Jaybird Flies

Jay Walder Is Not Casey Jones,

Jumps From NYC to Hong Kong

Because MTA Nears Fiscal Crash

Jay Walder is no Casey Jones.

Unlike the iconic railroad engineer, who kept his hand on the throttle while his train plunged down curving tracks to disaster, and by doing so saved the lives of many people, the MTA chief Jay Walder did not even complete two years at the helm of the transit authority before he jumped ship for a more secure and lucrative berth in a private, profitable transit system.

Walder was not shanghaied in the dead of night; he is going voluntarily to MTR (Mass Transit Railway), a railroad colossus headquartered in Hong Kong. Any idea where they might bank?

Actually, Walder had a number of good reasons for his secretive flight from New York and the MTA. The first is the impoverishment of the system he is leaving. The MTA has consistently been undersupported, not given enough money to operate, let alone to build and maintain the system in good repair. Before he came, they overspent wildly, in part because of bureaucracy, over-engineering, and weakness before unions, as well as traditional corruption, particularly in construction and real property. Walder did not want his reputation endangered by too many years presiding over a system subject to those perils.

Second is the apparent indifference of Governor Cuomo to the plight of the MTA, and the absence of any effort to develop a relationship with Walder. It was not nearly as bad as Governor Paterson, who refused to speak with Lee Sander, Walder's predecessor, or even to return his calls, because Sander had been appointed by his predecessor, Governor Spitzer. Sander did not have the luxury of another job offer as Walder did, so he hung around until he was dismissed by Paterson on May 7, 1999 on practically one day's notice, even though it took more than two months after that to find a successor (Walder).

Sander was not the only Paterson commissioner to be fired practically instantly. On October 21, 2010, just twelve days before the election of Governor Cuomo, the Environmental Protection Commissioner, Pete Grannis, who had served since the start of the Spitzer administration and before that, spent 32 years in the Assembly, was told to clear out immediately by Larry Schwartz, at the time a key aide to Governor Paterson. The trumped-up charge against Grannis was that he had sought to avoid budget cuts for his agency, which every commissioner worth anything does every year. Grannis was told that Paterson would not speak to him about the matter and that his dismissal was final. He got the news as he was preparing to deliver a speech and receive an award from an environmental group at what became his last supper in office.

The question arose as to why Grannis was fired just then. Why not leave it to the incoming governor (Cuomo) to choose his cabinet? Why should Grannis' 36 years of state service end in peremptory dismissal? One plausible explanation is based on where Larry Schwartz is now. Governor Cuomo has appointed him Secretary to the Governor, which is the equivalent to chief of staff on the national level and the same post Schwartz held in the Paterson administration.

It is likely that, in firing Grannis on the spot, Schwartz was serving his new master, Cuomo, and sparing the governor-elect the embarrassment of firing an environmental icon. Cuomo has the right to choose his own commissioners, and Joe Martens is a good choice for the position, with a fine environmental record. Nonetheless, we recount the story now to tell you how it was done, which is in accord with the important Rule 26, "No prints."

Walder chose to accept what could be the best transit job in the world, at a multiple of the salary which was begrudged to him in New York. He thus avoided the fate of his predecessor Sander and his colleague Grannis.

Last night, I watched The Call on New York 1. People called and emailed the station to express their views on Walder. Almost all were very negative, with the exception of Richard Ravitch, the former lieutenant governor, as well as MTA chair. Ravitch was highly complimentary, as was Mayor Bloomberg. The hostile attitude of the public came because of the service and personnel reductions that Walder was obliged to make because of the lack of public funds and steadily rising expenses, most but not all of which were uncontrollable. How many years should one devote to serving people who think you are doing a lousy job, when in fact you are doing a very competent job at an obviously thankless task?

One could tell that many of the disgruntled callers were transit employees or union activists. Even so, there were precious few callers who admired the service they received from the MTA or its departing chairman. If there were an attempt to jam the switchboard, it succeeded. If there were not, the negative sentiment was more authentic. Of course, no one likes waiting for a train on a hot platform, being squeezed or crushed inside a car, or being delayed for an indefinite period, whether by "the dispatcher" or by "train traffic ahead".

