said hey there's no way the city can get the balance budget right away, we had to give them four years, so let's create a borrowing mechanism in the interim for transitional purposes only and that's what I suggested here. And the answer was no borrowing, what resulted though, we had a budget that was months and months late and it looks like it's put together with bubble gum and whatever.

What's worse is there's a lot of borrowing in the plant, they borrowing from the pension fund, they pay pension payments, they have a reduction in corporate tax credits, but when you read the fine what they say reduces taxes for corporations, but if you read the fine print of the bill they have to pay it back in three years, so that's where I come from alone. So there's borrowing in there despite the fact that they all said there was no borrowing. So we've got this $10 billion haul. How do you, how do you fill it? How do you, I just, you know, we have to, you have no choice, I guess is, well I don't want to predict. I hope that Governor Cuomo is working on plans, you know, I also recommended that our fiscal year be moved from March 31 to June 30 because it's absolutely absurd to expect a newly elected governor to three weeks after he is sworn in or she is sworn in to submit a budget

that he's had a lot of time to study and prepare, so, but I hope there'll be a sensible plea. One of the things that has a tremendous impact obviously is the state of the economy and we just saw recent numbers that showed that New York State residents lost either as a decline of 3.1% and personal income for the first time in 70 years. Now we've got Governor Christie threatening to kill the tunnel that was supposedly going to be one of the biggest economic development opportunities on this part of the region. Don't you worry that in addressing the fiscal problems we're going to throw the economy even more into a tailspin? Yes. Simple answer. I have said there repeatedly in a hundred speeches in the course of the last year that our spending in K through 12 education and Medicaid is reflected in a decline in expenditures on higher education and on the public infrastructure.

And if you think about it for a minute, if people say, hey, the most important and only way we can get out of this economic decline is through economic growth. Building higher education infrastructure does not sit strike me as the right formula to dig our way out of this and to start growing again. And this is a tragedy. I mean, this is a serious tragedy, both what happens to the NTA, what happens to the roads and bridges upstate, the tap of the bridge. There enormous unmet needs. Trustee was unwilling to, I gather from the newspapers to consider imposing a gas tax to raise the revenues so they can bond out the incremental cost of that project. Now, do I agree with him? No. I don't.

But I think it was probably an honestly arrived at decision, but I don't know why we have the lowest gas prices of any place in the world. Well, the NTA just voted to increase the unlimited fare to $104 a month as one of the ways. And yet they're keeping easy past tolls the same, the congestion pricing. Do you think that could go anywhere at this time around? Well, as you know, I recommend that we tell the bridges. It should. It should. You think there's a more receptive audience. I mean, you've been up in Albany, you know, recently. I think as this fiscal crisis worsened, the people who laughed at me when I proposed tolling the bridges and now taking it seriously. This sounds like Samuel Johnson regarding the prospect of a hanging, it tends to concentrate the mind wonderfully. Yes. Are we at the Samuel Johnson moment? Well, we're getting there very fast, I'll tell you that. Talk about the NTA a little bit. The NTA looks like in its 2010, 2014 capital plan is $10 billion short.

That's the NTA shortfall. That's not the state. That's $20 billion that we somehow have to pull together at the state level and the NTA. Where's this money coming from? That's a very good question. I'd be the answer is that it's either going to come from enhanced tax revenues in the hands to user charges, enhanced general contributions. And Brawley, a combination of reducing the scope of the new projects that the NTA was helping to bring about over the course of the next decade. Obama's just proposed a $50 billion infrastructure program, a good start, but no one near enough. If we need $10 billion and the NTA out of $50, this doesn't do it. It does not.

How do you feel New York's prospects are for getting some help from the feds? Well, I think that, again, what you see playing out and washing in is very similar to what plays out here, and that's why I made reference early into the fact that we're caught in a total paralysis because the Democrats are being attacked for spending money that the federal government has to borrow to get its hands on. And therefore, there's particularly the Democrats who were on the marginal districts are very sensitive to voting for more deficit spending. And yet without deficit spending, we're going to have more and more unemployment in this country. Well, the bottom line is a lot of the problem confronting the state has less to do with government than the public, because the public doesn't want to raise the taxes to spend the money, but they want the services and programs that the money pays for.

