NY gets more aid from Congress

Nov. 17, 2001 at 6:45 AM
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NEW YORK, Nov. 17 (UPI) -- New York has never had an easy time of getting federal money out of Washington, and dispite the largest causalities ever experienced in one day at the World Trade Center it's still tough for New York to get money out of Washington.

In an agreement with the White House Friday the Republican members dropped their threat of an ugly floor fight against their own party after getting an additional $1.5 billion to help meet immedicate needs in Lower Manhattan.

"It's actually $2.5 billion from our point of view because it includes help in workers compensation and it will create an immediate infusion of economic development money in in Lower Manhattan," James Mazzarella, director of the governor's office of federal affairs, told United Press International. "It's a big help to the state."

The $20 billion in question was Federal Emergency Management Agency funds which is providing funds to clean up the rubble at the World Trade Center and providing loans to businesses and homeowners with damaged property.

Although the agreement increased the amount of FEMA funding by $1.5 billion, the net increase is $2.5 billion because of some trading of funds so that the state was given access to Community Development Block Grants.

"The block grants are very important because it will provide immedicate aid to businesses in Lower Manhattan for business retention because many businesses do not qualify for the Small Business Administration loans," Mazzarella.

The 12 GOP representatives said they would take the rare move of a floor fight in Congress and consider voting as a block with Democrats to delay or kill the defense spending bill if the New Yorkers were not allowed to include an amendment for more aid for New York.

Shortly after the September attacks, Congress approved spending not less than half of the $40 billion to New York but the White House won't release more $9 billion of that funding this year and promised more help next year.

The White House promised funding "when you'll need it," but the New Yorkers argued that the money was needed now for contracts to begin rebuilding Lower Manhattan and to keep businesses confident the financial district would rebound. More the 19,000 finanical jobs have left the city already.

"How goes New York City goes the rest of the country, it's the economic engine of the country and if it's recovery is slowed that the economic recovery for the country is slowed if not the world," according to Rep. John Walsh, a Republican from Syracuse. "I feel strongly that Congress made a promise to New York and it should follow thorugh."

According to a report by several top consulting firms, the attacks could cost New York City $83 billion or even $100 billion if the city's economy lags behind the rest of the country's. After insurance claims and assuming the $20 billion promised from the federal government is realized the report estimated the city will be left with a net loss of $16 billion

The financial services industry acounts for 24 percent of the city's economic output of $440 billion and 14 percent of all city revenues. New York City faces deficits of $6 billion in the next two years and the state of New York forecasts a revenue deficit of under $10 billion.

Because the House is so evenly divided between Democrats and Republicans a small group of Republicans banding together and siding with the Democrats can wreck havac for the House GOP leadership.

While the 12 representatives vowed to speak with one voice and were willing to go to the mat on the issue there were concerns by some that "in this time of war going against both the president and against a defense spending bill" could backfire. But agreement or the "compromise" on the funding drew fire from some of the Democrats and some Republicans.

"I'm disgusted that some of my colleagues have placed their political allegiance to the president above their duty to represent the interests of their state," said Rep. Maurice Hinchey, a Democrat from Saugerties. "Businesses are deciding whether they will stay in New York or not."

"We've got them to budge but I'm not sure it's enough," said Rep. John Sweeney, a Republican from Albany, who along with Walsh sits on the Appropriations Committee and the two led the fight among the GOP in the delegation.

New York lost a key vote Wednesday in the House Appropriations Committee, 33-31, to get all of the $20 billion approved by Congress after the terrorist attacks, with Walsh and Sweeney voting with the Democrats. The loss spured the delegation to work more closely together, and many believe it may have some lasting effects.

"There's no doubt that they'd rather not buck the party and the president in a time of war on defense spending but every single member of the delegation is willing to do what she or he has to for New York at this time," Mazzarella said. "Some better relationships have been forged and all know that how getting New York City back to where it was is critical not just for the city and state but for the country."

Part of New York's problem with getting funds from Washington has been that the delegation has not always spoken in one voice.

"The New York congressional delegation, hardly ever speaks with one voice," New York Assemblyman Alexander Grannis, a Democrat from New York City, told UPI. "New York politicians are not shrinking violets, they're competitive by nature, and what's been lacking in the delegation is bi-partisan unity."

New York has always been a high cost state in which to do business and therefore it has higher incomes and a larger percentage of people with higher incomes -- so much so that each year New York sends $17 billion in taxes more to Washington than it gets back in taxes. This has been going on for quite a while dating back to the Civil War. It's been a bone of contention with the delegation and was the issue former Sen. Danial Patrick Moynihan campained on in 1976. It's the same issue Sen. Hillary Rodhan Clinton campaigned in 2000.

