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After credit rating cut, McCarthy is the one who looks foolish

Monday, October 1, 2012
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After credit rating cut, McCarthy is the one who looks foolish

Re Sept. 27 article, “Moody’s lowers city’s rating”: For the past two weeks Schenectady Mayor Gary McCarthy has been describing the recent city-county sales tax agreement as “fair,” while characterizing attempts to gain a better deal for the city as being based upon “overly simplistic” or “flawed” analysis that only a “foolish” person would believe. As the city’s former budget analyst who provided the analysis, I’d like to respond.

The city relies on three sources for the bulk of its revenues: state aid, sales tax and property tax. Together these comprise about 70 percent of the city operating budget. State aid amounts are set in state law, leaving only two options for significant revenue which are under city control: sales tax and property tax. If one of these lags, the other must be increased to make up the shortfall.

The facts bear this out. In 1998, Schenectady County kept $25 million in sales tax revenue. In 2012, the county will keep $60 million. During this time frame, the county property tax rate has been cut 24 percent. By comparison, in 1998 the city kept $11 million in sales tax revenue and will receive the same $11 million in 2012. During this time frame the city property tax rate has been increased 37 percent.

This is not rocket science. If the key non-property tax revenue is increased, then property tax rates can be decreased; if the key non-property tax revenue is stagnant, then property tax rates will be increased. Schenectadians have lived this for the past 15 years. It is doubtful that many city residents would label the result as “fair.”

The only “flawed” or “overly simplistic” piece of the analysis is that it doesn’t consider the mayor’s fealty to the county. On this, I plead guilty to being naive and perhaps even “foolish.”

But on the financial facts, with Moody’s downgrading the city’s credit rating by two notches, assigning us a negative outlook and stating directly in its report that “the [city sales] tax has experienced minimal growth since the agreement was first enacted,” it is apparent that someone else is wearing the “foolish” crown.

Jason Cuthbert

Schenectady

Free college tuition plan could fix Sch’dy schools

Imagine! An economic development program that develops human capital. Not restaurants, not waterfronts, not downtowns. This program develops people, by paying for their college education.

Kalamazoo, Mich. is a rust-belt community a tad bigger than Schenectady, but with a demographic and an economic story quite similar to ours. As reported by Ted C. Fishman in the Sept. 16 New York Times, the Kalamazoo Promise, funded by anonymous donors, pays tuition to Michigan public college and universities of any graduate of the Kalamazoo public schools (on a sliding scale, based on length of time spent in the public schools).

To date, the Kalamazoo Promise has paid out $35 million for post-secondary study for 2,500 students. About $4,200 is spent on each student per semester. Students are responsible for their own room and board.

According to Fishman and others, the Promise has transformed the Kalamazoo public schools. High school test scores have improved four years in a row. More than 90 percent of Kalamazoo’s graduates today go on to higher education. Suburban flight has stopped, the school population has increased 24 percent, real estate values have risen. Support services for children have been strengthened, with early childhood education given a priority.

The Kalamazoo Promise donors saw how a school district in decline and a weakening economy create a vicious circle. Poor schools hindered Kalamazoo’s ability to support business and to bring in new ones.

Fishman notes that “the Promise was created against a backdrop of recent economic thought that considers investment in education better than nearly every other kind of developmental effort when it comes to promoting economic growth.”

Read Fishman’s article in The Times. If Kalamazoo, Mich. can make a life-changing Promise to its young people, so can Schenectady.

Patricia Rush

Schenectady

McDonald critic wasn’t even from his district

Re Craig Foote’s Sept. 27 letter, “McDonald paid for not listening to constituents”: True, if Sen. Roy McDonald voted against the wishes of a majority of his constituents, he has no one to blame but himself if the voters decided to replace him.

However, Mr. Foote is not one of them. He lives in Rotterdam, which is not in the 43rd Senate District. He had nothing to do with voting McDonald out of office as his letter implied.

As for his statement about Gov. Cuomo forcing same-sex marriage legislation “down our throats,” he couldn’t be more wrong. At the time the legislation passed in July 2011, 58 percent of New Yorkers were in favor of it and only 36 percent were against. Since the vote was so close, it seems to me there were many more legislators who voted against their constituents’ [wishes] than the other way around.

Sean Mulloy

Rotterdam

 
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comments

October 1, 2012
6:08 p.m.
albright1 says...

Patricia, the Kalamazoo Promise looks like it might be working and was a good idea. The key thing to remember is that it is a privately funded operation. A similar operation, called the Michigan Promise, run but the state is bankrupt and has been stopped. We should well be reminded of the difference.

October 1, 2012
11:36 p.m.
smith says...

Wrong Sean, you don't know what Foote had to do with voting McDonald out of office as his letter implied. I don't live in the district either, but I contributed to his removal from office, not unlike all those billionaire homo-activists who bought McDonald's vote for a half a million dollars didn't live in the district.

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