Crain's New York - February 25, 2013 - (Page 6)

Sequestration threatens $2.1 billion in federal funding BY GALE SCOTT Having endured state Medicaid cuts, an economic downturn and Superstorm Sandy, New York’s hospitals are battle-fatigued. But that hasn’t lessened their alarm over the latest threat: an estimated $2.1 billion in lost federal funds over the next 10 years if Congress fails to reduce the federal deficit by March 1. That’s when the mandated cuts in U.S. spending on military and domestic programs will automatically take effect. Sequestration could result in trimming $1 trillion from the federal budget over the next decade. According to the New York State Division of the Budget, the state has about $5 billion at stake. Vulnerable programs Hospitals and research institutions are particularly concerned. “Congress is serious about these cuts, and they are playing with fire,” said Dr. Dennis Charney, dean of the Icahn School of Medicine at Mount Sinai. The automatic cuts put at risk federal support for more than 20 education programs in New York, ranging from Head Start to graduate medical education. Unemployment benefits, highway contracts, air-traffic controllers and food in- spection workers are also vulnerable. The breadth of the cuts remains uncertain. “It’s not just a matter of when and how much, but what programs would be targeted,” a spokesman for the state budget office said. Though many of the cuts are fixed, Congress could decide to balance the budget in other ways. As things stand, Medicaid would not be affected,just Medicare, where spending would be reduced by 2%. To avoid raising taxes, however, Congress could decide to reduce the federal deficit by removing Medicaid’s protected status,along with that of other currently safeguarded programs like federally supported children’s health insurance and food stamps. If nothing happens to change the current plan and the automatic cuts kick in, hospitals and medical research in New York City would take a hit. About 31,800 health care and related jobs could be lost statewide this year, and nearly 50,000 by 2021, according to the Greater New York Hospital Association, citing a study by the American Hospital Association. The AHA study predicts that 496,000 health care and related jobs will be eliminated across the U.S. in 2013 if the Medicare cuts go through, a number that could reach 767,000 by 2021. Efforts to train physicians could also be impeded because sequestration has put at risk $750 million a year in Medicare support that New York teaching hospitals get for graduate medical education.That would make it harder to fill a gap in primary-care doctors and certain specialists. Slash in research dollars Research would lose money and jobs, too. Mount Sinai, for instance, gets about $200 million in National Institutes of Health funding annually.The cut would mean an annual loss of between $12 million and $18 million. The NIH budget faces a 5%, or $1.5 billion, cut. The state’s nearly $2 billion in NIH money in 2012 supported 32,249 jobs. The cuts would cost the state about $100 million in the first year, putting at risk about 1,600 jobs. The NIH would achieve the savings by cutting funding of current projects by 10% to allow it to continue to fund new proposals.The agency has already endured a decade of budget cutting that has reduced spending by 20%.“You still want to award as many grants as you can because if you shut the spigot, it hurts progress,” Mount Sinai’s Dr. Charney said. “This way, pro gress will just be slower.” Ⅲ ‘Congress is serious, and they are playing with fire’ by Andrew J. Hawkins newscom Hospitals brace for big cuts THE INSIDER When money and agendas line up T he real estate industry has poured more than $800,000 into City Council Speaker Christine Quinn’s unofficial campaign for mayor, according to an analysis by the New York Public Interest Research Group. That represents 14% of her total haul, which in January stood at just over $6 million. In contrast, her rival Bill de Blasio (above) has collected about $226,000—or 8% of his total—from developers and landlords, according to NYPIRG. The numbers lurk beneath the war of words that broke out between Ms. Quinn and Mr. de Blasio, the public advocate, over her proposal to cap property taxes for real estate developers who create affordable housing. Mr. de Blasio called the plan a “giveaway” to wealthy developers, noting that even the mayor had rejected it. Some in real estate complained that Mr. de Blasio’s criticism displayed a lack of understanding about how affordable housing gets built in New York. Ms. Quinn, a former tenant organizer, said it was impractical to develop an affordable-housing plan without the industry’s input. “It’s no surprise that the real estate industry has financially rewarded the speaker,” a de Blasio spokesman said. “She is passing off their tax-giveaway plan that even Mayor Bloomberg said was too tilted toward developers as her major housing proposal.” A Quinn spokesman shot back: “Chris will put her record and vision on the issues of housing up against anyone in this race.” Two other Democratic contenders, Bill Thompson and Comptroller John Liu, have each received $124,000 from real estate, less than 10% of their totals. Ms. Quinn has positioned herself as a business-friendly Democrat. As of December, she had received 67% of donations in the race made by employees of 100 politically active corporations in a New York Times analysis. NYPIRG’s calculations, by the group’s legislative operations and research coordinator, Bill Mahoney, totaled donations from companies solely involved in real estate and from construction companies that focus primarily on residential and commercial development, as well as a couple of investment firms that focus on real estate. “They’re hoping to gain access and influence,” said NYPIRG’s Gene Russianoff, “and this is a perfectly legal way to do it.” Politicians sometimes play that game as well. Last week, Sen. Charles Schumer described how he helped enlist politically connected businesspeople to lobby Republicans in Congress to pass a $51 billion Superstorm Sandy aid package, which they did in January. The senator, working with Association for a Better New York Chairman Bill Rudin and Partnership for New York City President Katherine Wylde, compiled a list of New Yorkers who had contributed campaign money to House Speaker John Boehner, Majority Leader Eric Cantor and Senate Minority Leader Mitch McConnell. The effort kicked off in midDecember, Mr. Schumer said at a breakfast forum in lower Manhattan hosted by Mr. Rudin’s organization and the Downtown Alliance, a business group. Among the executives tapped to lobby Republicans were Kenneth Langone, co-founder of Home Depot; Lloyd Blankfein, chairman and CEO of Goldman Sachs; Stephen Schwartzman, CEO of the Blackstone Group; Henry Kravis, co-founder of private-equity firm Kohlberg Kravis Roberts & Co.; and Terry Lundgren, president and CEO of Macy’s Inc. “Each of these people called three, four, five times,” Mr. Schumer said. “It really worked.” Ⅲ Crain’s Insider, our award-winning politics newsletter, is now a blog. Read it every day at www.crainsnewyork.com/insider 6 | Crain’s New York Business | February 25, 2013 http://crainsnewyork.com http://crainsnewyork.com http://www.crainsnewyork.com/insider

Table of Contents for the Digital Edition of Crain's New York - February 25, 2013

IN THE BOROUGHS
IN THE MARKETS
THE INSIDER
BUSINESS PEOPLE
OPINION
ALAIR TOWNSEND
GREG DAVID
REPORT: DIGITAL NY
THE LIST
CLASSIFIEDS
FOR THE RECORD
REAL ESTATE DEALS
SMALL BUSINESS
NEW YORK, NEW YORK
SOURCE LUNCH
OUT AND ABOUT
SNAPS

Crain's New York - February 25, 2013