Gotham Gazette http://www.gothamgazette.com/component/tags/tag/547 Thu, 22 Feb 2018 07:24:25 +0000 Joomla! - Open Source Content Management en-gb webmaster@gothamgazette.com (Webmaster) Four Years Later, 2014 State Campaign Finance Pilot All But Forgotten http://www.gothamgazette.com/?id=7428:four-years-later-2014-state-campaign-finance-pilot-all-but-forgotten http://www.gothamgazette.com/?id=7428:four-years-later-2014-state-campaign-finance-pilot-all-but-forgotten Cuomo ethics agenda

Gov. Cuomo unveils an ethics agenda (photo: The Governor's Office)


With the four statewide positions up for election again this year, Governor Andrew Cuomo’s ill-fated 2014 public campaign financing experiment, in which candidates for state comptroller were eligible to test-run a pilot program, appears all but forgotten.

New York State Comptroller Tom DiNapoli, like Cuomo a Democrat running for another four-year term, has long been a proponent of a comprehensive program to match certain private campaign donations with public dollars, as a way to curb real or perceived influence of money in government and the possibility of pay-to-play politics. DiNapoli would support a program that only targeted his office, he said, restating his views during a question-and-answer session last week at the Albany Times Union’s Hearst Media Center.

In 2014, DiNapoli briefly saw a version come to fruition, when a last-minute budget deal between Cuomo and the leaders of the Senate and Assembly instructed the State Board of Elections to quickly create a public funding program for the comptroller race in the middle of the election cycle, just eight months before Election Day -- a proposal many immediately saw as cynical and doomed to fail.

Recalling that pilot program nearly four years later, DiNapoli told the Times Union’s Casey Seiler he believes the state is long overdue for publicly financed elections for all state-level offices -- including candidates for the state Legislature -- given the numerous corruption trials involving former lawmakers, former state officials, and others that are looming over this legislative session. DiNapoli marveled at the state’s immensely lax campaign finance laws, including the infamous loophole that allows limited liability corporations (LLCs) to pour virtually unlimited funds into candidate campaign accounts.

"I don’t say it’s a panacea, but I do think public financing of elections will create more access for people to run for office,” said DiNapoli, adding, “Democracy works when there is a competition of ideas.”

In 2013 and 2014, there was a lot of momentum in New York and nationally around campaign finance reform, including a significant push for Cuomo to take the issue up the way he did other progressive initiatives in prior budget negotiations, where Cuomo is known for getting his top priorities passed. Newspaper editorial boards, government reform groups, and others continued to call on Cuomo to usher through a new campaign finance system, something he had repeatedly called a priority. And, it was a gubernatorial election year, and leaders of the left-wing Working Families Party indicated that they would withhold their endorsement of the Democratic governor, then seeking a second term, unless he pushed for comprehensive campaign finance reform.

Notably, the governor’s own Moreland Commission on Public Corruption -- a bipartisan panel primarily made up of district attorneys rather than politicians -- recommended public funding of all elections as the key component in reforming the state’s porous campaign finance system to prevent the type of scandals that had rocked state government in recent years. In addition, the panel recommended lower contribution limits and closure of loopholes, tighter guideline for how campaign account monies can be spent, and increased disclosure on outside spending, such as spending on ads that could be “reasonably considered’ campaign ads.

When at the end of March 2014 a budget deal came together between the governor and legislative leaders, Cuomo squeezed through the pilot program, passed as part of the last-minute horse trades that occur annually during the final hours of budget negotiations.

At the time, Republicans controlled the Senate -- as they do now -- and the compromise was notable given the Republican leadership’s vehement opposition to spending any state funds on public campaign financing, which they typically see as likely to bolster Democrats and a questionable use of state funds for campaign purposes. But then-Senate Majority Leader Dean Skelos agreed to include in the final budget bill the pilot, limited only to the comptroller’s office. While it could open the door to larger campaign finance reforms, the pilot would benefit DiNapoli’s Republican challenger more than the incumbent, who had already raised significant funds. Some saw Cuomo’s use of the comptroller’s race as a way to frustrate DiNapoli, who Cuomo has at times sought to undermine. 

“The pilot program for public financing of the comptroller’s election is a poor excuse to avoid real reforms New Yorkers deserve. At this point, I cannot participate in this pilot,” DiNapoli said in a statement at the time.

