By Assemblyman Will Barclay
The New York State Department of Budget reported in its quarterly update that the state estimates it will receive $4.2 billion in 2015 from financial settlements reached by the Department of Financial Services, Department of Law, and the Manhattan District Attorney’s Office.
This is unexpected revenue for the state and has provided us with a surplus.
There are a number of ideas circulating on how or if we should spend this money.
I believe we should close schools’ budget gaps so that we can reduce the local property tax burden and invest in infrastructure like roads and bridges.
The settlement money was obtained through six corporations, the largest of which was a federal case concerning BNP Paribas. This case resulted in BNP agreeing to pay New York State $3.6 billion for violating New York’s banking laws in connection with international dealings. Other companies that will pay New York for violations are Credit Suisse AG ($715 million) for allegedly violating laws related to asset disclosure; Metropolitan Life Insurance Company ($50 million) for allegedly violating New York insurance laws; AXA Equitable Life Insurance ($20 million) for violating state insurance law related to annuity products sold; and Citigroup which reached a $7 billion settlement with the U.S. Department of Justice of which New York will receive $92 million.
The unexpected windfall will be collected in the general fund.
When one considers that our total state budget for the year last year was $137.91 billion, $4.2 billion is a large amount, especially to be received from settlements.
This settlement amount has been partially paid.
The remainder will continued to be paid throughout 2015.
As a general matter, I am concerned about the increased efforts by the federal government and state governments to increase revenue for government operations through use of law enforcement.
It is not coincidental that when the state’s finances started to plunge, my office began receiving calls from individuals and small businesses upset with the aggressive nature of certain state agencies and their quick reaction to levy fines, assessments and penalties.
While I have no opinion on the cases that lead to these huge settlements, I do know that governments are always looking for revenues and I think it is wholly inappropriate to use law enforcement in effort to raise revenue for government operations.
If a company has violated the law they ought to be held accountable whether criminally or civilly but they shouldn’t be targeted simply to be used as the government’s ATM machine.
Despite the particulars of how or why the settlements were reached in these cases, it is up to the governor and legislature to determine how this money should be used.
While some are calling for new programs to be funded with this money, I think it would be more prudent to use it to help stabilize our property taxes (which we can do by providing more state aid to our schools) and invest in infrastructure that is desperately in need of repair.
In 2011-12, the state cut aid to schools by more than $2.5 billion with a promise to repay those funds.
We still owe our school districts $1 billion. This year, we restored $602.11 million to school districts.
Let’s restore those cuts entirely with this newfound money and pay back what we owe to the school districts.
We should also invest in our roads and bridges. A report out earlier this year from TRIP, a national transportation research group, finds that 45 percent of New York’s major roads and highways are in poor to mediocre condition.
It also finds that a quarter of our bridges need to be rehabilitated. Repair and maintenance of our roads and bridges is a necessary expense.
We have not done a good job keeping up with these costs.
For safety reasons, but also for economic development purposes, we should use some of this new found money to make these capital investments.
If you have any questions or comments or if you would like to be added to my mailing list or receive my newsletter, please contact my office by mail at 200 N. Second St., Fulton, NY, by e-mail at [email protected] or by calling (315) 598-5185.