The underlying fact is that the transit system is in a financial bind comparable to that which faces the United States, except that it cannot run up fourteen trillion dollars in deficits and then ask for more. Sooner or later, probably sooner, fares will rise and interest on the MTA's indebtedness will increase. The State and City, traditional sources of additional funding, are, as we know, undergoing severe fiscal problems and highly unlikely to substantially increase transit subsidies, if indeed they are willing to retain them. One cannot mention state aid without recalling with sorrow the disgraceful decision of the New York State Assembly to eliminate the commuter tax on May 17, 1999, a date which will live in infamy in mass transit history. How long should Walder remain at the helm of a ship which takes on more water each year?

We believe that Jay Walder is, by and large, a decent, honorable, hard-working and competent bureaucrat, who will be missed after he is gone. He is not an inspirational figure, nor did he attempt to be one. Nicole Gelinas, giving Walder a mixed review, asks today in The Post: "Can the next MTA chief be a fighter?" One answer to that question is that the MTA chief is an appointed, rather than an elected official. Major funding decisions are made by the elected, and it is the job of the appointed to do the best they can with the resources that they have been given.

Of course, they can and should demand more; that is what Commissioner Pete Grannis (who was from 1974 to 2005 an elected official, given to expressing his own opinions) did in October 2010, for which he was summarily politically beheaded in what appears to be a pre-election housecleaning. Fortunately, Grannis has found a new job in what appears to be a more congenial setting, so his public service can continue and his pension clock keep running.

"Speak truth to power" is a noble slogan, but truth is better spoken by those with no power than by those with some. People with intermediate degrees of power are likely to lose what little they have if they engage in unappreciated candor. Those outside the Beltway (or its local equivalent) are less subject to the whims of the authorities.

We wish Walder the best in his new adventure, which we hope will be excellent, for the sake of the millions of Chinese and others who will benefit from his services. The search for a successor should begin at once. It will be a real challenge to the Governor and the MTA to find someone as knowledgeable and professionally skilled as Walder. But once such a person is hired, s/he must be given the appropriation that is needed for the MTA to do the job right.

P.S. It is ironic that people now go from New York to Hong Kong in order to triple their wages.

Can't Anybody Here Play This Game?

Budget Deadlock -Day 98



Buffalonian Senator

Stachowski Objects

To Paying Sales Tax

On Cheap Clothing



The state budget - or the lack of it - is as unpleasant a subject as the heat wave, and we had hoped that by now both issues would have been resolved.

Unfortunately, the parties in Albany are still far apart. Today we are 98 days behind the legal deadline, which means the new state fiscal year, 2011, is now more than one-quarter over. During the Pataki era (1995-2006) a couple of budgets were not approved until August, but we were promised that when the governorship and both houses of the legislature come under one party (the Democrats) that issues would be settled promptly and amicably.

Though there are many disputes simmering in Albany, the current deadlock is about adopting the budget. Whatever else the executive and legislative branches are supposed to accomplish this year remains in limbo, partly because there is a lame-duck governor, partly because the Democrats have a bare majority of 32 senators, which means every one of them must vote for a bill to pass it, for if any member objects, the bill is lost. A senator may raise objections because of unrelated grievances against the leadership or concerns over other legislation.

In the current standoff, both houses have passed bills specifying appropriations. As might be expected, they differ. However, only the Assembly has passed a revenue bill, which is needed to pay for the expenditures, or at least some of them. The Senate cannot muster 32 votes to pass a tax bill because Senator William Stachowski of Buffalo will not approve any measure which does not provide increased status and authority for the State University at Buffalo. To insist on this expansion of SUNY-Buffalo, Stachowski is withholding support for an agreed upon re-instatement of the state's portion of sales tax on clothing under $110, which the Assembly and Senate are depending upon to balance the budget. The Democrats oppose the expansion of power for SUNY-Buffalo (and Stony Brook) because potentially all 64 state colleges could seek independence and operate autonomously, raising tuition at will and leaving some institutions far stronger than others. We have no idea at this time how or when this issue will be resolved.