It's free lunch. So I think a lot of the blame has to go to the people, nobody's telling the people it's your fault. Well, I wouldn't say they're full, but to say they have very unpleasant choices to make. And they ought to believe the candidates for political offers who tell them there's a cost-free way of getting out of this mess. That's what's so shocking, not the tea party. When you look around the region, do you feel, and you compare that to what you know is going on in Europe and in Asia, do you feel that we have the kind of regional transportation sort of vision for the future that we need, and if not, what's lacking? What should we be focusing on if we want to remain competitive? We have to devote a lot more of the wealth of this country into public things than we have been willing to in the past.

But specifically in New York, what do we need in order to be sort of a Bible? We need a comprehensive plan as to how to allocate our infrastructure spending, and we need new revenue sources to support the borrowing necessary to make those capital investments. You know, what people forget often is the fact that under our constitutional system, it states that have the primary responsibility for the public infrastructure and within their borders, about 80% of all infrastructure expenditures have historically been made by states, and very little of it, relatively by the federal government. But I don't hear a conversation within New York State about high speed rail, for example, that that should be a top priority. I mean, I sort of feel like there's an incremental wheel. We need to fix this terminology of K. Is there somebody, anybody who's sort of looking at this and saying, well, there are regional plan associations, as had a lot of very wise things to say about this, and there are people at the State Department of Transportation

who are eloquent on this subject, there's a lot of knowledge around it. That's not the problem. That's not the problem. Yeah. But they're being ignored, or that knowledge is because they are saying, in effect, the people are running for office. We've got to tax more, or cut more, and they don't want to hear that. That's not what they can stitch with, or are electing them to do. So it all comes back to where we started. What is the level of public understanding of the severity of this problem? And who's responsible for this very inadequate level of understanding of it? Okay. It's responsible. Well, the media do a large degree. It freezes to survey the educational role, and it does in other societies. The collapse of the print media, the preoccupation with sex, frolic, crime, much more news worthy than...

Well, let me let you go back, as a member of the media, and someone who's teaching students to be in the media, what we get back is, well, when the serious stories run, nobody reads them. All the focus groups show that you don't spend more than 10 seconds with something that's actually substantial. And they all go for the public goes. If you look at the clicks online, it's all for the sex and the celebrities, and we know that the industry is hurting from revenues. So as a business proposition, can you put out a publication that actually focuses on serious ideas? No, I mean, you may need a non-profit media. Well, certainly, United States has less of that than any society in the Western world, frankly. And certainly lasted a dictatorship like China, but we need a lot more of that. We spend less money per capita on public and non-profit news broadcasting week. We have politicized the transmission news in this country, on the blogs, and even on network

television between Fox News on the one hand and MSNBC and the other. How is somebody going to know what the truth is? Last week, we talked about Medicaid, one of the so-called uncontrollable expenses for local and state governments, another one of these is pension reform. And pensions are and have been a central topic of conversation over the last several months. And in fact, Deputy Mayor Wolfson said that the city's top priority in Albany, top of its legislative agenda would be pension reform. What could be the role of tensions in the current fiscal situation? And what would it be? Now you see. Well, the city of New York has a particular problem since they are required to appropriate the money out of their expense budget every year to keep that pension whole. New York State had the best funding pension in the country on one of the very best. This year, they started a practice, which to me is scary.

They are. They call it pension smoothing. But in fact, they are borrowing from the pension fund in order to make the payments that they are statutorily obligated to do the pension fund. I mean, this is a real twilight talk quality. It is. And that's a very bad sign. Who say now? Well, they started that in Jersey and the Christie Todd women. They made assumptions about rates of return that were absolutely insane. And now they're on top of the Jersey pension fund is less than 50% funded, which means at some time in the next decade, they're going to have to pay pension benefits out of current appropriations. If you were the philosopher king, what might you do with the pension situation? Well, I would, first of all, examine. I would make sure that any new employee was not entitled to the same level of benefits that people get today.