"New York doesn't have any big defense contractors or bases," said Mazzarella. "And the delgation has lost clout, partly because it lost Moynihan who had 24 years senority and former Sen. Alfonse D'Amato who served 20 years, it lost former Reps. Bill Paxon and Susan Molinari in leadership positions, in addition to losing congressional seats as the state lost population."

However, Moynihan was able to finally deliver on transportation funds and it angered some in Congress and some people just think New Yorkers are hard to deal with, one legislative staffperson said.

"Nevertheless, George Pataki makes a very convincing arguemnt to members of Congress when tells them, 'New York has been there providing taxes for a long time to the country that has resulted in many, federally funded prjects in the West and South and now New York, which took the hit for the whole country needs help now,'" Mazzarella said.

The compromise immediately tore open a rift in the New York delegation, which had been trying to maintain a united front to secure the full $20 billion President Bush promised to lower Manhattan in the wake of the Sept. 11 attacks.

"Frankly, I'm disgusted that some of my colleagues have placed their political allegiance to the president above their duty to represent the interests of their state," Rep. Maurice Hinchey, D-Saugerties, said.

Rep. James Walsh, the senior New Yorker on the powerful House Appropriations Committee, who brokered the deal with the White House budget office said "when you negotiate you take what you can get."

"What we got is the money that's going to stabilize those neighborhoods downtown," the Syracuse Republican said. "We were able to get the money New York needs right now."

Walsh and Rep. Thomas Reynolds, R-Clarence, unveiled the deal at a meeting Friday of the New York delegation.

But one key Republican skipped the meeting and said Friday he isn't sure whether he will support the compromise.

"We got them to budge but I'm wondering if it's enough," said Rep. John Sweeney, R-Halfmoon, who sits on the Appropriations Committees

The additional $1.5 billion in Community Development Block Grant money brings the total federal aid allocated to New York so far to $11.3 billion, still about $9 billion short of the $20 billion promised by the White House.

"Today's 'compromise' is up to 55 cents on the dollar, and it's not right," Rep. Carolyn Maloney, D-Manhattan, said.

Rep. John LaFalce, D-Tonawanda, accused the president of "impounding" the rest of New York's aid.

On Thursday, New York's 12 House Republicans they were prepared to stick together and use hardball parliamentary tactics to stall the whole defense bill to get a full House vote on amendment to provide more trade center aid. The highly unusual move would have angered party leadership. Members were also nervous about stalling a defense spending bill while the nation was at war.

The White House lobbied the New Yorkers furiously to get them to back down from seeking the $10 billion in extra spending now and insists that New York will receive the full $20 billion but over time.

Walsh's plan shuffles money within the $20 billion spending bill already approved by the House Appropriations Committee to give New York the additional funds. The state will now receive $2.5 billion in CDBG money.

In fact, Pataki--who is up for re-election next year--will have control over the CDBG funds. The governor lobbied successfully several years ago to gain control of the funds from then-HUD Secretary Andrew Cuomo, who is eying a challenge to Pataki.

Several lawmakers said privately Friday that the failure of Pataki and New York Mayor Rudolph Giuliani to publicly get behind their push for more federal aid right away killed it. Giuliani said Thursday that the city currently had enough money to get by. Pataki has been largely silent on the Walsh-Sweeney push for immediate federal funds.

James Mazzarella, director of the governor's office of federal affairs, on Friday praised the entire delegation for "working together to produce this win for New York."

Mazzarella said the money would fund federal recovery efforts well into next year but said the delegation would have come back together in the spring to launch a push for new aid.

Told of Hinchey's criticism, Mazzarella said: "When Hinchey delivers $2 billion in desperately needed economic development money to the city he'll have right to complain."

A last-minute agreement reached Friday that pitted the New York Republicans against the White House which will avoid a nasty battle of the floor of the House of Represnetait

New York sends $17 billion more in federal taxes than it gets back and its been a bone of contention for a long time,

The financial markets not just for the nation but for the globe are based in New York City, and how New York City goes, goes the nation.

Bascially, its an arguement over philosophy, the Office of Management and Budget is saysing if we gave you all the money now New York City couldn't spend it versus the delegation saying we need to put in place a committement form the federal gvoernment of the full $20 billion so there's never a lull in the funnding that could cause set backs.

There is a real reluctance from the OMB and the Bush adminsitration and very wary of lawmakers adding on spending to the bills all in the name of national security.

There is a certain paternalistic approcah from the White House that seems to rub the delegaitona the wrong way "

Fresh from his whirlwind trip to Washington D.C., yesterday, Mayor-elect Mike Bloomberg today turned his attention to one of this top campaign issues -- education.