Senator Stachowski is also reported to be displeased because, as a leading Democrat on the Finance Committee, he expected to chair the committee when the Democrats regained control of the Senate (after 43 years in the wilderness). However, that plum went to Senator Carl Kruger, who with the 'three amigos', Espada, Monserrate and Diaz, Sr., effectively controlled the organization of the DINO (Democratic in name only) senate.

In fact, it was former Majority Leader Malcolm Smith's refusal of Espada's demand for millions of state dollars to subsidize the Soundview Health Center that he and his three sons operate, that triggered the Espada-Monserrate revolt that led to Smith's unseating as majority leader and Sampson's installation as conference chair, with benefits.

Public confidence in the State Senate was not enhanced by the resulting June 8 coup, in which Senator Pedro Espada and former Senator Hiram Monserrate voted with the 30 Republicans to displace the Democratic leaders and form a new Republican majority. After a month of anarchy, Espada returned to the fold, and was rewarded with the majority leadership, formerly held by Malcolm Smith, who was kicked upstairs to president pro tempore of the senate, making him third in line to become governor, if the worst should happen.

As a by-product of this successful piracy, Richard Ravitch was appointed Lieutenant Governor by Governor Paterson and Judge Jonathan Lippman persuaded three judges on the Court of Appeals to join him in finding the appointment constitutional, although it was historically unprecedented in the 233-year history of the State of New York. Paterson now says he regrets the appointment because he feels Ravitch is too close to Speaker Silver and to establishment figures in New York City.

Much of what remains of authority in Albany is concentrated in the Assembly Speaker, who is clearly master of his own house. However, prospective governor Andrew Cuomo is already making his own judgments on issues in which the speaker may have an interest, professional or personal. The de facto Democratic senate leader, John Sampson of Brooklyn, does not have enough votes to override a governor's veto. (Silver does, but both houses must concur in order to override.)

The result so far is deadlock, which can theoretically continue until the State runs out of money. Since its finances have been so manipulated, no one can predict with certainty when that will be. But as with Bernie Madoff, the day is certain to come.



UPDATE ON THE AQUEDUCT GAMING SCANDAL:

MALAYSIAN IS LAST MAN STANDING (AS OF TODAY)

Senator Sampson was criticized last month for leaking the details of a bid, including two internal Senate documents, on the Aqueduct racino to a lobbyist (former Senator Carl Andrews) for the Aqueduct Entertainment Group (AEG), the firm that won the contract, which has since been cancelled after the State Lottery Division deemed the Aqueduct Entertainment Group to be "unlicensable". Sampson denied any wrongdoing in connection with furnishing the documents to AEG, one of whose investors was former Congressman Floyd Flake, who has since withdrawn from participation in the group.

Yesterday's Post reported, in a story by Brendan Scott, headlined "2 OF 3 AQUEDUCT BIDDERS SCRATCHED" that "Now there's only one horse in the race for the multibillion-dollar casino contract at Aqueduct Racetrack.

"The state Lottery Division yesterday abruptly tossed two of the three bids it received last week to build and run a video slots parlor at the faded Queens track, leaving only Malaysian gaming giant Genting in the running.

"The cash-strapped state is counting on the winner to pay a $300 million licensing fee.

"Lottery officials decided that the two disqualified bidders - Penn National Gaming and the powerful SL Green-Hard Rock partnership - 'did not conform with the requirements of the competition.'"

The Acqueduct situation has been a public embarrassment since Governor Paterson first attempted to award the sole-source contract to the politically wired Aqueduct Entertainment Group on January 29th. This took place close to the time that he was soliciting the support of Reverend (and former Congressman) Floyd Flake's support in his projected gubernatorial race against Attorney General Andrew Cuomo. Flake was a minor participant in AEG.

Six months later, no final decision has been made. There has been no independent review of whether the racino is a good idea, or simply a desperate attempt to pump $300 million into a chasmic state budget hole that now exceeds $9 billion.

Why would any rational person seek to govern this state at this time, unless it were the family business?



STARQUEST IN THE NEWS

"The architecture of Central Park, like the United States Constitution, must evolve with the times." StarQuest weighs in on the future of Tavern on the Green in yesterday's New York Times. Read all about it here.

