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Eliot Spitzer discusses the Upstate economy and the dysfunction in Albany

The Spitzer vision 

Eliot Spitzer discusses the Upstate economy and the dysfunction in Albany

Eliot Spitzer, October 2, 2006

He's considered a shoo-in. Way ahead in fundraising, way ahead in the polls, he has held only a few debates with his opponents. His critics --- and even some of his supporters --- complain that he has spoken only in generalities, that his has been a "trust me" campaign designed to sound tough but commit to little.

In a recent interview in New York City, New York Attorney General Eliot Spitzer fleshed out some of his stands on major issues of this year's governor's race.

Upstate New York still has a lot to offer as a manufacturing center, he said, if obstacles like energy costs can be overcome --- and if Upstate is marketed properly. He insisted that the state can both cut taxes and invest in its future. He called the state's 700-plus public authorities New York's "hidden government," and said many of them can be either consolidated or eliminated. Major reform in Albany is crucial, he said, and he thinks that in the wake of government's handling of the Hurricane Katrina disaster, the public is ready to pay attention to the wonky issues of governance.

And yes, he said he's sure he can convince the state legislature to reform itself --- although, he said, by law, the major issue --- gerrymandering state legislative districts --- will have to wait until after the 2010 Census.

Following is an edited version of the interview with Spitzer.

Geoff Kelly: Most of the state's wealth and political influence is concentrated in and around New York City. What do you intend to do as governor to put Upstate New York in a position to generate more wealth and exert greater influence in Albany?

Eliot Spitzer: First let me state the obvious. It is the dominant issue facing any person who becomes the governor of the state: How do you take the Upstate economy and revive it? The western-tier economy is perhaps the most challenged in the state, in the sense that it is where there is the greatest concentration of old industrial structures that are facing the greatest competition as the economic winds are shifting.

New York City remains vibrant based on the service economy and the influx of immigrant communities and new economic courses. The HudsonValley is benefiting from the outflow and migration out of New York City; as costs in the city rise, people move up into the HudsonValley and east on the Island. The limitations downstate are infrastructure limitations that we will have to invest in.

What [economic revitalization Upstate] means is confronting head on, first, property taxes, which is why I've said we must cut property taxes by $6 billion focused on the middle class.

Second, we have to invest in our downtown communities. If we're going to draw new businesses, new capital, to our downtowns, we have to make them vibrant, vital. That means investing in housing, giving tax credits, confronting the brownfields issues that are keeping many potential development sites off the horizon of those who are willing to invest the money.

We have seen the suburbanization of America, not just the Northeast. That suburbanization has hurt downtowns. We need to bring people back to the downtowns.

What sort of jobs do you think you can attract Upstate?

Some of it is high-value-added manufacturing. The manufacturing that has remained is not, by and large, the commodity manufacturing, it's the high-value-added work, where on-time, on-demand delivery is critical, and the quality of the work. We have a great workforce, so we can still get those jobs there, if --- and this is a big if ---if we generate low-cost energy, overcome the workers comp problem, which has been a major impediment, and if we train the workers for the jobs that [manufacturers] need.

Right now, if you can imagine this, there are manufacturing jobs going begging in Upstate New York because people haven't gotten adequate training. Back-office service sector: lot of good jobs there that we haven't marketed Upstate New York as being a great destination for. When Citigroup or Bank of America wants to move a thousand back-office jobs from New York City, say: Instead of going to Omaha, Nebraska, let's go to Syracuse, Utica, Buffalo, Lackawanna.

We can do it. Those are good jobs, steady people. The outsourcing that had been a huge tidal wave five years ago --- to Bangalore and the subcontinent --- I think to a certain extent, that has dissipated. Costs have gone up overseas; people are getting more sensitive to the quality of service they get when they are actually talking to a domestic person on the phone.

But how do you bring those jobs Upstate? It's not as if it's a new problem.

A lot of it's marketing. I had breakfast with the CEOs of some of the largest corporations in the world in Manhattan; a lot of them are headquartered here. I asked, "How many of you have thought about locating jobs in Buffalo, Syracuse, Rochester?" They hadn't. They think about moving them out of state. Nobody has gone to them and said: "Do it. We'll give you the tax incentives. Keep the jobs here."

The hard part isn't the idea, it's the execution. If nobody is there every day, picking up the phone to these CEOs to say, "We want you to move the jobs that you want to move somewhere else, move them [Upstate]" ---it can be done. Look, Warren Buffett is moving a lot of Geico jobs to Buffalo. He has a prior connection, so he knows the city, but he's not going to do it if he knows he's going to pay a huge penalty for doing it. He's doing because he knows it makes economic sense.

Both your Republican and your Democratic opponents have said that fiscally you're trying to have it both ways: You want to cut property taxes by $6 billion while increasing funding for numerous programs. How do you reconcile that?

We're talking about $6 billion over three years. It's one and a half [billion], two, two and a half, sequentially, targeted to middle-class taxpayers, as it should be. One of the major [provisions] in the STAR plan, as implemented and as Mr. Faso's plan is structured, is that it doesn't differentiate between a landowner who has an income of a million dollars a year versus somebody who is struggling at $60,000. My belief --- this is a matter of equity, this is a matter of economic growth -- is you must target that middle-class taxpayer. We do that.