As surprising as it was to some that Senate Republicans had agreed to even the pilot, Cuomo had the leverage of the Moreland Commission, which had begun to irk the Legislature (and the governor himself), according to those familiar with budget negotiations. On March 31, 2014 -- about two days after the proposed pilot program had been announced -- Cuomo abruptly shut down the commission, just halfway through its planned 18-month duration, citing inclusion in the new budget of reforms aimed at addressing bribery and corruption and enforcement of election law, which he said would eliminate the need for the panel.

DiNapoli had been surprised to learn of the pilot, having not been informed “even by his friends in Legislature,” the former assemblymember said last week. According to the pilot, statewide candidates would need to raise $200,000 in donations above $5 from at least 2,000 New York State residents. For each eligible donor, every dollar donated up to $175 would be matched with $6 of public money.

"The process was flawed,” DiNapoli said at the time, just after the pilot proposal was announced and before it was voted through as part of the 2014-2015 state budget. “I was excluded from the negotiations, and it appears a historic opportunity was missed for comprehensive campaign finance reform and public financing for all statewide and legislative offices.”

Unlike DiNapoli’s own proposal -- which would create a seven-member board, appointed by a variety of offices, to create guidelines and procedures to ensure that the public funds are appropriately spent -- Cuomo's proposal entrusted the state Board of Elections to administer the program. The Board was instructed to issue payments "as soon as it is practicable," write advisory opinions, and create new regulations as needed. Civic groups opposed the program, writing in a letter to the Cuomo administration that, “the Board is ill-suited to take on such as task, much less set up an entirely new administrative system for an election cycle which has already begun.” They noted that Cuomo’s Moreland Commission had investigated the Board and found a great deal of dysfunction at the agency in its preliminary findings.

Good government groups also raised concerns about the timing of the pilot -- which would launch just months from Election Day and not easily provide candidates with adequate time to organize their campaigns in a way that would allow them to opt in. They noted that the program did not need to be piloted; New York City already has a successful public matching system.

Indeed, DiNapoli, who had already done significant fundraising, chose not to opt in to the pilot, and his severely disadvantaged Republican opponent, Robert Antonacci, the Onondaga County comptroller, did not meet the $200,000 threshold to qualify for public matching funds. DiNapoli wound up winning the election, 60 percent to Antonacci’s 36.6 percent.

Blair Horner, executive director of New York Public Interest Group, recalled the 2014 push and the budget compromise, and called the program a “kamikaze pilot” that was designed to fail.

“Despite the fact that the governor said it was a pilot project, we never heard about it again,” said Horner. “If it was a serious proposal, [a comprehensive public campaign finance system] would have gone into effect within months.”

Cuomo, in a May 2014 op-ed in the Huffington Post, “Finishing the Job Teddy Roosevelt Started: Public Financing of Elections,” acknowledged that the deal was not sufficient, but said critics should recognize the significance of Republicans conceding “the crucial ideological point they had resisted for decades.”

“We crossed the ideological Rubicon and the world did not stop spinning — now it’s time to finish what we started and pass a full-fledged program of public financing for state campaigns,” Cuomo wrote. “If you can use public funds for a demonstration program then you can use public funds for a full program.”

The Board of Elections did briefly review the failed pilot, recommending that a future version of the program allow two years for implementation and coordinate better with other agencies. “It is important to note that the 2014 program was to be implemented nearly 3 ½ years into the election cycle for this office,” the report’s authors wrote.

Now, four years later, the four statewide offices -- governor, lieutenant governor, attorney general, and comptroller -- are again up for election, with Democratic incumbents in each position likely to seek another term. As they are every two years, all the seats in the state Legislature will also be on the ballot this year. While Cuomo, who is sitting on a $30 million warchest, including millions in dollars from LLCs, put provisions for a small-donor public matching program and closure of the LLC loophole in his State of the State policy book again this year, the proposals were only briefly mentioned in his 92-minute address on January 3.

"We should increase trust by closing the LLC loophole and open up the electoral process with public financing, but not our current public financing system that has public financing but private loopholes,” Cuomo said. “I mean a true public financing system in which the exception does not swallow the rule. That's what we need to do to regain the trust of the citizens in this state and across this nation."

There’s no indication that Cuomo will prioritize campaign finance reform this year, especially given the difficult budget situation the state is in, with a $4.4 billion deficit to close and a new federal tax code to react to. While the Democratically-led Assembly appears to continue to support campaign finance reform, it is not evident as a top priority in the lower house. Senate Republicans regularly dismiss the idea of campaign finance reform, and when discussing the LLC loophole typically point to the influence of labor unions in donating to Democratic candidates.

