Testimony of Andrew S. Hollweck, Vice President New York Building Congress Before the New York City Council Finance Comm
Published on Jun 7, 2010 by
The New York Building Congress appreciates this opportunity to comment on the Capital Budget component of the Fiscal Year 2011 Executive Budget. The Building Congress endorses the Capital Commitment Plan presented in the Mayor’s Budget. The proposed plan maintains core infrastructure and public education facilities, assets essential to the quality of life, and prepares the City for longer term growth when the economy recovers.
The Mayor’s commitment to infrastructure at this juncture is particularly important as both City and State governments are facing monumental fiscal challenges in the coming year and beyond. Capital programs are particularly vulnerable to budget cuts because the consequences of significantly reducing investment today are difficult to reverse and can lead to a longer-term decline in the safety and livability of the City. Delaying essential capital projects would only cost the City more money to restart later on, which could further slow a broader economic recovery.
In addition to protecting critical infrastructure, the Mayor’s capital program has the added important benefit of pumping billions of dollars that would not otherwise be available into the local economy in the form of quality jobs, goods and services at a time when these opportunities are in short supply.
What’s more, the City has been able to procure certain capital projects at a lower cost this year than they would have been able two or three years ago. The City’s debt now carries historically high credit ratings, and the City will be gaining a big advantage from several federal subsidy programs to finance infrastructure. There has also been quantifiable deflation in the price of construction materials, the City recently completed a landmark project labor agreement with many of the construction trades and is finding increased competition for City contracts. The combination of these factors has enabled the City to procure large construction projects at a lower cost this year than at the top of the market.
It is also worth noting that while the Mayor and Council must confront difficult choices facing other critical services – capital dollars are not fungible. Because capital projects are debt financed, these funds could not simply be reallocated for salaries or other core services.
Despite the City’s clear commitment to infrastructure investment, the Building Congress did identify areas of concern. First, the trend of investment is downward from the peak years of 2009 and 2010. Given fiscal pressures, this is understandable. But further declines in capital spending in upcoming financial plans would be cause for concern.
Second, certain capital priorities do not fare well in the budget. Of particular importance is the City University of New York, which trains several hundred thousand full and part time students on 23 campuses and maintains more than 26 million square feet of property. However, higher education – which received over $200 million in capital funding in each of the last two fiscal years – is slated to receive only $72 million for the entire four year period. This is not sufficient money to maintain this vital resource for New Yorkers.
While the Administration and the City Council should be applauded for their efforts to preserve infrastructure investment at reasonable levels, the Building Congress continues to urge – as it has at past hearings – that the City undertake a wholesale examination of its assets and financing methods and propose policies that maximize asset value and investment opportunities, much like the initiative led by the New York State Commission on State Asset Maximization with regard to State assets. This effort, given its broad scope and potential for savings, cannot be a one-time effort, but an ongoing function of government.
In conclusion, the Building Congress supports the Mayor’s proposed Fiscal Year 2011 Capital Plan. It pares spending in the coming years in recognition of the City’s difficult financial outlook. However, it retains important investments in the City’s core infrastructure programs to ensure that our City is able to emerge from the downturn prepared for future growth and able to retain its competitive position in the world economy.
The New York Building Congress appreciates this opportunity to comment on the Capital Budget component of the Fiscal Year 2011 Executive Budget. The Building Congress endorses the Capital Commitment Plan presented in the Mayor’s Budget. The proposed plan maintains core infrastructure and public education facilities, assets essential to the quality of life, and prepares the City for longer term growth when the economy recovers.
The Mayor’s commitment to infrastructure at this juncture is particularly important as both City and State governments are facing monumental fiscal challenges in the coming year and beyond. Capital programs are particularly vulnerable to budget cuts because the consequences of significantly reducing investment today are difficult to reverse and can lead to a longer-term decline in the safety and livability of the City. Delaying essential capital projects would only cost the City more money to restart later on, which could further slow a broader economic recovery.
In addition to protecting critical infrastructure, the Mayor’s capital program has the added important benefit of pumping billions of dollars that would not otherwise be available into the local economy in the form of quality jobs, goods and services at a time when these opportunities are in short supply.
What’s more, the City has been able to procure certain capital projects at a lower cost this year than they would have been able two or three years ago. The City’s debt now carries historically high credit ratings, and the City will be gaining a big advantage from several federal subsidy programs to finance infrastructure. There has also been quantifiable deflation in the price of construction materials, the City recently completed a landmark project labor agreement with many of the construction trades and is finding increased competition for City contracts. The combination of these factors has enabled the City to procure large construction projects at a lower cost this year than at the top of the market.