The so-called. What do you have five? Five. Well, I think you've got to examine additional tiers as well. Okay. So you have to examine very carefully as to, to one extent, and it varies from jurisdiction to jurisdiction, whether you can reconstitute existing benefits in a fashion. Makes more sense. Oh, politically. Isn't that contractually set? Well, yes, but again, so are all the dead obligations. And so are all of the, a lot of contracts to build the second avenue subway that, but if there ain't cash, something's got to give. And I think, as I've said before, the problem is in one of these things independently of all the other things. So everybody's going to have to put to use the vernaculars and the skin in the game to solve this problem, because you kind of take it out on the backs of public employees entirely.

What's next for Richard Rabbit? You stepped down as Lieutenant Governor on December 31st. Are you finished fixing, Mr. Fix it? Well, probably, I'm going to spend some time with my family. I'm probably going to write a book. I'm probably going to do a little teaching and I can't keep my mouth shut so I'll probably end up commenting. Okay, let's see. Okay, let's see. Let's see. Okay. Talk about higher education. What is state policy? What are the deficiencies in state policy and what ought to be state policy? Well, you know, people don't understand that in the United States, there are three kids in public universities for everyone, kid in a private university. And it's public universities around the country that are being hurt significantly by the fiscal crisis that besets all states.

California, the great state university system in the country has been decimated. New York has more applications this year because of the economy, no doubt than they've ever had before, and they're being cut once again in the state budget, and the amount of dollars is, you know, that's not what breaks the bank. It's just that the constituencies that care about that aren't as powerful as some of the constituencies we talked about earlier in this program. Have you ever looked at the structure of the SUNY and the CUNY systems and wondered whether there's ways to rationalize that to get more out of it, and are there some concrete suggestions? You know, it's, I think it's something that the next government is going to look at very carefully. Is that what you really do? Wouldn't that sort of fight what you just said about how important it is? Well, I don't think necessarily shrinking is the answer, but I think that there are a lot

of things that can be examined, including the right to set their own tuition rates. They're not going to commit suicide. The legislature refused to do that this year. It was something the governor pressed very hard. It made a lot of sense to me. It had legislative decision. One of the reasons that you have this, almost this calcification of the state system is that each of the individual units are where they are for political reasons and any changes on where they are, will develop a firestorm. My mother-in-law lives in upstate New York and was surrounded by the state university of Darwin. You can cobble skill on your, you touch any of those systems and you've got, you know, political fire. Unfortunately, those are often the only growing economic activities in the upstate. I mean, upstate's a wasteland. You got a Buffalo and the state university in Buffalo is critical to the economy there. Do you see, as the election plays out, a real upstate downstate divide, I mean, we hear

about that a lot. Do you feel like that's been, you know, accentuated in the last year? You know, it's very interesting to me that what you find is that the elected officials from the central cities have one orientation, the elected representatives of the suburban areas are far more conscious today and sensitive to the level of tax issue than, so it's no surprise that the Democrats had difficulty putting 32 votes together for anything in the Senate, was not because the leadership didn't try, it was because they were quite very interest. And you see the same thing happening in Washington, in a funny sense. So by definition, when the Democrats control a legislative body, they had to have done that by electing people from suburban areas, whose economic and social interests are different

from people who represent the poorest parts of our cities. So there we are, different interests, different politics, makes the game fun. Once again, my special thanks to Lieutenant Governor Richard Ravich and Professor Sara Bartlett for being on the show, and this concludes the second part of a two-port conversation. See you next week. Hello, I'm Doug Musio. Let us know what you think about this show, you can reach us at cuny.tv. When you get there, click on the board that says contact us and send your email, whatever it is.

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