The state’s broken campaign finance system will likely be on display during the upcoming corruption trials of eight men, including Cuomo’s former top aide Joe Percoco and former SUNY Polytechnic Institute President and CEO Alain Kaloyeros, whom Cuomo regularly praised and empowered. The massive bid-rigging scheme associated with the governor’s signature Buffalo Billion program benefited developers who contributed generously to Cuomo’s re-election campaign. After the scheme came to light, Cuomo vowed to instruct his campaign to turn away donations from those bidding for state projects, but ultimately did not follow through on that promise.

Karen Scharff, executive director of left-leaning advocacy group Citizen Action of New York, who was involved in the negotiations of 2014, said advocates sensed they had hit a wall with the Republican-controlled Senate after their major push to pass comprehensive public financing system failed. Despite this, she said, nothing has changed in Albany and these reforms are needed more than ever.

“We continue to see a donor-driven culture where critical policy is determined based on who the biggest donors are. And who can run for election and who can win is also heavily based on who can raise money from real estate and hedge funds,” she said. “We’re not going to have a real democracy in New York State until we have publicly funded elections.”

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by Rachel Silberstein, State government reporter, Gotham Gazette
     

Read more by this writer.

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Four Years Later, 2014 State Campaign Finance Pilot All But Forgotten Wed, 17 Jan 2018 05:00:00 +0000
With Phase One Going on Trial, Cuomo’s Buffalo Investment Moves Ahead with Broken Reform Promises http://www.gothamgazette.com/?id=7353:with-phase-one-going-on-trial-cuomo-s-buffalo-investment-moves-ahead-with-changes-and-broken-reform-promises http://www.gothamgazette.com/?id=7353:with-phase-one-going-on-trial-cuomo-s-buffalo-investment-moves-ahead-with-changes-and-broken-reform-promises Cuomo jobs western new york

Gov. Cuomo (photo: Governor's Office)


As federal corruption trials loom for several associates of Governor Andrew Cuomo, the administration is forging ahead with Buffalo Billion II, the second phase in an ambitious plan to revitalize Buffalo’s beleaguered economy and help transform Upstate New York into a hub of technology innovation and jobs. The first phase saw the massive alleged bid-rigging and kickback scandal that rocked state politics when outlined in September 2016 by the Manhattan U.S. Attorney’s Office and will loom over Cuomo’s 2018 reelection campaign.

In April, the state Legislature approved $500 million in budgetary funds for the Buffalo Billion II, which marks a shift in the investment in Western New York. The initial Buffalo Billion program, touted by Cuomo as a major success in revitalizing that city despite the scandal, poured the bulk of the $1 billion in funds into a controversial solar panel factory, while Buffalo Billion II investments are diverse and largely infrastructural, including the development of waterfront and rail access, tourism, and job training initiatives.

Critics -- including lawmakers, financial analysts and good government groups -- acknowledge steps the Cuomo administration has since taken to improve the contracting process, but say they remain skeptical of the Buffalo Billion extension and how it is administered. Calling its approval “a blank check” to the governor with little oversight, they question why these small projects are not being funded through traditional means -- like via local governments -- and whether these investments are tax dollars well-spent. Meanwhile, other promises the governor made in the wake of the scandal were abandoned by Cuomo, who had promised unilateral action that did not materialize.

“There’s two problems here. One is the corruption problem, which is obviously paramount in the upcoming trials,” said David Friedfel, director of state affairs for Citizens Budget Commission, a nonpartisan watchdog. “But a second problem that we’ve voiced concern about, which is sort of getting lost in the conversation, is that a lot of these are a bad investment of state taxpayer dollars.”

The Buffalo solar panel factory, which received about $750 million in state subsidies, as well as a state-funded nanotechnology hub in Syracuse, are at the center of last year’s sweeping probe by then-U.S. Attorney Preet Bharara’s office, which ensnared nine men -- including two who had been powerful state officials -- whose trials may overshadow the 2018 legislative session in Albany, set to begin in January.

On January 8, jury selection is scheduled to start in the trial of Cuomo’s former close confidant and aide Joe Percoco, along with three construction and energy executives who had business before the state and are accused of arranging bribes for Percoco and his wife in exchange for Percoco’s government influence.

On May 15, jury selection for the trial of former SUNY Polytechnic Institute President and CEO Alain Kaloyeros, whom Cuomo empowered and praised over several years as a key architect of his upstate economic development efforts, and executives from LP Ciminelli, a construction company tied to the factory and Cuomo’ campaign coffers, will commence.

