Tuesday, January 27, 2009

New York City Fears Return to 1970s-like Decay

NEW YORK (Reuters) - While many U.S. cities worry that their economies are deteriorating to the level of the 1930s Great Depression, New York City fears reliving a more recent decade that features strongly in city lore.

The 1970s were a low point in city history as a fiscal crisis almost pushed it into bankruptcy, crime rates soared, and homeless people crowded sidewalks as public services crumbled.

Almost 1 million people fled New York's Mean Streets during the decade for the safer, more stable suburbs, a population decline that took more than 20 years to reverse.

When discussing the current crisis, Mayor Michael Bloomberg, now seeking a third term, promises that he will not allow the city to return to the darkness of those days, although he stresses that it faces "giant financial problems."

"I know some are concerned that city services will erode," he recently told reporters. "Let me remind you that the city went down that road in the 1970s ... I can just tell you that we are not going to make that mistake again."

But behind the rhetoric, there are signs of a city under growing stress, including a rise in homelessness that's driving more families to shelters and last year's 57 percent spike in bank robberies.

There were 444 bank robberies in 2008 compared with 283 in 2007
, according to the city Police Department.

A Bank of America branch in Manhattan near Rockefeller Center said it has posted a sign asking its customers to remove sunglasses, hoods and hats before entering, one of the anti-crime measures the police department recommended.

As city revenues slide with the demise of Wall Street firms, the mayor, an independent, has slashed spending by all agencies and there's more to come.

The budget plan drawn up by New York State Governor David Paterson will cost the city $1.6 billion in cuts and force it to lay off thousands of police officers, firefighters and teachers, Bloomberg warned last week.

The mayor has already said he will cut $3.6 billion, or 6 percent, from next year's $60 billion budget.

Wall Street's financial industry is one of the city's biggest taxpayers but it has lost more than $36 billion in the last two years and may eventually shrink its work force by 25%, the mayor said.

That will deprive the city of billions of dollars in lost tax revenues, including the mini-bonanzas it gets when securities firms pay bonuses every year.

Factoring in layoffs at the many service companies from law firms to shops that rely on Wall Street, the city could lose as many as 243,000 jobs from 2008 to 2010, economists say.

Meanwhile, raising funds has become harder for many states and cities around the nation as the tax-exempt bond market has been caught up in the broader financial market crisis.

Despite its high-credit status as semi-sovereign debt, the $2.7 trillion muni market has lost some of its biggest buyers -- banks, hedge funds and insurers. Many of them have lost money and need cash to shore up their balance sheets.

The collapse of Lehman Brothers and Bear Stearns has returned the muni market to retail investors, its traditional client, but demand has been inconsistent.

Many individuals lost confidence in municipal bond insurers after their top ratings were slashed and were stung by last year's collapse of the auction-rate securities market.

New York City is one of the nation's premier issuers of municipal bonds and although capital markets have not temporarily locked it out as they have California, the city has slashed its average bond sales by a third. So instead of selling $1 billion at once, it now sells just $300 million.

Still, the city can take heart from its experience of previous downturns, according to Harrison Goldin, the Democrat who began his first of four terms as city comptroller in 1974.

New York "has proven time and time again its enormous resiliency," said Goldin, who left office in 1989 and opened a turnaround consulting firm.

"The city, obviously, is looking at a deteriorating economy and eroding revenues, but it has a full handle and grasp on the extent of the problems. As painful and difficult as they may be, it is in a position to act pre-emptively and to avoid ending up in the sewer."

There are more safeguards than before, perhaps most notably in helping the poor get health care. Dr. Unsup Kim of Elmhurst Hospital Center in Queens cited the development of trauma centers and programs for outpatients with chronic diseases as two key developments since he began running the public hospital's surgical department over 30 years ago.

Though narcotics-related violence has fallen and gunshot victims are more likely to survive, thanks to faster ambulatory times and medical advances, gangs can still be troublesome, Kim said. He cited the recent stabbing of an 18-year old in a fight that the patient said involved 20 people.

