Outrages & Insights

Think Eliot Spitzer couldn't sink any lower? Think again.

Now he's a member of the press, sort of (gasp!).

"He's going to be doing a regular thing," Slate Editor Jacob Weisberg told the New York Observer. "It'll be heavily about the financial crisis and fixing financial markets and the economy generally."

In his first column, Spitzer criticized the federal bailout of the financial sector.

Wrote the former governor:

What are we getting for the trillions of dollars in rescue funds? If we are merely extending a fatally flawed status quo, we should invest those dollars elsewhere.

Nobody disputes that radical action was needed to forestall total collapse. But we are creating the significant systemic risk not just of rewarding imprudent behavior by private actors but of preventing, through bailouts and subsidies, the process of creative destruction that capitalism depends on.

A more sensible approach would focus not just on rescuing pre-existing financial institutions but, instead, on creating a structure for more contained and competitive ones.

From lawyer to politician to Client No. 9 to member of the fourth estate. Talk about a downward spiral.

Actually, when it comes to misconduct on Wall Street and how to deal with the fallout, I'm interested in what Spitzer has to say, no matter his private peccadilloes. I suspect I'm far from alone.

Actually, when you think about it, given what's transpired on Wall Street the past few months, Spitzer would have been an especially well suited governor -- if he hadn't messed up.

On a related front, ProPublica is maintaining this running tally of bailout recipients and providing a good roundup of continuing coverage. It's worth checking out.

The move by Buffalo school officials in 2005 to unilaterally move teachers into a single health insurance plan was a loser from the beginning. Anyone with any knowledge of labor law knows you can't make unilateral changes to a contract.

The fact the Board of Education did this in the midst of contract negotiations with the Buffalo Teachers Federation all but ensured there would be no settlement. You can't take away a union's biggest bargaining chip and expect to strike a deal. That's not how the real world works.

The board's action has been rejected as improper by an arbitrator and three courts.

Three strikes and you're out. Four and you're just out there.

Meanwhile, contract talks between the district and BTF have dragged into their fourth year.

I got to wondering how much all this legal wrangling is costing taxpayers. So I filed an information request with the school district. I've received an answer.

Legal costs through the end of June total $251,907.72.

As in, a quarter million dollars. Just for outside legal counsel, Damon Morey, in this case. Their lead attorneys were charging the district -- in other words, taxpayers -- $150 an hour three years ago; I'm sure the rate hasn't gotten any cheaper.

I'm also pretty sure a lot of staff time has been invested, as well, and we know school bureaucrats don't come cheap.

Gee, for that change, the district could have pursued disciplinary action against McKinley High School Principal Crystal Barton. Williams nixed the idea, saying it would cost too much.

District officials will gladly tell you how much they've saved in health insurance premiums, some $40 million since 2005. But keep in mind, the savings are the byproduct of illegal activity on the district's part.

Not a good lesson for the kids, and we all know, it's all about the kids.

Meanwhile, the district's legal bills continue to mount, as the BTF continues to press the district to live up to court orders that the Board of Education so far has failed to honor.

Gov. Paterson has mentioned a half-dozen people he will turn for advice in selecting a successor to Hillary Clinton. They're all from downstate.

Meanwhile, another name has been floated as a possible successor. Bubba.

The state's Empire Zones are the Muhammad Ali of economic development programs. Everyone flails away, but the program survives, much like Ali and his use of rope a dope against George Foreman in Zaire.

The News did a major investigation in 2003, the Syracuse Post-Standard has done its share, and the state comptroller has issued several critical audits. Add to the list the Citizens Budget Commission, which released a critical report Tuesday.

The title says it all: It's Time To End Empire Zones.

The program is costing the state $582 million this year, according to the study, up from $30 million just eight years ago. That's no small consideration, given the state's fiscal plight.

The report said the state is getting a poor return for its money.

Among the key findings:

The Zones have proliferated to such an extent that the mission of the program has been lost. The Zones no longer correspond to distressed areas; instead, Zones are built around businesses that seek the tax credits.

The program's objectives are not measured consistently, and local agencies do not hold firms accountable for the economic development commitments they make. The program is complicated by the combination of State and local administration and compromised by a lack of transparency.

The program is failing to meet the targets that the firms themselves set when they were
approved for participation. Numerous audits have shown that recipients do not meet their
stated employment and investment goals.

I found especially damning quotes cited in the report from the upstate and downstate economic development czars under former Gov. Eliot Spitzer.

"On balance, the Empire Zone program has been a failure, and in some ways a gross failure. We have no way of knowing how many jobs have been created or retained," said Patrick Foye, who was the downstate chairman of the Empire State Development at the time he made the comment.

“Of the 9,700 companies that currently claim Empire Zone benefits, three-quarters of them are in the upstate region. Yet job growth has been sluggish or non-existent. The problem we have with the Empire Zone program is that it is not tied to any overall economic strategy," said Dan Gundersen, Foye's upstate counterpart.

The program was tweaked several years ago. A cost-benefit analysis was imposed with the idea of weeding out bad projects and zone administrators were required to end the practice, common in Buffalo, of carving up zones into dozens of non-contiguous parcels. These were not insignificant changes.