Two Syracuse developers, Steven Aiello and Joseph Gerardi, who run COR Development, will be defendants in both trials. Eight defendants in total have pleaded not guilty, while a ninth, lobbyist and former Cuomo ally Todd Howe, pleaded guilty to numerous felony charges and is cooperating with prosecutors. While Cuomo was not directly implicated in the federal complaint, prosecutors note that he received large campaign donations from the business people involved in the scheme, often at Howe’s behest. The governor also oversaw the economic development programs that were allegedly taken advantage of and dismissed calls for greater independent contracting oversight, both before and after the scandal broke, though he did make some relatively minor adjustments.

In November 2016, two months after the charges were outlined, Cuomo expressed dismay over the scandals that were threatening to undercut his signature economic development programs and vowed to quickly strengthen oversight and ethics, though all under his purview. Notably, Empire State Development, the state’s economic development authority, would immediately begin to oversee projects run by entities associated with SUNY Polytechnic, Fort Schuyler Management Corp. and Fuller Road Management Corp., state-affiliated nonprofits created to more quickly disburse economic development funding that Kaloyeros is accused of using to illegally direct contracts.

“I believe this public trust and integrity issue must be addressed – directly and forthrightly. I don’t believe in denial as a life strategy. I believe you must face your problems, no matter how unpleasant, and do your best to resolve them,” Cuomo said in a long statement outlining his response to the scandal and news of problems at CUNY. “It is time for action, not words.”

Cuomo promised a series of actions and proposals, some that would need legislative approval and others he categorized as “steps we can take immediately.” Most of those promised reforms did not materialize.

In the November 2016 statement, Cuomo vowed, “I will order my campaign and my party not to accept campaign contributions from companies once a Request for Proposals has been announced, and for six months following the conclusion for the winner,” adding, “I believe the other state offices and the legislature should do the same and will propose such a law.” According to Cuomo’s office, his pledge was not followed through on.

While his campaign did not follow through, in January of this year, Cuomo outlined his ethics platform and proposed creating such bans for all government leaders overseeing contracting processes. It did not pass.

In November 2016, under other ‘immediate’ actions he would be taking, Cuomo acknowledged that “[t]he contracting systems at CUNY and SUNY have become the focus of US Attorney and IG inquiries in the past several months. To insure more permanent supervision, I will create and appoint separate Inspector Generals for both SUNY and CUNY.” These IGs were not created.

Cuomo also said in November 2016, “I will also appoint a Chief Procurement Officer for the Executive branch. That person will be charged with reviewing all state contracts, with an eye towards eliminating any wrongdoing, conflicts of interest or collusion. And just so there is no confusion, I do mean all contracts.” The governor did not appoint such an officer.

Instead of immediate action on these promises, they were turned into proposals in Cuomo’s 2017 agenda that did not pass in the April budget or June legislative agreements that followed. Asked about the lack of follow-through on the promises from November 2016, Cuomo’s office pointed to the Legislature. In the November 2016 statement Cuomo had classified the proposals among “actions I can take under my own authority."

Enacted or not, critics say that these appointments would make no substitute for outside oversight.

Two months later, during the Buffalo leg of his six-stop 2017 State of the State tour, Cuomo made no mention of the scandals or his ethics platform, painting a rosy picture of his administration’s efforts to revitalize the city, and vowing to “double down” on the projects.

“Buffalo Billion squared because it takes Buffalo Billion I and it takes Buffalo Billion II, and there’s a synergy between the two of them that will be exponential,” Cuomo said. “The principles of it are going to be to build on Western New York’s renaissance, which you’ve all accomplished already, help more small businesses in downtown areas and strategically invest in regional industries.”

As the next phase of those efforts unfold with the backdrop of the corruption trials, the new Buffalo Billion does appear less vulnerable to bid-rigging, in part due to a series of voluntary fixes adopted by Cuomo’s administration, and also because of increased scrutiny from the press and government watchdogs.

The shift of economic development projects from under SUNY-affiliated nonprofits to Empire State Development, which can be audited by the comptroller’s office, is a key step, and ESD, a public authority, has modified its own contracting protocols based on recommendations by state-contracted consultants from Guidepost Solutions. (Cuomo announced he was hiring Guidepost to do a review soon after the scandal broke.)

