State of the City Address by New York City Comptroller John C. Liu
“We Can Be Heroes”
John Jay College
December 20, 2012
[AS PREPARED FOR DELIVERY]
Good morning everyone.
Thank you, Rev. Miller, for that kind introduction.
What a beautiful rendition of the Star Spangled Banner. Thank you, Jeanette.
Let me also thank President Travis and his staff here at John Jay College for working with our office to make this event possible. We are big fans of the CUNY system, and we are well aware of the great work you do here.
I’m delighted to be joined by CUNY Senior Vice Chancellor Jay Hershenson, Bronx Borough President Ruben Diaz Jr., Manhattan Borough President Scott Stringer, Brooklyn Borough President Marty Markowitz, Queens Borough President Helen Marshall, members of the New York State Senate, New York State Assembly, and the New York City Council. Thank you all for the great work you do for our City.
In addition, I’d like to recognize my deputy comptrollers, and say a special thank you to Simcha Felder, who is leaving our office to take his newly elected seat in the New York State Senate. Congratulations, Simcha. As my grandmother in Taiwan used to say: “Mazel Tov!”
Thank you all for taking the time to be here. I appreciate it. Especially at this bittersweet time, amid the joyous holiday season we have been confronted with a horrifying tragedy. Our hearts and prayers are with the families of the children, teachers, and school workers whose lives were so senselessly and violently taken away in Newtown, Connecticut.
It is clear from what happened in Newtown that we need to expand the City’s gun buy-back program. And move quickly to push Congress to pass the semi-automatic assault-weapon ban, as well as outlaw the sale of high-capacity ammunition clips.
We’ve been through a tough time here in New York City and across our region.
From the shocking attack on school children … to the devastation wrought by Superstorm Sandy… to the lingering effects of the recent recession from which many of us have yet to recover … it has been a long, hard haul.
As difficult as things have been, we have been inspired to believe that we can all be heroes, even if it’s just for one day.
We have a tendency—I think—to make heroes out of the rich and famous: superstar celebrities, highly-paid athletes, and the winner of the latest installment of “The X Factor.”
But there are real heroes out there, who are quietly making a difference every single day. Most aren’t highly paid. And you’ll probably never see them on TV or on the cover of magazines.
But they are heroes because they make our City better. I’d like to introduce you to a few of them.
First, please meet Edith Prentiss, president of the Taxis for All campaign, who has been working tirelessly for 16 years to make our fleet of yellow cabs fully accessible to people with disabilities.
Secondly, I’d like you to meet Surpreet Kaur and Simran Jeet Singh, two leaders of the Sikh Coalition, who are spearheading a campaign to allow Sikh men to serve as New York City police officers without having to shed their beards and turbans, articles of faith required by their religion.
As many of you know, areas across the City were devastated by Superstorm Sandy. People had to live for weeks without heat, hot water, and electricity. Homes were ruined and lives were lost.
Our third hero represents an organization that came to the rescue in these communities, handing out blankets, water, and $600 debit cards so that thousands of victims of the storm could buy food, medicine, and supplies. Austin Chu, of the Buddhist Tzu Chi Foundation, helped organize this distribution and we are grateful for his group’s extraordinary efforts.
Another Sandy hero is Joanne Smith, who saw the suffering and needs of her neighbors and decided to take matters into her own hands. She launched a Facebook campaign and in a matter of hours began collecting truckloads of food and clothing for Rockaway residents hit hard by the storm. Let’s hear it for Joanne.
Our next hero is María Fernández of the Urban Youth Collaborative. For the past 9 years, Maria has been organizing young people around educational justice issues, including ending disruptive school-closure policies, and developing multiple pathways to college for all students. Please welcome Maria.
Our final hero today, Maurice Coleman, is a senior vice president at Bank of America. He and his bank played a tremendous role in helping the residents of Diego-Beekman Houses in the Bronx buy and renovate their development. These residents had the courage to stand up to a slumlord, ruthless gangsters, and predatory investors. Working with our pension funds, Diego-Beekman was able to secure a long-term mortgage that ensures that the rents for more than one thousand apartments and nine small businesses there remain affordable.