But, according to the latest report, the reforms have not done the trick.

The question now is: "What is the governor and Legislature going to do about it?"

A more effective program has particular importance to Buffalo, which has four square miles of Empire Zones, double that of most other locales. The program here has been used mostly to provide tax breaks to downtown business interests.

Someone get the governor on the phone. Steve Pigeon has endorsed Byron Brown to succeed Hillary Clinton in the U.S. Senate.

The mayor stands about as much of a chance of getting the job as most of the other local candidates  Pigeon and Tom Golisano backed this election season.

So, a lot of local banks are in line for hundreds of millions of dollars from Uncle Sam to help prime the economy and fight the recession. Good news for Western New York, right?

No, not really.

WNY banks, like many around the nation, are eligible for federal aid in the form of stock purchases that represent cheap capital for lenders. M&T Bank, the big kid on our block, has applied for $600 million, and it's not alone among local lenders.

To put that $600 million in perspective, that's $200 million to $300 million more than the economic development subsidies provided annually to businesses in WNY by the federal, state and local government. My first blush reaction to reading about the M&T money was, "Gee, is that the best way to help our local economy?"

But don't go blaming M&T. The feds are leaning on banks to take the money, in the belief/hope an infusion of cash will lead to more lending and thus economic growth. If M&T doesn't take the money - and it's only one-third of what it could get - it would probably be the only one of the 25 largest banks in the nation to say "Thanks, but no thanks."

This is Plan B for the feds. Plan A was to help capitalize struggling banks, but Wall Street wasn't buying.

So now the feds have set aside $250 billion for relatively healthy banks to, among other things, lend to businesses and home buyers and spend to acquire weaker sisters.

That strategy may or may not fly in growth states like Florida and California, which have been hammered by the implosion of the real estate market, or Death Valley states like Michigan, whose economy makes ours look good.

Imagine how bad off they are.

As we have learned the hard way over the years, WNY is, well, different. Our banks here are in better shape. They've kept lending. Thus, most of them don't really need the federal money. That's the good news.

The not-so-good news: The upstate economy, including WNY, isn't screaming for more borrowing. Small business loans are down, big business loans are down and housing sales are slumping, so that takes care of mortgage lending.

In other words, the federal bank bailout for WNY means a growing supply of money in the face of a declining demand.

Just our luck, isn't it?

It sure would be nice if our economic development thinkers came up with a strategy for taking advantage of this prospective surge in capital, especially in light of President-elect Obama's push for renewable  energy and eco-friendly growth.

I'm not sure it's realistic to craft such a strategy on short notice and with the pressure for short-term results. But it sure wouldn't hurt if folks at least contemplated coming up with a game plan.

I wonder what the Jim Allens, Sue McCartneys and Paul Dysters of the world think?  To say nothing of M&T boss Bob Wilmers, who also happens to be the state's economic development chief.

People, talk to us.

Last Tuesday I posted an online poll asking what readers thought of the prospect of Brain Higgins being appointed to succeed Hillary Clinton if she vacates the seat for a position with the Obama administration. As of Sunday night, 62 of you weighed in, out of more than 1,000 who read the post, and it seems respondents like Higgins, for the most part.

Two-thirds said he would do a good job as senator, although not all feel he should accept an appointment if offered.

Some 42 percent of respondents said he should go for it if offered, but another 23 percent said he should turn it down because he probably couldn't hang onto the seat when it came up for election. Better he stay in the U.S. House than risk a promising career in Congress, they said.

Another 23 percent said they'd rather have someone from Western New York other than Higgins appointed, while 13 percent said they don't care if the appointee is from upstate or downstate.

I won't pretend the results are scientific. Kind of interesting, though, on some level.

A lot of folks are rightfully raving over the Burchfield Penny Art Center that opened ten days ago, as well they should. I was among the thousands who visited the museum the opening weekend and it's a neat building filled with a lot of neat art. Even I realize that. Me, who considers Three Stooges films to be fine art.

Well, they are.

But I digress.

What I like best about the new museum is its green building design. Not many people in this town are building to LEED standards, but the museum has. Director Ted Pietrzak expects the building will receive a silver certificate the early part of next year from the U.S. Green Building Council.

"We'll be the first art museum in the state to be (LEED) certified," Pietrzak said.

Well, good for us.

What makes for a LEED museum?

In Burchfield Penny's case, it starts outdoors with a white roof that reflects sun and heat and a stormwater retention system that allows for absorption into the Scajaquada Creek ecosystem.

Indoors, there's lot of natural light and sophisticated systems to manage power consumption. There are water-saving features, including waterless urinals. Radiant heating. Recycled building materials have been used, including flooring.

Kudos to the Burchfield Penny board, Buffalo State College and the architects, Gwathmey Siegel, out of NYC.

What was the motivation to go LEED?

"We just believed it was the right thing to do," Pietrzak said.

Then there was the inspiration of Charles Burchfield, whose collection is the centerpiece of the museum.

"Burchfield was a naturalist. It seemed appropriate," Pietrzak said.

Next up on the LEED front is the ongoing construction of a Center for Information, Research and Community Programs at Daemen College. The 45,000-square-foot building, going up on Main Street, is going to be both green and high -ech. It should open in January.