Asked for comment about the steps the administration has taken to address the corruption scandal in the Buffalo Billion and which Cuomo promises has followed through on as Buffalo Billion II moves ahead, a spokesperson for Cuomo provided some background information but pointed Gotham Gazette to prior public statements by state officials.

“We share your goal of preventing fraud, waste and abuse. ESD has taken substantive steps to strengthen applicable processes to address the concerns you have raised and to implement your recommendations, including our support of strengthened governance provided to non-profits associated with SUNY,” Zemsky of ESD wrote in a letter sent to Guidepost Solutions’ head Bart Schwartz in April.

According to the governor's office, those Guidepost-suggested changes include reforms related to procurement, construction, property and equipment acquisition, and grant compliance. More specifically, there are new controls and procedures to improve payment processing and project management‎, with a focus on project timelines, billing, budgeting, documentation verification, payroll, and how RFPs and bids are evaluated.

There has been little contract or spending activity related to Buffalo Billion II in 2017, according to records provided by the governor’s office, but a handful of relatively smaller projects have made it past the planning stage. A new building for University at Buffalo Jacobs School of Medicine, is expected to be completed in December and will house an incoming class of students for the semester commencing January 2018. A welcome center on Grand Island, which is expected to become a vital component of New York's tourism industry, drawing in $100 billion and “supporting more than 900,000 jobs,” is expected to be fully constructed and in use by August 2018, according to Cuomo’s office.

Government watchdogs and reformers commend the government’s efforts to create more accountability for these projects but say they are no replacement for long-term, independent oversight.

The watchdogs call for a “database of deals,” which would digitally compile every entity receiving funds from the state along with where each dollar is going; dramatic overhaul of the campaign finance system to eliminate the appearance or reality of pay-to-play; and a bill to restore the powers of the state comptroller to review procurement contracts for SUNY, CUNY, and Office of General Services before they are approved. That power was stripped by Cuomo and the Legislature in 2011, in part to expedite the flow of economic development funds aimed at upstate revitalization, a move that was criticized intensely when the corruption revelations came to light.

"As with all of the economic development programs subject to our review, we are closely looking at payment requests,” said Jennifer Freeman, a spokesperson for DiNapoli's office in a statement to Gotham Gazette. “The problem is not all contracts and payments are subject to our review, which is why State Comptroller DiNapoli is pushing for major procurement reforms to improve oversight."

These long-sought reforms appeared to have some momentum in the 2017 legislative session, but wound up going nowhere due to pushback from Cuomo, even as more economic development money was approved.

There is less pushback against Buffalo Billion II, in part because the state projects involved are less controversial and more diverse than those announced in 2012. At that time, many questioned the state’s decision to spend $750 million on the SolarCity manufacturing plant that made a splash when it was purchased by Tesla’s Elon Musk, but has failed to the deliver the promised jobs. However, those watching Albany, and Buffalo, say questions remain about why the state is overseeing projects typically done by a local development authority or industrial development authority.

“In Buffalo, you have the state economic development corporation calling the shots on dinky expenditures on small real estate and street improvement projects,” said John Kaehny, executive director of ReInvent Albany, a watchdog group that has focused on economic development spending, especially upstate. “Is Buffalo Billion II a good investment compared to traditional government spending on clean water, road repair and public transit?”

Kaehny added that it is still preferable that the government make many small bets on small businesses, which is the emphasis of Buffalo Billion II, rather than “rolling the dice on giant, high risk, corporate handouts like Buffalo Billion I did with Tesla, Riverbend.”

Cuomo, a Democrat who has said he’s seeking a third term in 2018 and appears to be considering a run for president in 2020, may see Buffalo as an opportunity to shape his national image as a leader who successfully resuscitated one of America’s largest, long-suffering post-industrial cities -- succeeding where many others have failed. Though that narrative is likely to be complicated by the corruption scandal, with more to be determined by the trials set to begin in 2018.

The governor has called his work in Buffalo successful, pointing to a declining unemployment rate in the formerly industrial city, a rate that dropped from 7.9 percent in October 2010 to a 15-year-low of 4.9 by October 2016, and there is a chorus of voices backing him up. But Western New York’s job growth continues to lag behind the national average.

Part of the boom is related to an increase in construction jobs. For the five-year period ending in 2015, the number of construction jobs in the Buffalo-Niagara Falls Metro Area rose by 10.1 percent, an all-time record, according to Cuomo’s office, and by 9.3 percent in Erie County. The state investment has generated buzz and created an air of optimism and excitement for both Buffalonians and outsiders, including companies that have eyed the state’s second largest city. The city has recently seen investments from General Motors, Geico, Goldman Sachs, General Mills, Sumitomo Rubber, and Moog and Entrepreneur Magazine recently ranked Buffalo second in the nation for start-up communities, according to the governor’s office.