Bloomberg is slated to hold a private meeting this afternoon with Schools Chancellor Harold Levy, which could be a step towards determining if Levy will keep his job after his contract expires in July.

The Board of Education must decide by April whether to extend it. Levy has not said yet whether he even wants to continue as chancellor.

Yesterday, Bloomberg made the political rounds on Capitol Hill, throwing himself into the fight to get more federal money immediately to help the city recover from the devastation of the Sept. 11 terrorist attacks.

"We need the money now," Bloomberg said after a meeting with New York senators and House members. "What we have to remember here is that everyone's intent is to help the city. What we are talking about is a timing issue."

President George W. Bush committed $20 billion to help New York with recovery and repair since the attacks; however, he does not want to send the state all of the money this year.

The president has said he will veto any spending over the $40 billion total Congress already has approved for homeland security, defense and repairs to sites damaged in the attacks. About $3.2 billion has been put in the pipeline for New York, and Bush has promised another $6.3 billion this year.

Members of the New York congressional delegation are pressing to get Bush's full $20 billion commitment now.

In addition to meeting with the New Yorkers, Bloomberg met with House Speaker Dennis Hastert (R-Ill.) and Vice President Dick Cheney but apparently was not successful in moving them off their position that the extra recovery money for New York can wait.

Hastert told reporters that it is not possible for New York to spend that much money this year. "I have committed that $20 billion and we will spend that $20 billion but we need to know how we are going to spend it," he said.

Cheney's spokeswoman, Mary Matalin, said the vice president is committed to giving New York at least $20 billion, but not immediately. "What's out there is out there for this year," she said.

Both Republicans and Democrats in the New York delegation praised Bloomberg, a self-made billionaire, as a quick study on the issue of money for New York. That was a change from some lawmakers' private grumbling that outgoing Mayor Rudolph Giuliani and Gov. George Pataki had not weighed in at the White House and Capitol Hill with all their might.

"He gets it," said Rep. Jerrold Nadler (D-Manhattan). "Above all else, he's a money guy."

Behind closed doors yesterday, New York Republicans in the House debated whether to try to get the extra money by bucking their party leadership and voting against a procedural motion that would set up debate on defense legislation and would likely bar the New Yorkers from inserting the extra $9.7 billion. If the motion failed, it could delay a vote on the overall defense bill.

Party members almost never break ranks with their leadership on a procedural motion, but several New York Republicans said there are times it must be done. Rep. James Walsh (R-Syracuse), one of the senior House Appropriations Committee members, who are sometimes called "cardinals" because they wield tremendous power, said this is such a time.

"I'm a cardinal and I'm about to sin," he half-joked. "This is what we were elected to do. We're representatives of New York."

Staff writer Thomas Frank contributed to this report

According to a report prepared by seven leading management firms for the New York City Partnership & Chamber of Commerce, the terorrist attacks caused $83 billion in damage to New York City's economy, however, quick action by government and business could decrease the losses significantly.

The report said that 125,000 jobs would be lost in the fourth quarter of 2001 as a direct result of the terrorist attacks and a net loss of 57,000 jobs by the end of 2003. The $83 billion includes an estimated $30 billion in capital losses, $14 billion in cleanup and related costs and $39 billion in loss of economic output.

Even with insurance payments and federal funds to defray the cleanup, the city's economy could sustain a net loss of at least $16 billion.

The 12 Republicans of the New York congressional delegation left a closed-door meeting Thursday vowing they would speak with one voice and go against their own party to secure more funding to deal with the attakcs on the World Trade Center.

The GOP representatives said they would take the rare move of using parliamentary rules to fight the vote on the floor of the Congress of the $66 billion defense spending bill.

"The New York congressional delegation, hardly ever speaks with one voice," New York Assemblyman Alexander Grannis told United Press International. "New York politicians are not shrinking violets, they're competitive by nature, and what's been lacking in the delegation is bi-partisan unity."

Shorty after the September attacks, Congress approved sending not less than half of the $40 billion to New York but the White House won't release more $9 billion of that funding this year and promises more help next year.

Standard & Poor has put the city of Buffalo, N.Y. on a negative credit watch. The city could have its bond rating lowered because it faces a $100 million budget shortfall and because of the "stagnant economy dependent on declining manufacturing, high unemployment, declining population and per-capita income below the state and national averages."

Buffalo is a another casulty of Sept. 11 because the city has banked on receiving $48 million in special aid this fall from the state, but the state's $9 billion revenue decrease forecast for the next two years, made the aid to Buffalo impossible.

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