Let’s hear it for Maurice, and for all of the real heroes of New York City.
As I mentioned earlier, we’ve been through some tough times here in New York. And we’re not in the clear yet.
Political brinkmanship has been raised to a high art in Washington. The country faces a set of draconian austerity measures—the so-called fiscal cliff—that no one wants and that could be extremely damaging to the nation and our City.
It would be easy just to blame Washington for the impasse. But let’s face it. The “showdown at fiscal cliff” is occurring, in part, because there are momentous decisions to be made. Decisions that will set the budget priorities of the federal government for decades to come. Decisions that will affect the incomes, taxes, health care, and retirement security for generations.
It is crucial that we get this right. The well-being of the City depends on it. Government programs like Medicare and Medicaid are not just abstract lines in a federal budget—they enable millions of New Yorkers to live with security and dignity.
On the other side of the ledger are the tax increases under discussion. New Yorkers understand, as Oliver Wendell Holmes put it, that “taxes are the price we pay for a civilized society.”
But New Yorkers also believe in tax fairness, and demand that the costs of maintaining this civilized society are borne equitably; that those with the highest incomes should shoulder their fair share as well.
Once the federal budget deal is sealed, where will we find New York City’s economy? Well, 2012 was a year of excellent progress in some respects and disappointment in others.
We are experiencing strong job growth in sectors such as Professional and Technical services, which is helping to wean the City’s economy away from an over-reliance on Wall Street.
The City’s leisure and hospitality sector has also been a bright spot, generating more than 53,000 new jobs since the recession ended. Some of these jobs are entry level, but many, such as in the hotel industry, pay middle income wages and even provide health and retirement packages. This is proof that economic growth does not have to come at the expense of decent compensation and that unions continue to play an important role in the lives of so many workers.
But the City’s economic performance has not been all positive. The unemployment rate, at 9.3 percent, is unacceptably high. Moreover, the frustration and despair of unemployment weighs particularly heavily on the City’s communities of color.
Job creation is the top priority. And as jobs are created, City policies must ensure that everyone has the same opportunities to pursue those jobs. It isn’t just about economic recovery; it is also about shared prosperity.
On the fiscal front, the City avoided many of the devastating budgetary cuts and layoffs that have affected other states and municipalities. That’s been possible because the City accumulated reserves during a period of unprecedented revenue growth in Fiscal Years 2005 through 2007.
But as we deplete our financial cushion, a very dangerous structural imbalance has emerged in our City budget.
Combine that with declining support from Washington and Albany each year, and in a sense we face our own fiscal cliff. My office projects that the City may face a $2.7 billion gap in Fiscal ’14, increasing to $3.8 billion the year after.
Then we must consider the impact of Superstorm Sandy, which first and foremost cost the lives of 43 fellow New Yorkers and dozens of others from throughout the metropolitan region. To date, my office has approved more than $850 million in emergency expenditures. The City has sustained lost economic activity to the tune of billions, with small businesses taking the hardest hit. Recovery of the massive property and infrastructure damage will require tens of billions.
So what do we do in the face of all these economic difficulties? We face them head on—and we come up with creative and sometimes unorthodox solutions. In times like these, it’s not just managing the money—it’s managing the impossible. Because the people of this City are counting on it. To make our lives easier, better, and fairer. Every dollar does something, so every saving means something. During my tenure as Comptroller, we’ve produced more than $3 billion in cost savings.
I am particularly proud of the work we’ve been able to accomplish in the area of public finance.
We have been relentless in reducing the debt service the City pays to our creditors. Since 2010, we’ve saved more than $1 billion from the refinancing of outstanding City bonds to lower interest rates. As any homeowner knows, refinancing is the kind of savings that goes straight to the bottom line.
We have also saved large sums of taxpayer money by scrutinizing City spending on outside consultants. In the infamous CityTime scandal, we stopped millions of dollars from being wasted on that money pit. And our audits eventually led to recouping $466 million from the consultant involved.
