A Good Governor

Carey Was Indispensable

In City's '70s Fiscal Crisis

The obituaries for Governor Hugh L. Carey stress a major achievement, bringing fiscal responsibility to New York City government after the financial crisis of 1974 and 1975. Here are some facts about the situation at that time and Governor Carey's critical role.

Mayor Koch, who knew Governor Carey since they served in Congress thirty years ago, has written about Carey's achievements. Click here to read his commentary.

This article is a worm's eye view of the fiscal crisis and political events that surrounded and followed it. Back then, I was a City Councilmember at large, elected from the Borough of Manhattan. The City Council, at the time less powerful than it is today, had little to do with creating or resolving the city's near-bankruptcy. We offer some background and political history of the 1970's. Thirty-five years later, it is remarkable how many of these events have been forgotten, while the new generation of New Yorkers never knew them.

In Governor Carey's inaugural on January 1, 1975, he said that "the days of wine and roses were over." This was a sage prediction of the fiscal storms ahead. In response to the city's inability to borrow money to meet its obligations, Carey secured state legislation creating the Municipal Assistance Corporation (also known as Big Mac) and the Financial Control Board for New York City. MAC had the authority to borrow money on behalf of the city, and city tax revenue streams were required to give priority to MAC bonds over any other municipal obligations. The interest rate on some MAC bonds was set as high as 11 per cent, and that income was tax-free. The FCB had authority over the city budget, its approval was required before a budget could be adopted.

The city's fiscal crisis was different and more immediate than the one the Federal government is now enduring. For years, starting at the end of the mayoral term of Robert F. Wagner in 1965, and increasingly during the eight years of the Lindsay administration and the first year under Mayor Abe Beame, the city had consistently spent more than it received in revenues. The gap was filled by borrowing, and city officials devised a number of instrumentalities for short-term borrowing, which was in addition to regular long-term borrowing through the issuance of bonds. In addition, current expenses, which should have been paid for by current revenues, were allocated to the capital budget, which made them eligible for bonding.

To meet its cash needs, the city began to issue new instruments, called RANs, TANs and BANs. These were respectively Revenue Anticipation Notes, Tax Anticipation Notes, and Bond Anticipation Notes. When they came due, the city rolled them over, renewing them for a short period of time. The sum of money borrowed in this way steadily rose, and there came a time in 1975 when the banks, fearful of default as the city's debt increased, stopped buying the freshly issued notes. This caused an immediate cash crisis, as the city did not have the money to pay its employees, having become dependent on the proceeds of the short-term notes which had been rolled over.

The Emergency Financial Control Board (as it was called at the time) had effective control of the city government, since it controlled the cash flow. Its seven-man board consisted of the governor, the mayor, the state and city comptrollers, and three private citizens chosen by the governor and confirmed by the state senate. Other elected officials were allowed to appoint non-voting representatives to the Board.

Governor Carey, who had become proconsul for the city, first secured the retirement of Deputy Mayor James Cavanagh, a longtime civil servant and the appointee of Mayor Beame. Cavanagh, an honorable man who came to symbolize the old way, was replaced by John E. Zuccotti, a 38-year-old who had been chairman of the City Planning Commission. The city reduced its expenditures sharply, mainly by laying off 50,000 employees on June 30, 1975, the end of the fiscal year.

Politically, Carey concluded that Beame was indecisive and not competent to manage the city. He and former Mayor Wagner set about finding a challenger for the 1977 Democratic primary. The usual partner of Wagner and Carey was Alex Rose, the Liberal Party leader who had brought about Mayor Lindsay's re-election in 1969 after Lindsay, at the time a Republican, lost the primary in his own party. Lindsay was re-elected on the Liberal Party line.

Sadly, Alex Rose had passed away on December 28, 1976 and Wagner and Carey were left on their own. They settled on Mario Cuomo, at the time New York's secretary of state under Governor Carey. Cuomo came in second in the seven-person primary race (Bella Abzug, who had just left Congress after narrowly losing a Senate primary to Daniel Patrick Moynihan, came in fourth). The top two, Congressman Ed Koch and Cuomo, made the runoff. Beame had been eliminated because he came in third, Manhattan Borough President Percy Sutton ran fifth and Bronx Congressman Herman Badillo was sixth. Joel Harnett, a civic reformer, was a distant seventh. The results were so close that the top six candidates each received more than 10 per cent of the vote, but none of them won 20 per cent. Koch was barely one per cent above Cuomo in the initial voting.

The law provided for a runoff between the top two candidates if no one received 40 per cent of the ballots. Koch defeated Cuomo in the primary runoff by ten points, and in the general election when Cuomo ran a strong race on the Liberal line. On winning, Koch declared peace with Carey, and the two men became political allies and friends. In 1982, when Mayor Koch ran against Carey's Lieutenant Governor, Mario Cuomo, for the Democratic gubernatorial nomination, Carey endorsed Koch, who ended up losing to Cuomo.

