If New Yorkers have collectively learned anything in the last year, state Attorney General Andrew Cuomo told more than 250 business leaders at Palisades Dolce Center Dec. 16, it is to study the mistakes that led to the current recession and not to repeat them.
Cuomo, arriving on his 52nd birthday, said one toast he”™ll be making New Year”™s Eve will be to “say goodbye to 2009. It”™s a good time to look back to see where we”™ve been and where we”™re going. If we are willing to learn what brought this crisis to our doorstep, we can learn not to make the same mistakes again.”
Saying subprime defaults triggered the freeze, “It”™s hard to pin the blame. It”™s rather like ”˜Murder on the Orient Express”™; everyone pointing fingers, but who is the guilty party?
“Remember mortgages? Those were instruments you got through your bank because you had a good job, good credit and chose a home you could afford with good loan-to-value ratio: 80 percent, which meant you had a ”˜cushion.”™”
But, Cuomo said, in a frenzy of hyper-creativity by many lenders, some reputable, some not, “there came a point when mortgages got so creative you could actually borrow 110 percent of a home”™s value, assuming the real estate market would continue to climb and the money would be recouped. It was a ”˜losery.”™ If it sounds too good to be true, it is too good to be true.”
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Unfortunately, said Cuomo, “no one was monitoring the ratings. Where were the alphabet soup of regulators watching what was going on? We”™ve now learned that government regulations are there to protect the private sector.”
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Cuomo chastised Albany”™s reliance on Wall Street as a never-ending funding stream for the state”™s coffers. “Diversification is the key,” he said. “The state”™s budget is based on 25 percent of Wall Street”™s earnings as a result of its reliance and more taxes to make up for the deficit are not the answer. It does us no good to be one of the highest-taxed states in the nation. The notion that ”˜that”™s the way it is”™ is not acceptable. People are going to start voting with their feet; we are precariously close to that point.”
In the real world, said Cuomo, “When income goes down, the family sits and cuts expenses; government needs to do the same thing. We have 1,000 state agencies and taxing authorities and 10,000 local governments. The operating costs have dragged us down. It”™s more than time for a cultural adjustment in New York.”
Cuomo chastised the state for not courting businesses who are contemplating a move to a friendlier business environment. “In other states, if they see a business looking at the horizon, they pull out all the stops to keep them in place. We”™re not doing that here. Who would have looked at the New Jersey shoreline 20 years ago and thought they”™d see development going on in Hoboken? People laughed at the notion. But look at Hoboken now. We have Connecticut knocking on our border every day.
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What are site selectors telling them: ”˜It will take a few more minutes to get to work, but think of the savings for your company.”™ That is what our business community is hearing.”
Bluntly accusing New York”™s legislative body of failing to work as a team, Cuomo said, “I have never seen a government as bad as the one we have now. Government is public service, not personal service. We”™ve gotten our wake up call.” And then: “We have the greatest state with the greatest city in the world, but we have to become better at selling it.”
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Cuomo told his audience his office has been aggressively investigating Medicare and Medicaid fraud and brought more than $100 million back to state coffers, “something the Attorney General”™s office historically did not do.” When it comes to the $120 billion pension fund, “lawyers lead the way in local abuse, signing on in towns and village”™s to become its attorney so they can collect a state pension and state health benefits.”
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Cuomo fielded few questions from the audience, but Rockland legislative Chairwoman Harriet Cornell managed to ask about the fate of the Empire Zone, scheduled to end in June, 2010. “We were the last county to get it,” she said. “It”™s been a tremendous asset in attracting businesses. What can be done to help keep it?”
Saying the Empire Zone program was modeled after national Empowerment Zones he created as HUD secretary in the Clinton administration, Cuomo said, “There have been abuses in the system that need correction. I support the concept, but it has been abused, with many companies simply moving into the zone areas and not doing anything to warrant being there. And I have no idea what will happen to it next year.”
As quickly as he was whisked into the Palisades Conference Center, he was as quickly whisked away, but not before HVBiz/Westchester Business Journal had the opportunity to ask about the MTA”™s financial woes and the negative impact the mobility tax was having on the region”™s business community. “I believe the tax is inequitable, and there is legislation to amend it as it now stands” said Cuomo. “But it is up to the Legislature to correct it.” He said he has no intentions ”“ at least, not yet ”“ of running for governor in 2010, but does plan to run for attorney general.
Audience reaction? Michael Oates, the new president of the Hudson Valley Economic Development Corp., liked what he heard. “We can”™t tax our way out of this deficit,” oates said. “We need to consolidate, get our finances in shape. When you realize the number of taxing entities out there, it”™s mind boggling. It”™s really time for New York to change its business model.”
Rick Jones, executive vice president of Provident Bank, said he liked much of what Cuomo had to say. “I heard his father speak at Yale in 1991; he said there was a difference between the poetry of campaign and the prose of actual governing. Lowering taxes by eliminating overlapping municipal authorities is a must. I am sorry Mr. Cuomo did not address ”˜double-dipping.”™ I don”™t think a state employee receiving a pension should get another state job with another pension.”