In another out-of-control project, my office has demanded restitution of $163 million related to outrageous over-billing by consultants hired to upgrade the City’s 911 emergency call system.
The project was woefully mismanaged and is now seven years behind schedule and $1 billion over budget.
Because my auditors’ findings in this particular case were so disturbing, we turned the information over to the Manhattan District Attorney’s Office.
The City needs to get that money back. Just like we did with CityTime.
We will continue to eliminate wasteful spending by vigorously auditing City projects, especially those involving expensive outside consultants.
We must also grow the economy. Given the disappointing employment picture emerging since last year, we have placed a priority on creating jobs. One of the innovative economic stimulus ideas we’ve promoted is our Capital Acceleration Plan, which I proposed in my last State of the City address.
This plan accelerates already-approved City construction, like repairs to schools and repaving of roads. It will save taxpayers $200 million in debt service by taking advantage of historically low interest rates. And, it creates 8,000 jobs! I’d like to thank Mayor Bloomberg for embracing this idea and accelerating $1 billion of the City’s construction plan.
Recently, I proposed something called Green Apple Bonds. This is money that the City would borrow to environmentally upgrade buildings such as our schools. The debt service on these bonds would be more than made up for by the savings we gain from lowering energy bills. We would issue the first set of Green Apple Bonds to eliminate the source of dangerous PCBs in 700 schools. This would protect students and teachers from toxic waste and save taxpayers $339 million from lower electric bills. With Green Apple Bonds, we would save green by going green!
And, it would create 3,000 jobs.
And just last week, I was proud to stand with President Clinton and pledge, as part of the Clinton Global Initiative, to invest $1 billion from the Teachers Retirement System to restore infrastructure damaged by Superstorm Sandy. These investments will help rebuild housing and strengthen New York’s coastline, and earn a solid return for the pension funds. And once again, thousands of jobs would be created.
As we focus on creating jobs, we must also be mindful of the growing wealth gap. It’s a problem for the nation as a whole but even more so for our City. The wealth gap, if unchecked, threatens long-term economic growth. We need City policies to narrow the gap, level the playing field, grow the middle class, and empower those who aspire to move up.
I am fortunate to have an extraordinary staff and I wanted to share some of their recent accomplishments with you:
- Our Labor Law group negotiated a $1.2 million settlement on behalf of workers—many of them immigrants who speak little English—who had been underpaid for carpentry and masonry work on buildings owned by the City.
- Our audit bureau discovered that the Department of Finance, in connection with the Senior Citizen Rent Increase Exemption program known as SCRIE, distributed more than $10 million in error to landlords on behalf of the deceased. Our award-winning Audit team managed to put a stop to this practice.
- Our Corporate Governance group was instrumental in getting JPMorgan Chase to claw back two years of pay from the supervisors and the trader known as the London “whale,” who gambled his way to a $6 billion loss in credit derivatives.
We have many more exciting projects in our pipeline. In fact, we are now only a few weeks away from launching Checkbook 2.0, an innovative open-source application which will help make New York City the most financially transparent government in the United States. When City agencies know that every penny spent is being watched, they will be extra careful with taxpayer money.
I started out this morning introducing you to a group of heroes. Heroes like the firefighters and police who responded to Superstorm Sandy. Heroes like New York’s strongest whose Herculean efforts cleaned up neighborhoods in the aftermath of Sandy. Heroes like the teachers, principal, and school employees who gave their lives to protect children who otherwise would have been victims in Newtown.
I believe that government can be a hero as well, especially when it comes to helping the most vulnerable.
There are hundreds of thousands of people in New York City who work, but still live in poverty.
They do jobs that are essential, like serving food, or taking care of the elderly, or nurturing our children. Yet their pay is too little to support themselves, let alone a family, and they have nothing to fall back on when they get sick or grow too old to work.
We need to help the working poor climb out of poverty. Doing so will only help to rebuild our middle class.
We need policies like paid sick leave, expansion of temporary disability insurance, and the creation of paid family leave insurance.