The breakthrough in Hugh Carey's political career came in 1974, when he defeated the better-known Howard J. Samuels by a 3-2 margin to become the Democratic and Liberal Party candidate for governor. Carey had been a Congressman from Brooklyn for seven terms. Samuels, known affectionately as "Howie the Horse", had been the first chairman of the Off-Track Betting Corporation. He had the support of Democratic Party leaders and was personally wealthy due to the success of Kordite, a plastic product used in baggies, wax paper, plastic wrap, disposable kitchenware, and sturdy trash bags, which he invented and developed. Samuels came from upstate Canandaigua, and was widely referred to as "the upstate industrialist". Carey was the downstate politician.

As governor, Carey made first-rate appointments to his staff, including David Burke and Robert Morgado as successive Secretaries to the Governor, Judah Gribetz as counsel and Michael Del Giudice as policy director. After he left office, Carey led a relatively private life with his family.

In addition to the extensive obituary by Richard Perez-Pena which began on A1 of the Times, the Carey family placed a lengthy and detailed notice on pA17, the obituary page of the newspaper. Mayor Koch wrote a tribute to the former governor, titled HUGH CAREY: NEW YORK'S GREATEST GOVERNOR OF THE MODERN ERA. Click here to find the column, republished on New York Civic's website. It is well worth reading.

BTW, many years ago, Governor Carey received the park name "Leonine". It was a reference to his middle name, Leo, and his stately appearance. In New York State, he was, at an important time in history, the king of beasts.



StarQuest #773 8.8.2011 1247 words

What Would Moses Say?

Koch Bridge, Carey Tunnel

Long Island to Manhattan,

Over or Under East River



Recent days have seen a flurry of activity on a previously quiet front: the naming of bridges and tunnels.

Mayor Bloomberg and City Council Speaker Christine Quinn announced Wednesday evening at a party in Gracie Mansion to celebrate former Mayor Ed Koch's 86th birthday that legislation would be introduced in the City Council to add the name "Ed Koch" to the Queensboro Bridge, also known as the 59th Street Bridge.

At the same time it was reported that both houses of the State Legislature had adopted legislation changing the name of the Brooklyn Battery Tunnel, which was opened in 1950 and charged a 35 cent toll, to the Hugh L. Carey Tunnel, honoring the seven-term Brooklyn Congressman (1961-74) and two-term New York State Governor (1975-82). The bill awaits signature by Governor David A. Paterson, whose eponym is the former 'silk city' in northern New Jersey.

The twin name changes are relished affectionately in an article by veteran NBC reporter Gabe Pressman titled HAIL TO KOCH AND CAREY and aired December 8. Read it here.

The Times digested the name changes the next morning in a column by Michael M. Grynbaum, BRIDGE AND TUNNEL TYPES. The column is very well done, and its best lines are saved for the closer:

"But the former mayor asked a reporter to wait a moment so he could share a quotation he had found in 'The Great Gatsby,' [a 1925 novel by F. Scott Fitzgerald], which he called appropriate for the occasion.

"'The city seen from the Queensboro Bridge,' Mr. Koch said, reading from the novel, 'is always the city seen for the first time, in its first wild promise of all the mystery and the beauty in the world.'

"'Nobody else has a bridge like that,' Mr. Koch concluded happily. 'Only me!'"

In Mr. Pressman's article, Mayor Koch is quoted as saying: "I'm not handsome, that's why the Queensboro represents me so well. And on my bridge I'll insist there'll never be a toll!"

The phrase that comes to our mind is: "From your lips to God's ear."

Unfortunately, there are lesser figures, all honorable men, who are eager to impose fees and tolls wherever they find human life or activity, or even death in some cases. But like the troll in "The Three Billy Goats Gruff", who wanted to gobble up anyone who crossed the bridge under which he lurked, taxers are sometimes frustrated.

The tradition in New York City has been that a bridge is a street over water, and the 19th century bridges, which once cost a few cents to cross, have been toll free for about a hundred years. The 20th century bridges were built largely by Robert Moses from the '30s to the '60s. Their tolls were supposed to pay the cost of construction, and then maintenance. They did, but that was not enough.

Since the MTA swallowed the Triborough Bridge and Tunnel Authority in 1968, in part so Governor Nelson Rockefeller could rid New York of the once powerful Moses, who had insulted his brother in 1963, most of the bridge income has gone to mass transit subsidies. These millions have not, however, been able to keep up with escalating costs of transit agencies, where salaries, health care and pensions are growing at a rate that will be impossible to maintain, and incurring debt service for capital projects which are charged to operating expenses.

