Strange Signs of – Gasp! – Cooperation in NY

New York State appears to be doing what President Obama and Congress have repeatedly failed to do: agree to enact tax reform legislation as well as create jobs through increased investment for infrastructure projects.

While the President and Congress continue to battle over tax and budget reform and have yet to reach an agreement on a multi-year federal highway-funding bill that expired in September 2009, lawmakers in Albany, N.Y. -- frustrated by the lack of action in Washington -- are on the cusp of innovative solutions.

New York Governor Andrew Cuomo and state legislative leaders convened a special session yesterday and were beginning the legislative process to pass proposed tax reform and infrastructure-funding bills that are expected to close a significant portion of a projected a $3.5 billion budget deficit in 2012.

In a video address, Cuomo stated, "I am approaching this problem in a much different way than in the past. I am not just treating the symptom, but attacking the illness. I am not just trying to balance a budget, but I am trying to grow our economy. I am not just plugging a budget hole, but I am trying to create jobs."

While details are still being ironed out, here are some of the highlights of the agreement hammered out by Cuomo, Republican Senate Majority Leader Dean Skelos, and Assembly Speaker Sheldon Silver, a Democrat.

Tax reform
Because the state's "millionaire's tax" is set to expire at the end of the year, the Cuomo plan would restructure the state's tax code and provide 4.4 million New Yorkers with a tax cut, including a $690 million reduction for middle class taxpayers. Despite those tax cuts, the new tax structure would generate approximately $1.9 billion in additional revenue for New York, state officials estimate.

The new tax bracket structure would be reorganized as follows:

Infrastructure investment
Cuomo recently partnered with the federal government to expedite approvals for the construction of the much-delayed new Tappan Zee Bridge in Westchester and Rockland counties. If all goes according to schedule, bids to build the new $5.2 billion span could go out in August of next year, with construction to follow shortly thereafter. Up until recently, the project, which has been under review for more than a decade, was at least three years away from breaking ground.

Now, the governor and state legislative leaders have proposed a new plan to help the struggling construction trades and create thousands of new jobs by establishing a "New York Works Infrastructure Fund." State officials say that the fund, partially financed by $700 million in capital investments, will move up some state projects that were scheduled to begin in 2013 to start construction in 2012.

The fund will leverage $10 billion in direct capital investment to create thousands of direct jobs by rebuilding roads and bridges; parks, dams, and flood control projects; upgrading water systems and educational facilities; and investing in energy efficient improvements to commercial and residential buildings.

An additional $300 million from the Port Authority of New York and New Jersey would be directed towards funding for infrastructure projects in New York City. In addition, the new public/private infrastructure fund would raise up to $1 billion from pension funds and private investment. The governor has also proposed an additional $50 million in grant funding for businesses and property owners hit by Hurricane Irene and Tropical Storm Lee.

Other popular proposals that were part of the plan include an agreement to seek a constitutional amendment to allow more widespread gaming facilities in the state, and the reduction of the highly controversial MTA Payroll Tax to small businesses.

Bipartisanship and cooperation: what a novel concept. Unfortunately, I think the prevailing political headwinds will prevent this type of progressive thinking to enter the nation's capital until well after the November 2012 election.