When the economy bloomed, Bloomberg was the nation's first politician to save money for public retirees' health care.

Monitors praise him for this and for improving high school graduation rates, cutting crime and refusing to sell assets to close budget holes. Investors eventually balked in the 1970s when the city was issuing debt to pay operating expenses.

But Bloomberg is faulted for granting city workers overly generous pay hikes and approving too many real estate developments that have fallen apart in the credit crunch.

Though Wall Street's misdeeds pushed the global economy to the brink, the mayor says the city needs its talent. So he aims to help these workers become entrepreneurs or learn green jobs. That will increase employment faster than pouring money into infrastructure, which is unlikely to offer openings to office workers and clerks, he said.

Reporting by Joan Gralla.
Editing by Jan Paschal.
Editorial Voice by Empire Lost New York

Monday, January 26, 2009

Ever wonder why New York State has the highest taxes in the U.S.?

January 27, 2009
Ex-Surgeon General Accused of Abusing Staff
ALBANY — Gov. George E. Pataki’s appointment of Antonia C. Novello, a former surgeon general, as state health commissioner in 1999 was seen as something of a coup for New York.

An appointee of President George H. W. Bush who was the first woman and first Hispanic to serve as surgeon general, Dr. Novello was praised even by the Clinton administration for her “vigor and talent” and promised to bring new attention to pediatric health.

But the New York State inspector general’s office says that she turned her staff at the Health Department into her personal chauffeurs, porters and shopping assistants during her seven-year tenure, and has referred a criminal case, including potential felony charges, to the Albany County district attorney.

A report from the office of Inspector General Joseph Fisch to be released Tuesday depicts Dr. Novello as preoccupied with shopping and routinely abusive of her authority over employees, ordering them to buy her groceries, pick up her dry cleaning and even water her houseplants.

On one occasion, Dr. Novello purchased a heavy statue of Buddha during a shopping excursion in Troy, N.Y., then required a Health Department security guard to move it into her apartment, and then a few days later move it to another spot in her home because she didn’t like how it looked, according to the report, a copy of which was obtained by The New York Times. The guard told investigators that he often had to ask his teenage son to help him move her furniture around.

Dr. Novello also ordered a Medicaid fraud investigator in her department to drive her on trips to Macy’s and Saks Fifth Avenue in Manhattan. On numerous occasions she had state workers drive her or her mother from the Albany area to Newark Liberty International Airport, roughly 300 miles round trip, to fly to Puerto Rico for personal business. When traveling between state offices in New York City and Albany, she liked to stop at the Woodbury Common Premium Outlets in Central Valley, N.Y., and she is also accused of using state workers to take her on excursions to three malls in the Albany area.

Security guards who acted as her drivers told state investigators that she would embarrass and yell at them if they did not do things the way she wanted and expected them to be at her beck and call at all hours.

Dr. Novello, 64, declined to comment Monday. She has hired a top criminal defense lawyer in the capital, E. Stewart Jones, to handle the case.

“I don’t believe that anything she did was unjustified or unwarranted or calls for criminal prosecution,” Mr. Jones said Monday.

“The inspector general’s method of investigation and method of reporting leaves much to the imagination,” Mr. Jones added. “They aren’t held to the same standard of proof that’s required in a criminal investigation or a criminal trial. They tend to adopt hearsay as truth.”

Dr. Novello, now an executive at Disney Childrens Hospital in Orlando, Fla., has also declined to be interviewed by the inspector general.

Mr. Fisch has asked the district attorney, P. David Soares, to determine whether there are grounds to bring felony charges, including defrauding the government and offering a false instrument for filing, against Dr. Novello. Mr. Fisch, in a statement, said Dr. Novello “shamelessly and blatantly exploited and abused her staff, adding a new dimension to the definition of ‘arrogance’ and ‘chutzpah.’ ”

Mr. Soares applauded the inspector general’s work and said, “We are moving forward with an investigation.”