I applaud the majority of City Council members who are sponsoring paid sick leave legislation.
People who are sick should not go to work. Workers without paid sick days are 50% more likely to report to work with contagious illnesses. People who work when they are sick reduce productivity for themselves and others. This is bad for business and it affects us all.
In addition, we must reform the Temporary Disability Insurance program. We can leverage it to create a new Paid Family Leave Insurance program like those that are now available in New Jersey and California.
To make these programs more effective, their maximum cash benefit, currently an unrealistically low amount of $170 a week, has to be increased. Let’s get real—no one can support a family on $170 a week, an amount that hasn’t changed since 1989. In addition, both employers and employees should split the cost of the annual premium.
The working poor also need a pay raise. The current minimum wage in New York City is the federal rate of $7.25 an hour, or a full-time salary of about $15,000 a year. This pay is not primarily for teenagers working part-time, but breadwinners supporting kids. Who can possibly support a family in the country’s most expensive city on that amount? In fact, Mayor Bloomberg’s New York City Center for Economic Opportunity sets the City’s poverty threshold for a single parent with one child at $21,000, and with two children at $25,000.
If we are serious about narrowing the wealth gap we need to have the courage to pay all people a livable minimum wage. Because of New York’s high cost of living, the effective minimum wage here is less than $4, the lowest in the country.
Today, I propose that New York City adopt a minimum wage of $11.50 an hour, phased in over five years and then pegged to the Consumer Price Index. This will help single parent families with either one or two children finally climb out of poverty.
We realize that many nonprofits which provide important social services under City contracts will be impacted by this change. These contracts would be reviewed and adjusted as appropriate.
I support our leaders in Albany who are working to raise our State’s minimum wage to $8.50 an hour. But we need to recognize that the cost of living varies drastically within our state. $8.50 buys a lot more in Buffalo and Rochester than it does in Brooklyn or Queens.
New York should be a City where working men and women can afford to make ends meet and support their families.
Opponents will argue that paying a decent minimum wage will cause unemployment to rise and businesses to leave the City. But sound economic research says otherwise. We must continue to speak up for the working poor.
We must also continue the struggle for pay equity so that working women, who compose at least half of the New York City workforce, earn salaries equal to their male counterparts. The struggle for gender equality continues nearly a century after women won the right to vote. It is time for us to win this fight once and for all and ensure that working women achieve pay equity.
People who’ve worked hard all of their lives should not come to the end of their careers and have no way to support themselves. That’s why I’m repeating my call for New York City Personal Retirement Accounts.
Since I proposed this in my last State of the City address, the idea has continued to gain momentum in places like Connecticut and California. We can leverage the system for managing the assets of our own City pension funds to make this work.
I will continue to demand a more progressive Personal Income Tax for New Yorkers so that we can give our City’s middle class the tax relief they deserve. It makes little sense that a family with an income of $50,000 pays nearly the same tax rate as a family that makes $50 million.
To grow the economy, it’s not just about helping workers. We must also help businesses. I reject the notion that government needs to choose between being pro-employee and pro-employer. We can and will do both. Being pro-employee and pro-employer is the only way to create real economic growth.
Today I am unveiling a series of proposals that will cut taxes and fines by $500 million for our City’s small businesses. They are vital engines of job growth in our City. It’s time we level the playing field for firms of all sizes and stop showing favoritism to large corporations that get tax breaks from the City but fail to provide the jobs they promise.
Number one: Let’s eliminate the City’s General Corporation Tax for all businesses that have an annual City tax bill of less than $5,000. This would cut taxes and hassles for 240,000 businesses or 85 percent of those that currently pay the GCT. The total cost to the City would be about $200 million in lost revenue.
Number two: Let’s exempt businesses that make less than $250,000 in annual income from the City’s Unincorporated Business Tax. This would be a huge help to neighborhood outfits like dry cleaners, fruit and vegetable grocers, and pizza joints.
It would reduce our revenue by about $100 million but it would cut taxes for three-quarters of those now subject to the UBT, or about 25,000 businesses.
