Governor See-No-Evil
New York governor Andrew Cuomo is heading into a reelection year with an unbalanced budget, and he’s blaming most of his state’s woes on Washington. Federal tax reform amounts to an assault on New York’s own tax system, according to the governor—who also rips the Trump administration’s decision to decline participation in a proposed $13-billion-plus, trans-Hudson commuter railway tunnel. But New York’s budget problems are mostly of its own making. While Washington’s scale-back of state-and-local tax deductibility likely will bite deep, that wouldn’t even be an issue if the state’s tax levels weren’t so infamously out of line with national averages. Albany’s money problems reside in its inability—or unwillingness—to control spending.
This was vividly illustrated at year’s end by the New York Times in its dissection of the Metropolitan Transportation Authority’s East Side Access project—an effort to connect the Long Island Rail Road to Grand Central Terminal that has produced what the Times termed “The Most Expensive Mile of Subway Track on Earth.” To the uninitiated, it’s an astounding tale of favoritism, featherbedding, and what seems like fraud—but which, adjusting for occasional freelancing, is structurally entirely legal.
This speaks principally to the low quality of lawmaking in New York, where insider advantage-taking almost always tops the public interest—and not just in construction. Indeed, the only real surprise is the heft of the East Side Access tab— which, the Times reported, “has ballooned to $12 billion, or nearly $3.5 billion for each new mile of track [or] seven times the average elsewhere in the world.” (The three-station Second Avenue subway project came in at an equally scandalous $2.5 billion per mile.)
Cuomo, who controls the MTA, bears statutory responsibility for the extravagance—as well as for the special-interest-driven work rules and management practices that have hamstrung public-works reinvestment all across the state. The governor didn’t create the system, but he’s been quiet regarding its corrosive consequences, and has never attempted reforms. Indeed, he didn’t touch on the topic when, with a straight face, he proposed a new subway line—under New York Bay, between Manhattan and Red Hook, Brooklyn—during his annual State of the State address yesterday.
Cuomo also used his address to tout a “congestion-pricing” plan for Manhattan— a tax on traffic entering the borough’s principal business districts. It’s an old plan, to be sure—Mayor Bloomberg’s best efforts were unavailing—designed ostensibly to reduce traffic congestion while raising money for transit-infrastructure upgrades. As with construction, though, it makes little economic sense to pour renewal dollars into such a wasteful system. It would be better first to wring low-hanging efficiencies from the cash already being spent—but, again, the governor is silent on public-works reform. This is no surprise. He will rely heavily on support from construction unions, big-bucks contracting companies, and other interested parties this election year, as he has in the past. But while New Yorkers in and out of government are free to practice business as usual, it’s a little over the top to expect outsiders to play that game, too.
So it’s not surprising that the Trump administration has exhibited no enthusiasm for the so-called Hudson River Gateway Tunnel commuter-rail project—an Amtrak-driven undertaking meant to connect New Jersey with Penn Station. Original estimates put the cost at $7.7 billion, but it’s now pegged at more than $13 billion, and even that might be a bargain; at the informal current rate of $3.5 billion per mile, its five miles of track would top out well in excess of $18 billion—absent real contracting and work-rule reform. But there was no hint of reform in the letter Cuomo budget director Robert Mujica dispatched to Washington on New Year’s Eve, effectively urging the Trump administration to lay aside cost concerns, fill up its thermos with Albany-flavored Kool-Aid, and enlist in the undertaking. But Trump, who has wrestled with New York’s wasteful construction practices his entire career, is surely leery of the many unique burdens the Empire State lays on its taxpayers.
The Gateway Tunnel project is a worthy one, as is East Side Access, and even a Red Hook Express. There is even some wisdom in a well-thought-out congestion-pricing tax. But costs matter. The outrageous wastefulness detailed in the Times’s subway-construction report infects public investment everywhere in New York—driven by the greed of construction unions and other special interests and abetted by the advantage-taking and cowardice of New York’s elected leadership at every level of government. Cuomo had nothing to say about this in his report to the legislature, and it’s impossible to imagine the lawmakers taking him seriously even if he had spoken out. Keep that in mind when the complaining about Washington’s unwillingness to subsidize New York’s profligacy begins in earnest.