The report also says Dr. Novello brushed off a written warning from one of her subordinates and subsequently took steps to hide what she was doing.

The report is the latest taint to surface in Albany, from former Gov. Eliot Spitzer’s political demise in a prostitution scandal to the federal corruption indictment last week of Joseph L. Bruno, the former Senate majority leader. The allegations against Dr. Novello, however, echo the controversy that engulfed former State Comptroller Alan G. Hevesi, who resigned in late 2006 after he admitted that he had used state workers to drive his ailing wife. At Mr. Soares’ insistence, Mr. Hevesi pleaded guilty to a felony.

The report alleges that Dr. Novello required state employees to work more than 2,500 hours of overtime performing personal services for her, costing the state $48,000. One employee told investigators that “Novello’s fondness for shopping was so well known that employees in the office would give her sales fliers or coupons to encourage her to leave the office so that they would not have to work late,” according to the report.

Asked whether she ordered state workers to ferry her on shopping trips and other errands, her lawyer, Mr. Jones, said: “That sounds highly unlikely and completely out of character. Saying it’s so doesn’t make it so.”

The report also raises questions about the diligence of the Pataki administration in pursuing internal corruption. Complaints about Dr. Novello’s behavior were reported in 2001 and 2003 to the inspector general’s office, according to the report. In the summer of 2003, a former Health Department employee said the agency’s security desk was frequently empty because guards were being used to drive the commissioner around on personal business.

Inspector General Jill Konviser referred the matter back to the Health Department, which was run by Dr. Novello. Ms. Konviser, now a state judge, declined to comment. In New York, the inspector general is an appointee of the governor.

Dennis P. Whalen, then the executive deputy director of the Health Department, subsequently brought the matter up with his boss and eventually wrote her a memorandum in 2003 instructing her, “Never under any circumstances request or direct that an employee perform a personal (non-state) service for you or conduct business on your behalf.”

Mr. Whalen currently serves as the director of state operations under Gov. David A. Paterson. He told the inspector general’s investigators that after his warning, he kept receiving complaints that Dr. Novello was using security guards as her drivers on personal errands.

One security guard who was interviewed by investigators said that after the Whalen memo, he was called into a conference room. Dr. Novello told him that “she had been questioned on my hours and that we needed to calm down,” the guard said, according to the report.

The guard testified that Dr. Novello told him to spread his overtime hours on different days of the work week so nothing out of the ordinary would be noticed. She also told him to park the state car in inconspicuous places on shopping excursions and even ordered the guard to drive her in his own personal car.

The current investigation began in 2007 after she and Mr. Pataki had left office. David Catalfamo, a spokesman for the Mr. Pataki, declined to comment Monday, saying he had not seen the report.

As surgeon general, Dr. Novello, who followed the highly visible Dr. C. Everett Koop, was known for battling tobacco companies for marketing campaigns aimed at children and focusing on improving health outreach to minority communities. A native of Puerto Rico and a pediatrician, she was controversial among abortion rights advocates for her support of a policy prohibiting workers at family planning programs that received federal financing from discussing abortion with their patients.

The employees who spoke to investigators at the inspector general’s office said that Dr. Novello would call them at all hours on their cellphones and at home to come to her personal service, and that they feared ignoring the demands of the commissioner.

But occasionally they balked.

When Dr. Novello told one security guard to use his own car to drive her and her friends and family on a sightseeing trip to Cooperstown, N.Y., the guard refused and they used a state car, the report said. The same guard was instructed to drive her from Albany to Newark at 1 a.m. on Christmas Day, shortly before the end of the Pataki administration. He did so. But the final straw came when she ordered him to pick her up on her return trip, and by then it was January 2007. Dr. Novello was no longer the health commissioner.

The guard “testified that Novello had urged him to take vacation leave and use his personal vehicle to chauffeur her,” the report says, adding that the guard said “it felt good to finally say no to Novello.”