Today New York Governor Andrew Cuomo provided a little more insight into his plans for financing the $5.2 billion replacement for the Tappan Zee Bridge, saying that private union pension funds were interested in investing in the project.
Last month the governor announced that the state would replace, not continue to repair, the aging bridge. No funding plan has been settled upon, but last week reports surfaced that the governor was looking at using pension funds to partially finance the construction. The Wall Street Journal's editorial board accused him of raiding pension funds (subscription required) to pay for the bridge; Cuomo countered by saying he never stated the state would use its own pension funds for the project, but that because it was such a huge project he had to look at alternative financing plans.
Wednesday morning he appeared on Fred Dicker's show Live from the State Capitol. While most of the lengthy conversation was devoted to the state's looming $3.5 billion budget deficit and the prospect of a tax hike, the governor spent about 10 minutes talking about the Tappan Zee's replacement.
A partial transcript follows. You can listen to the audio below.
The conversation opened with Fred Dicker asking about arguments in recent days saying the Tappan Zee Bridge replacement might not be a good investment vehicle for pension funds.
Cuomo: I get that critic’s argument. Government should do nothing. Government is the problem. The less government does the better. Starve the beast, we don’t need government.” (Fred interjected; the governor continued.)
Cuomo: There’s no doubt that you’d only go to an alternative financing vehicle if you didn’t have a better financing vehicle, and if the state could do it with low-cost tax exempt bonds and that was the most cost-efficient way to do it, you’d do it. If you didn’t have the ability, because you were at your debt ceiling, you’d either let the bridge fall down, or you’d find another way to do it. I guess some people could say ‘let the bridge fall, and we’ll get in boats and we’ll row across the river.’ We’re exploring – again, you know, all of these conversations, if you have an exploratory conversation then somebody says ‘well, you’re considering’ – we’re exploring using union -- private union pension funds as a financing vehicle. Meaning what? Meaning labor unions finance projects all across this country. And labor unions, especially in the construction trades, could have a self-interest in seeing large-scale construction projects – good for the state, but also employs members of their union. So if they’re investing their pension funds, might they be interested in investing in a project in their state that creates jobs? And the answer is yes. Well, they’d have to get a market rate, true, they have fiduciaries, they have trustees, federal regulations, it would have to be a market rate. I understand that. Is that market rate the best rate you could get? Well, if it’s not, then you wouldn’t use it. But if it’s a competitive rate then you could increase the capacity of the state because you wouldn’t have just the state’s checkbook on the table, Fred, you’d have the state’s debt ceiling, and you’d have pension funds that could invest their own funds, which could give you added capacity.
(Fred Dicker asked him about whether it makes more sense to repair the bridge for a few more years and table a replacement plan.)
Cuomo: I think on the numbers, Fred, they’d say to you you should have replaced it years ago. That the cost of maintenance far outpaces the replacement cost. And look, in truth, they have been talking about replacing this for years. Governor Pataki announced that it was his intent. It’s partially finding the financing. And it’s partially, Fred, just the lack of initiative and ability to execute by state government. Talk about metaphors! When was the last time we built a bridge that didn’t frankly collapse and then we had to rebuild it because it collapsed?
Cuomo: Yes, but it was an emergency. The emergency expedited the process. But in some ways we’ve gotten so bogged down with process that we’re suffocating in our own process. And a little bit we’ve lost our appetite to even try. And well it’s so difficult and this and the environmental this and they’re going to sue us this and the community opposition this. And I think that becomes – we talk about the lack of confidence becomes a problem in and of itself, that lack of initiative, that sense of paralysis becomes a problem in and of itself.
(Fred Dicker: couldn’t it be done statutorily lifting the debt ceiling, funding, bonding out the building of the TZ bridge?)
Cuomo: Yes, but then all of the names you mentioned would go on your show and say ‘can you believe it! They’re raising the debt ceiling!' These are tax and spend... (cross talk). Raising the debt ceiling is a legitimate issue a legitimate discussion. The debt ceiling is a ceiling for a reason. I think using alternative financing is better than raising the state’s debt ceiling...we have to remember that sense of courage and vision and capacity and can-do spirits. We’ve gotten so good at saying why we can’t do it, we’ve gotten so good at the negative.