It is also worth noting that while the Mayor and Council must confront difficult choices facing other critical services – capital dollars are not fungible. Because capital projects are debt financed, these funds could not simply be reallocated for salaries or other core services.
Despite the City’s clear commitment to infrastructure investment, the Building Congress did identify areas of concern. First, the trend of investment is downward from the peak years of 2009 and 2010. Given fiscal pressures, this is understandable. But further declines in capital spending in upcoming financial plans would be cause for concern.
Second, certain capital priorities do not fare well in the budget. Of particular importance is the City University of New York, which trains several hundred thousand full and part time students on 23 campuses and maintains more than 26 million square feet of property. However, higher education – which received over $200 million in capital funding in each of the last two fiscal years – is slated to receive only $72 million for the entire four year period. This is not sufficient money to maintain this vital resource for New Yorkers.
While the Administration and the City Council should be applauded for their efforts to preserve infrastructure investment at reasonable levels, the Building Congress continues to urge – as it has at past hearings – that the City undertake a wholesale examination of its assets and financing methods and propose policies that maximize asset value and investment opportunities, much like the initiative led by the New York State Commission on State Asset Maximization with regard to State assets. This effort, given its broad scope and potential for savings, cannot be a one-time effort, but an ongoing function of government.
In conclusion, the Building Congress supports the Mayor’s proposed Fiscal Year 2011 Capital Plan. It pares spending in the coming years in recognition of the City’s difficult financial outlook. However, it retains important investments in the City’s core infrastructure programs to ensure that our City is able to emerge from the downturn prepared for future growth and able to retain its competitive position in the world economy.
The New York Building Congress appreciates this opportunity to comment on the Capital Budget component of the Fiscal Year 2011 Executive Budget. The Building Congress endorses the Capital Commitment Plan presented in the Mayor’s Budget. The proposed plan maintains core infrastructure and public education facilities, assets essential to the quality of life, and prepares the City for longer term growth when the economy recovers.
The Mayor’s commitment to infrastructure at this juncture is particularly important as both City and State governments are facing monumental fiscal challenges in the coming year and beyond. Capital programs are particularly vulnerable to budget cuts because the consequences of significantly reducing investment today are difficult to reverse and can lead to a longer-term decline in the safety and livability of the City. Delaying essential capital projects would only cost the City more money to restart later on, which could further slow a broader economic recovery.
In addition to protecting critical infrastructure, the Mayor’s capital program has the added important benefit of pumping billions of dollars that would not otherwise be available into the local economy in the form of quality jobs, goods and services at a time when these opportunities are in short supply.
What’s more, the City has been able to procure certain capital projects at a lower cost this year than they would have been able two or three years ago. The City’s debt now carries historically high credit ratings, and the City will be gaining a big advantage from several federal subsidy programs to finance infrastructure. There has also been quantifiable deflation in the price of construction materials, the City recently completed a landmark project labor agreement with many of the construction trades and is finding increased competition for City contracts. The combination of these factors has enabled the City to procure large construction projects at a lower cost this year than at the top of the market.
It is also worth noting that while the Mayor and Council must confront difficult choices facing other critical services – capital dollars are not fungible. Because capital projects are debt financed, these funds could not simply be reallocated for salaries or other core services.
Despite the City’s clear commitment to infrastructure investment, the Building Congress did identify areas of concern. First, the trend of investment is downward from the peak years of 2009 and 2010. Given fiscal pressures, this is understandable. But further declines in capital spending in upcoming financial plans would be cause for concern.
Second, certain capital priorities do not fare well in the budget. Of particular importance is the City University of New York, which trains several hundred thousand full and part time students on 23 campuses and maintains more than 26 million square feet of property. However, higher education – which received over $200 million in capital funding in each of the last two fiscal years – is slated to receive only $72 million for the entire four year period. This is not sufficient money to maintain this vital resource for New Yorkers.
While the Administration and the City Council should be applauded for their efforts to preserve infrastructure investment at reasonable levels, the Building Congress continues to urge – as it has at past hearings – that the City undertake a wholesale examination of its assets and financing methods and propose policies that maximize asset value and investment opportunities, much like the initiative led by the New York State Commission on State Asset Maximization with regard to State assets. This effort, given its broad scope and potential for savings, cannot be a one-time effort, but an ongoing function of government.
In conclusion, the Building Congress supports the Mayor’s proposed Fiscal Year 2011 Capital Plan. It pares spending in the coming years in recognition of the City’s difficult financial outlook. However, it retains important investments in the City’s core infrastructure programs to ensure that our City is able to emerge from the downturn prepared for future growth and able to retain its competitive position in the world economy.