StarQuest reminisces about Parks Department alum, Bradley Tusk (a.k.a. Ivory), in this week's Observer profile of Tusk entitled "Mayor Bloomberg's Secret Weapon". Click here to read the entire article.

Paterson Channels Polonius

Albany Skirmish

Over Borrowing

Day 78 without a state budget.

78 is the speed of some old records, in rpm, the atomic number of platinum, and the number of chromosomes in a dog's DNA (39 pairs). We have 23 pairs.

We have not written since last week about the state budget and the contortions now under way as the legislature and governor try to reach agreement. It is not clear how hard they are trying, but we believe they are making a serious effort to come to terms. Governor Paterson's threat to shut down state government alarms incumbents who do not want to be blamed for any of their constituent-contributors not receiving their paychecks.

In the last months, the courts have shot down the governor's planned furloughs and layoffs as part of the judiciary's ever-expanding sense of its own responsibilities (see Citizens United v. Federal Election Commission). It was a Federal judge who ruled, in Donohue v. Paterson, that the governor could not impose a four-day work week, pursuant to the next to last prohibition of Article I, Section 10 of the Constitution. For those of you who may not recall the section, we reprint its relevant first paragraph:

"No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any title of Nobility."

In the past, Speaker Sheldon Silver has won many political battles by delaying a decision until the last minute, and then making a proposal which could not be refused. He is the most proficient politician in the Albany swamp, and his skills should not be underestimated. Some of his strength comes from the fact that he is responsive to his base (the Democratic Assembly caucus) and tries to protect his members, although a few of them are felons.

Silver is responsible for two major appointments made by the governor: Lieutenant Governor Richard Ravitch and Chief Judge Jonathan Lippman of the Court of Appeals. Both men are competent. Judge Lippman persuaded a bare majority of the Court of Appeals to sustain the appointment of LG Ravitch, a decision that may well have been in the public interest, although it would probably not have been the correct answer in a law school examination.

The decision certainly blindsided Attorney General Cuomo, who took the opposite position, but he has recovered nicely. He awaits the opportunity to choose Judges of the Court of Appeals himself, and will use his wits to avoid being boxed in by nominating committees which substantially limit his power of appointment by minimizing the number of papabili from whom he must choose.

The story today was that Governor Paterson said he would rule out borrowing, which is in direct contrast with the Ravitch plan, which calls for two years of borrowing, limited by the imposition of strict fiscal controls by a financial control board. If Paterson sticks to his guns, more layoffs will be required.

We expect some sort of flim-flammery to be proposed, which means borrowing billions from somewhere without calling it that. Raiding the pension funds is one possible scheme, vaguely justifiable because it is the swelling pension funds which got us into this trouble in the first place. Any more state borrowing, however, will further increase the interest on the public debt, which must be paid before one begins to provide for vital services like police, fire and education.

Paterson's problem is somewhat mitigated by the fact that President Obama, Governor Schwarzenegger and many other public officials have the same difficulties. The national debt today is about thirteen trillion dollars, or $13,000,000,000,000. We left off the number of cents so as not to appear to exaggerate the number of zeroes (12).

The problem at all levels of government, in many countries around the world, is that public expenditures exceed revenues. This can lead to devaluation of the currency, which makes debt less burdensome, and at the same time destroys people's savings. New currency was issued in the Democratic People's Republic of Korea (Pyongyang), and resulting public dissatisfaction led to the execution (by the regime) of two officials held responsible for the decision, and the demotion of others.

Living in a more gracious and gentle system, our economic blunderers go off to academia and think-tanks of like-minded souls. They are replaced by others whose views are just different enough to convey a sense of change. The first TARP program was enacted under President George W. Bush and Treasury Secretary Hank Paulson, former chairman of Goldman Sachs.

When Mr. Bush was asked why he had approved such a substantial bailout in view of his generally conservative economic views (but not practices, he was a mega-spender), he replied in effect that he did not want to go down in history as being President of the United States when the economy collapsed completely. The shade of Hoover was in his mind, and that was an image he urgently desired to avoid, and for the most part successfully did, although the subprime crisis and market collapse took place in 2008, and led to the defeat of the McCain-Pain ticket.

Every cloud has a silver lining.