How do we pay for it? It's easy --- well, it's not easy. First, we'll make the tough decisions. Among those tough decisions are the $11 billion in budget savings that we have highlighted, with specificity, over three years. Eleven pays for six, leaves us five for the sort of investments that we need. One of the reasons I don't want to take all $11 billion and put it into the property-tax cut is, you need money for infrastructure, you need money for schools, you need money for other investment areas as well.

It has been noted that Governor Pataki is looking to reconfirm his appointments to a number of influential public authorities, to extend their terms in order to stymie the policies of his successor. That is to say, you.

There may be some trouble; we'll see. Despite what's going on now with some individuals being reconfirmed and their dates being extended, I think people have a generalized sense that when a new governor is elected, that individual deserves to be in a position to select the people he wants to be running these agencies and authorities. Because people know that you can't flout, you shouldn't flout the electoral process that way. I think we'll succeed in getting new people in, without too much ruffling and too much fighting.

The authorities are the hidden government. That is where the decisions are made. People don't pay attention; it's where the ugly stuff is done. And because there's no transparency, people get away with all sorts of bad stuff, whether it's ESDC cutting deals, whether it's the MTA, whether it's the Port Authority or the Canal Corporation. Big to small, the problems are the same, and that is: the wrong people have been put in charge. People have been put in charge based on politics, friendships, contributions, rather than skill. That's going to change.

You know, until Katrina and FEMA, talking about competence as an objective value was mind-numbingly boring, and no one cared. Every time I tried to raise it, people would say, "Nobody cares." Since FEMA, I think, it has become a more tangible and real-life virtue. People appreciate that knowing how to get the job done matters.

There are 700-plus authorities. Many can be eliminated or consolidated. Different rules would be imposed upon them in terms of transparency, ethics, how we get the bidding done and the level of expertise that would be brought in.

After launching a study of New York's public authorities, State Comptroller Alan Hevesi allowed that his office's resources were not equal to the task.

And this is by design. Historically, the authorities were created as a way --- and this is ironic --- to separate decision-making from politics. In other words, if everything was dependent on a legislature that we didn't trust, and perhaps still don't necessarily, the ideas was to create decision makers who were outside that purely political world and give them the capacity to make decisions.

What has happened is now we're getting the worst of both: Politics has invaded the authorities; there's the lack of transparency that has invaded them, so nobody knows what they're doing.

The authorities also create separate public budgets.

It's a way to get a lot of the backdoor borrowing. We are going to consolidate the budgets. We are going to handle deficits and borrowing the right way, which is to get voter approval, use borrowing only when it's appropriate: for capital expenditures, not for operating costs.

It's usually an easy decision whether a project is appropriate for borrowing or not. And then, if it's appropriate for debt, say to the public: "Is this something you want to spend money on?"

As attorney general, you've made public shaming a weapon. What tactic can you use to convince the legislature to change its ways, given the necessity to work with legislators in order to realize your initiatives?

Here's how you do it: You don't personalize things. There have been a lot of candidates who say, "He or she is the enemy; he's all that's wrong with government." Don't personalize it. Talk about the theory, talk about what we have to do. Both persuade and cajole. Say: "Look, there's a reason that the public is supporting these issues overwhelmingly. Join us in this effort." There are carrots and sticks, and you use them.

Do you intend to implement the recommendations of the Brennan Center's 2004 report of New York State government, and its follow-up report this year?

Their report crystallized a lot of the thinking that's out there in terms of the problems that we face. Whether we're 50 out of 50 [in a ranking of most dysfunctional state governments] or 48 out of 50 doesn't matter. The dysfunction is real.

The problems to a certain extent are the result of internal, legislatively determined rules that only the legislature can reform. Therefore, the question is how does the governor persuade them to reform? I think by leading by example and by saying the people have spoken. And I hope the people speak. I hope to win, and I hope to win by a sufficient margin that I can go to the legislature and say, "This is a genuine statement on the part of the public that we need reform."

Reform means empowering committee chairs, permitting committee chairs to hire their own staff, which means there will be genuine hearings on bills. Permitting bills to reach the floor for votes so that we can have genuine voting about the tough issues.

And member items, which is perhaps a small manifestation. It's a big number --- objectively, not in the context of the state budget --- but it is symbolic of all that's wrong. And I've said that I won't sign bills that allow member items to be handed out in the dark. Budget them in the right way. A lot of the money goes to good purposes, but do it the right way. Some of it clearly doesn't; a lot of it is wasted. But if the money is going to a good purpose, run it through the budget process, so that it's done properly.

Gerrymandering --- which is the root of the problem, and I would start there but for the fact that we won't draw new district lines until after the next census --- has got to end. Have lines drawn by nonpartisan individuals ---whether it's a panel of judges, however you configure it; there are a lot of proposals out there --- so that the lines are not drawn to perpetuate incumbents and eliminate genuine democracy.

Those are all things that we will do. And I can't wait till it happens.

Geoff Kelly is editor of Artvoice, Buffalo's alternative newsweekly.

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