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Discusses Senate Plans for Tort Reform, Privatization
Thursday, February 6, 2003
Senate Majority Leader Joseph L. Bruno, speaking today at the Crain's Breakfast in Manhattan, said enacting tort reforms and privatizing certain state and city assets could generate significant savings and revenue that could help close budget gaps faced by the state and New York City, while reducing the need for spending reductions and tax increases.
"I've said all along that the state and the city have to be creative and imaginative to find ways to close budget gaps and maintain important government services, particularly in regard to education, health care and continued job creation and economic development," Senator Bruno said. "The knee-jerk reaction that we should just raise taxes doesn't work, nor do massive cuts in education and health care and other critical government services. We have to look at alternatives and that's what the Senate is doing.
"Tort reform can save a billion dollars by making common sense changes to a system that costs state taxpayers more than $14 billion, more than any other state in the country," Senator Bruno said. "President Bush, Mayor Bloomberg and Governor Pataki have proposed tort reform measures and almost a thousand groups and organizations in New York representing local governments and school districts, professional organizations, and businesses of every size in virtually every sector of the economy are pleading for relief from lawsuits that cripple the state and place an enormous burden on taxpayers."
Senator Bruno said that from 1988 to 1996, annual tort case filings in New York State grew by almost 60 percent, from 53,104 to 84,089. Last year, the City of New York paid out more than $550 million in settlements and judgments in lawsuits claiming the city negligently caused injuries. According to the Public Policy Institute, in 1996, the 'tort tax' cost every taxpayer in New York $800.
Senator Bruno said tort reforms that would repeal joint and several liability; place a $250,000 cap on non-economic damages; limit lawyers' contingency fees; link judgment rates; eliminate "vicarious" liability; reduce statutes of limitation; extend Court of Claims jurisdiction, among others, have generated a groundswell of support in this state and across the nation.
"Twenty three states have adopted tort reform," Senator Bruno said. "With the budget gaps faced by the state and the city, changing tort laws would be an effective alternative to raising taxes and cutting spending."
Senator Bruno also discussed proposals to generate savings and revenue through privatization of government run entities, including JFK and LaGuardia Airports, the State Insurance Fund as well as other state assets and services.
Senator Bruno estimated that selling JFK and LaGuardia could generate between $4 billion and $8 billion, depending on what is included in the sale.
"Privatizing airports has proven to be successful wherever it has been undertaken," Senator Bruno said. "It would transform a government expense into a new tax base capable of generating economic activity and new recurring revenues for the state and the city in the future.
Senator Bruno pointed out that in 1987, Great Britain sold seven airports, including Heathrow and Gatwick, in a public share offering for $2.5 billion. Since that time, more than 100 airports around the world have been privatized, resulting in more revenue for governments, and more efficient and affordable air travel for consumers.
"New York and the rest of the country has lagged behind a growing trend of airport privatization around the world," Senator Bruno said. "In 2000, the state leased Stewart Airport to a private company and the result has been a success. Privatizing Stewart has resulted in reduced costs, improved service, and the establishment of new businesses that generate additional revenue for state and local governments. It would work on a larger scale with JFK and LaGuardia."
Senator Bruno also suggested the privatization of the New York State Insurance Fund (NYSIF), which was created in 1914 to provide a guaranteed source of workers' compensation insurance coverage at the lowest possible cost to employers within New York State. NYSIF is a self-supporting insurance carrier that competes with private insurers in the workers' compensation and disability benefits markets. NYSIF has more than $8 billion in assets. It is estimated that the sale of NYSIF could generate as much as $500 million.
Senator Bruno said every state asset, property and service that competes with the private sector should be closely looked at to see if it could be privatized. In addition, Senator Bruno emphasized that any plans for privatization of government assets or services must include protections for public employees.
"We have to take a close look at every area where the state is competing with the private sector that pays taxes and question whether the state should be in that particular business or not," Senator Bruno said. "Is it a benefit to the taxpayers, or would it be more of a benefit if the service was moved to the private sector?"
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