Number three: Let’s reduce fines—which have more than doubled under the current administration—by $200 million. While fines are sometimes a necessary evil to protect public safety and health, they should not be used just to generate revenue for the City. I applaud the work of Public Advocate Bill de Blasio on this issue.
How can we afford to do this? How are we going to make up for the lost revenue?
We can start by eliminating the tax breaks and corporate welfare handed out to big companies. The City’s Economic Development Corporation doled out more than $250 million last year to a handful of lucky and well-connected businesses, even though the agency has a failing record of creating jobs.
We also need to scrutinize the tax breaks for special interests that cost the City millions of dollars in lost revenue. For example, why haven’t insurance companies been paying the General Corporation Tax since 1974? This exemption costs us $300 million annually.
Similarly, why aren’t private equity firms paying the Unincorporated Business Tax for carried interest or gains from assets held for investment? This costs the City some $200 million in lost revenues every year. I say: Enough. Let’s get that money.
Finally, why has Madison Square Garden been awarded a $15 million a year real-property tax exemption? Now, I love the Knicks as much as anyone in this town—even though they let Jeremy Lin go to Houston—but it’s time for the Garden to kick in its fair share, just like everyone else.
We thank the City’s Independent Budget Office for continuing to shine a bright light on these little-known but very-costly tax-breaks.
We’ve discussed how we can make our workplaces and our tax code more equitable. Now we need to talk about how to get our young people into the workplace and how to develop our future workforce and taxpayers.
This requires a “cradle-to-career” approach in order to avoid a “school-to-prison” pipeline. There has been a lot of talk in this City about improving high school graduation rates. And that’s a good thing.
But as we all know, in today’s complex economy, it takes a college degree to make a decent living.
Yet four out of five New York City public high school students do not graduate from college. Let me repeat: four out of five of our high school students do not graduate from college.
In order to maintain New York City’s economic viability, we must work to increase the proportion of New Yorkers with either an associates or a bachelor’s degree from where it is now, at 42 percent, to 60 percent by the year 2025.
New York City should be the education capital of the country. Right now, we lag behind Seattle, San Francisco, and Boston. It’s time we reverse New York’s education gap and put our public schools back on track.
Earlier this year, along with Speaker Quinn, and many of our City’s teachers, I visited the school system in Cincinnati.
I was very impressed by what I saw there.
Cincinnati, a city that is home to some of the poorest neighborhoods in the country, takes a holistic approach to education, an approach we can learn a lot from.
We know, from our own research, that we have to start early; even before formal education begins. In fact, in certain situations, even before children are born.
The Nurse Family Partnership provides critical in-home prenatal care for Medicaid- eligible first-time mothers, and continues parental support for up to 2 years after a child is born.
For less than $75 million annually we can expand this program in NYC from the 2,400 families it now serves to 14,500 families.
And what does the Nurse Family Partnership do? It results in higher scores on children’s reading and math achievement tests. It produces a 67 percent reduction in behavioral and intellectual problems per child at age 6. It improves a child’s cognitive ability and language development and reduces language delays.
In short, it makes kids from struggling families better able to handle school.
The initial Nurse Family Partnership program in Elmira, N.Y., is now on track to save as much as $4 in taxpayer money for every dollar the program costs.
Now that’s what I call a real return on investment.
Once children are in school, we need to continue to partner with their families. When our Secretary of State was first lady she said: “It takes a village to raise a child.” And she was right.
By the way, I think the world of Secretary Clinton and eagerly await her announcement to jump into the New York City mayoral race…
But seriously, families need to know that there is support for them in the community. That there are people who care. That’s why I’d like to see every New York City public school become a community center before and after school. In addition to after-school programs, it could include a health clinic, and offer resources to parents and adults in the evenings, like tax advisory services and financial literacy courses.
We know that middle school is a particularly vulnerable time for kids. So we need to do more to support our middle school students. In fact, my son Joey is in middle school.