The bridge and the tunnel will have bright new names. We hope they enjoy bright futures in the new century.

HOT AIR: Albany, NYC, Syracuse

Budget Deadlock - Day 99

Heat Wave - Who Invented Air Conditioning?



Barrett, on Albany Strife,

Criticizes Paterson Vetoes

As Unjustified Pessimism

On Funding of Medicaid



A great deal of what has been going on in Albany for years is confusing to most people.

Media reports shed some light on events, but do not reveal the motivations of the actors.

One person who is more often right than wrong, and has perceptions that many others lack, is Wayne Barrett, a senior editor at the Village Voice, who has been covering politics for almost 30 years.

He has been writing about the budget crisis for the last week, and is particularly critical of Governor Paterson's veto of 7,000 bills.

What it comes down to is that all factions of both parties are acting in what they believe is their own partisan interest. The result has been deadlock, with the possibility of a descent into chaos as time goes on and the money runs out.

Rather than rewrite what Barrett and his team of researchers have discovered and explained, we want to link directly to his Village Voice articles and blog.

We recommend it for your weekend reading, if you have the opportunity. You should read what Barrett has written before coming to your own judgment on the budget. Among the titles of his most recent articles are: "David Paterson Vetoes His Way to Tabloid Glory", "David Paterson, After Letting St. Vincent's Die, Rescues a Harlem Hospital From His Old District", "David Paterson Shadow-Boxes Himself; Press Awards Him TKO", and "Mike Bloomberg Draws Praise for the Same Budget Decisions That Reap Tabloid Ridicule for Shelly Silver".

This does not mean we agree with every point Barrett makes, but his observations are an important part of a discussion, as the months pass is becoming too complex for many people to follow

One conclusion most New Yorkers have drawn by now is distaste for all the combatants and their self-serving manipulation of facts and events. But the remedy for this situation is harder to discern.

HEAT WAVE SPURS US TO LOOK INTO STORY OF AIR CONDITIONING

This week will be most remembered for the heat wave that struck the northeast. The degree of discomfort experienced by New Yorkers varied with the availability of air conditioning in homes, offices, subways and buses.

For us at New York Civic, it was a new experience to leave a relatively pleasant office, go out on Park Avenue South to find a place to eat lunch, and be struck by a blast of hot, dry air, making us feel as if we were in a new milieu, more like a sauna than a steam room.

It made one reflect on what New York would be like if we had this heat every day - think of summer in Phoenix, Arizona and similar locations. How dependent we are on climate, and how limited in range our comfort level has become, were among the thoughts that crossed my mind while my co-workers and I sweltered, knowing we simply had to hold out until we reached the Curry Express on East 29th Street, just east of Lexington Avenue, in Little India.

BTW, we recommend the place highly. Delicious (to us) food at very reasonable prices.

A CENTURY OF ARTIFICIALLY COOLED AIR

Who invented air conditioning, anyway? When and where did it come into use? The inventor was Willis Haviland Carrier, who founded the eponymous company.

Carrier was born in 1876 in Angola, New York, a village on Lake Erie, which was named after the sub-Saharan African nation, then a Portuguese colony, which at that time was being visited by Quaker missionaries from Angola, NY. The lakeside village still exists; its population was 2,266 at the 2000 census. The nation's name sounds Angola-Saxon rather than African, but in fact, it is derived from the Bantu kingdom of Ndongo, whose word meaning king is "ngola". You didn't know that.

Carrier studied mechanical engineering at Cornell, graduating in 1901. He went to work at the Buffalo Forge Company, in the heating division, and reasoned that if forcing air through hot coils would warm a room, using cold water in metal coils would cool the room. The company sent him to help a client in New York.

On July 17, 1902, the first air conditioner began operating at the Sackett-Wilhelms Lithographing & Publishing Company in Brooklyn. Carrier obtained a patent for his invention in 1906. It was designed to humidify or dehumidify air. In 1914, he and six other young engineers formed the Carrier Engineering Corporation which, despite being beset by financial problems brought on by the Wall Street Crash of October 1929, survived the Great Depression and moved to Syracuse, NY. Carrier died in 1950, and the company was acquired by United Technologies (formerly General Dynamics) in 1979, and its headquarters moved to Farmington, CT.

The Carrier Dome, Syracuse's indoor arena, is the largest domed stadium of any college campus. It received a naming gift of $2.75 million from the Carrier Corporation, in addition to $15 million in state funds during Hugh L. Carey's campaign for re-election in 1978. You may observe that the name Carey is part of Carrier. The arena opened in 1980 and is still in use today. Despite its name, the Carrier Dome is not air conditioned.