The Transport Workers Union (TWU) local 100, which represents most Metropolitan Transportation Authority (MTA) union workers in the city, has launched a “no contract, no peace” effort to push the MTA into dropping its lawsuit against the state’s recent contract award, which state arbitrators decided in favor of the TWU.

The union also wants to defeat Mayor Bloomberg, and vigorously supports challenger Bill Thompson, the city’s comptroller. Thompson marched ”the length” of a recent Brooklyn parade “arm-in-arm” with the union’s leadership, according to the TWU, along with Gov. Paterson, who, behind-the-scenes, personally orchestrated the generous raises in the bad contract that’s now under dispute, and comptroller candidate John Liu, who won his run-off election yesterday with heavy multi-union support, including that of the TWU. (more…)

Xerox is buying Affiliated Computer Services (ACS) for $6.4 billion. Why?

Partly because ACS does a lot of work for government entities, processing Medicare benefits and all kinds of other stuff. Big businesses — including Xerox and ACS competitor IBM, which is running ads all over political TV shows to push its own smart-government-through-data stuff — think that big government is a growth center in the next few years, for two reasons: (more…)

Some states are being more stimulated than others.

February’s stimulus package included something called “Build America Bonds.” Under the program, states can issue taxable debt to bondholders to raise money for infrastructure projects, rather than issue the usual tax-exempt debt.

The idea was to broaden the investor base of municipalities at a time when many existing investors were feeling crunched and unwilling to lend. Investors that don’t have to pay taxes, like pension funds, don’t want to buy tax-exempt debt, because they don’t get any tax exemption, but they are interested in taxable debt, which pays a higher interest rate to everyone to help taxable investors (like you and me) make up for the tax owed on their profit. Under Build America, the feds then reimburse the states for the extra interest rate they must pay on the taxable debt.

Now, Municipal Market Advisors tells us that “of the $19.2 billion of total subsidy payments now ‘owed’ by the federal government over the next 40 years” under Build America, “nearly half of that (49 percent) will go to California and Texas, even though those states account for just 20 percent of the nation’s population. Nearly 70 percent of the total BAB subsidy will flow to just five states.”

Sometimes the credit crisis seems like last year’s news. At least, you would think so if you looked at projected Wall Street bonuses and New York City and State public spending.

But a new Moody’s report shows how the crisis continues to impact infrastructure projects. It’s a reminder that municipalities can’t rely on fancy structured finance as a way to avoid making tough decisions on how to fund critical infrastructure with taxpayer money (optimally, by cutting spending elsewhere). (more…)

My op-ed article in today’s New York Post suggests that, thanks to Governor Paterson’s lack of leadership, New York State is sliding faster towards a fiscal abyss.

Next week’s Democratic primary runoff for New York City comptroller–a choice between two City Council members–is both more interesting and more important than it might appear on the surface, Nicole writes today in the New York Post.   She notes that David Yassky and John Liu differ most strongly on the crucial issue of pensions and health benefits, with Yassky favoring reform while Liu defers more to the interests of his organized labor supporters.

The Fed and President Obama got the headlines they wanted. The NYT wrote Friday that the Fed will propose “Sweeping Rules to Regulate Pay at Banks,” while the WSJ said that ”Bankers Face Curbs on Pay.”

The rules could mean a change in the mechanics of financial compensation, and thus for New York City and state taxing and budgeting. But by themselves, they likely won’t mean any harsh caps on pay. Lower bonuses should result instead from the market forces stemming from two badly needed regulatory changes: strict borrowing limits on financial institutions and the end of “too big to fail.” (more…)

State and local governments increased their borrowing by 8.3 percent on an annualized basis between April and June, according to the Fed flow of funds report. While the number isn’t eye-popping against the past decade’s history, what’s unusual is that states, cities and towns have kept on borrowing even as people have cut their own borrowing, down 1.7 percent.

In other words, people seem to have learned their lesson and have changed theirr behavior (whether voluntarily or not), while state and local governments and the people they employ haven’t yet bowed to reality.

The Federal Reserve is working on a far-reaching proposal to regulate compensation by the nation’s largest banks — including, inevitably, some big New York firms now raking in big profits thanks to government bailouts.

The upshot for Governor Paterson and state lawmakers in Albany: you can’t count on renewed financial sector bonuses to pull you out of your latest patch of fiscal quicksand.

(more…)

The Metropolitan Transportation Authority (MTA)’s proposed capital program falls short of what downstate’s transit assets need, and, what’s more, the MTA can’t even afford the insufficient amount of spending it has proposed, said state Deputy Comptroller Ken Bleiwas in a new report. (more…)