We are privileged today by the presence of a group of very impressive fifth and sixth graders from PS 45 in South Ozone Park, Queens. These kids are on the student council and are here with their principal, Samantha Severin. Please stand up and say hello to everyone. Thank you for coming.
Middle school students often need extra help. That is why I believe we need to expand the Computers for Youth program to every public middle school in New York City where at least 75 percent of the students receive free lunch.
Computers for Youth provides refurbished computers, pre-loaded with educational software, to 6th graders. The program teaches these students and their families how to use the computers. And we can expand this program for only $32 million annually. In today’s day and age, no child, regardless of their family’s income, should live without a computer and internet access in their home.
We also know that guidance counselors are particularly important for college success. Best practices advise that guidance counselors have caseloads no larger than 100.
But in the New York City public schools the average is 259 students to one counselor, and many of our counselors are struggling to care for more than 400 students on their own.
I proposed in October that we change the current unmanageable ratio from 259 students to 100 students per counselor. This will cost $176 million, or about $2,000 per high school student. We already spend $227,000 on every New York City public school child’s education, kindergarten through twelfth grade. Why not give that child the best chance to succeed, for just another $2,000 per kid?
And there are other things we can do. We know from the great results at some of the newest specialized high schools: American Studies at Lehman College as well as Math, Science, and Engineering at City College, that putting a high school on a college campus can create wonderful synergies.
Why can’t we do this for every New York City public high school? We don’t have to move the schools. We can create “sister college” relationships for every high school with the many terrific colleges and universities we have right here in New York City.
We happen to have with us today a class of 12th grade government students from one of New York City’s historic high schools, Abraham Lincoln in Coney Island. They are here with their teacher, Ellen Levitt. Can you all stand up?
We are also honored to have Mr. George Israel here with us today. He graduated from Abraham Lincoln 64 years ago. George, can you stand up?
There is a lot we can do to make sure our kids graduate from college. In addition to the Macaulay Honors Program that already exists at CUNY, we can and should offer free CUNY tuition to the top 10 percent of New York City public high school graduates. Top graduates from every New York City high school should be eligible for this program.
The offer of free tuition would help motivate students and elevate CUNY, one of our City’s most valuable gems, to the level of a competitive prize. It would also be a life-saver for many working families who are struggling to send their kids to college. We must do more to make college affordable.
Ladies and gentlemen, brothers and sisters. I’m not going to kid you or mince words. Tough times still lie ahead. But we are tougher than the times we live in and stronger than the storms that test us. We are going to have to work hard to rebuild our City.
But it’s not just the physical infrastructure and our economy that need rebuilding. We must also rebuild our communities and neighborhoods by reexamining the laws and policies that govern our City.
Let 2013 be a year of hope for New York City.
Let’s work to make New York City a safer place by taking semi-automatic assault weapons off our streets and by abolishing Stop & Frisk.
Let’s help Edith and the Taxis for All Campaign win its fight to make all New York City taxis handicapped accessible.
Let’s bring diversity to New York City’s Specialized High Schools, so that every child has access to an elite education and the privileges that go with it.
Let’s help President Obama, who has worked so hard for all of us, pass the DREAM Act so that immigrants can pursue a higher education.
As many of you know, I came to this country as a five-year-old from Taiwan who didn’t speak a word of English. And if it wasn’t for the great public school teachers I had at PS 203 in Flushing and at Hunter High School and at Bronx Science, I would never be where I am today.
In addition to benefiting from a first-rate New York City public school education, I had a tight-knit family and community behind me, supporting me every step of the way.
We need to reweave the fabric of our communities and neighborhoods so that we catch every kid before they fall.
That’s the way we will minimize gun violence on our streets.
That’s the way we will get every kid to earn a college degree.
That’s the way we can help every New Yorker achieve their full potential.
And that’s the way we ensure that the full promise of New York City is realized.
Collectively, we can be so much more.
Join me and let’s make our City the best it can be.
Because we can all be heroes, even if it is just for one day.
Thank you for coming, everybody.
Happy Holidays. Happy New Year. Thank you.