The governor and his aides also say young people are flocking back to Buffalo: the number of young adults ages 20 to 34 in the Buffalo-Niagara region has increased by 8.3 percent since 2010.

Still, lawmakers whose districts should benefit from the funds have critiques of both phases of the program. Assembly Member Raymond Walter, a Republican from Amherst, has been a vocal critic of the Legislature’s approval of the Buffalo Billion II and has joined calls for reforms in the wake of the the 2016 scandal. While acknowledging that Western New York has been infused with optimism and entrepreneurship, Walter says he attributes some of the economic prosperity to initiatives that predate Cuomo.

“My biggest concerns are, from what I've seen, is an inability to actually provide any data that shows that the programs are working,” he said of the initial Buffalo Billion program, noting that SolarCity was initially intended to house many types of industries before it became a solar panel factory. add

“The idea all along was we don't want a silver bullet, there's not a silver bullet solution to the economic woes of Western New York. We can't just have one big project, but that's exactly what this is turned into,” said Walter, who got in a heated back and forth with ESD head Howard Zemsky last month at an Assembly hearing on the progress of Buffalo Billion and other economic development programs.

The governor’s office says it is creating a “comprehensive and diverse portfolio of investments that collectively is driving the future of Buffalo’s continuing economic recovery.”

But while Buffalo Billion II may provide more tangible investments into the area, Walter questioned why the funds were not lined out by project in the 2017 budget, and criticized the opaque process through which it was passed.

“We're giving a blank check to the governor, to the Empire State Development, to whoever is going to be administering these funds,” he said. “So yeah, I still have great concern because we've given up all legislative authority over how this money is going to be spent.”

Others, like Democratic Assemblymember Crystal Peoples-Stokes, of Buffalo, says she and her constituents welcome the investment from the state. While she recognizes concerns, Peoples-Stokes said she has witnessed a dramatic change in the long-struggling city in terms of opportunity, entrepreneurship, and investment from major companies, as well as college students choosing to remain in Buffalo’s downtown after graduation.

“For me, at the end of the day, to see economic development dollars have a meaningful impact in the core of our city, I’m satisfied with that,” she said. “Because for years, literally years -- this is not my first go around, I’ve been here for 15 years -- I’ve never seen the type of resources put into Buffalo as we’ve seen under Governor Cuomo.”

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by Rachel Silberstein, State government reporter, Gotham Gazette
     

Read more by this writer.

Correction: An earlier version of this story mistated the trial date of the LP Ciminelli executives.

Note: this story has been updated with more information on the reforms adopted from the Guidepost recommendations.

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With Phase One Going on Trial, Cuomo’s Buffalo Investment Moves Ahead with Broken Reform Promises Thu, 07 Dec 2017 05:00:00 +0000
Vance Fallout Echoes Other Controversies that Led to Reforms http://www.gothamgazette.com/?id=7265:vance-fallout-echoes-other-controversies-that-led-to-reforms http://www.gothamgazette.com/?id=7265:vance-fallout-echoes-other-controversies-that-led-to-reforms comptroller dinapoli with check nyscomptroller

Comptroller Tom DiNapoli (@NYSComptroller)


As the office and campaign of Manhattan District Attorney Cy Vance reexamine internal policies regarding the acceptance of campaign contributions, they may want to reference the guidebook of the office of the State Comptroller or Attorney General, both of which have implemented their own donor-vetting systems and guidelines in the wake of controversies involving fundraising practices. These checks far exceed what is required by lax and porous state campaign finance laws.

District Attorney Vance, facing immense pressure over his handling of a sexual misconduct case against disgraced producer Harvey Weinstein and of a fraud investigation into Donald Trump, Jr. and Ivanka Trump, announced Sunday in a New York Daily News op-ed that he had enlisted the Center for the Advancement of Public Integrity (CAPI) at Columbia Law School to review and recommend restrictions on his campaign finance practices, especially with regard to contributions from defense lawyers with business before the district attorney’s office.

In the column, Vance said he hoped that CAPI would “recommend that we go well beyond what is currently required by laws that govern contributions to district attorneys in our state,” adding that “this is one of the first reviews of its kind ever undertaken in the realm of prosecutors’ offices, and the firestorm we have experienced over the past week presents an opportunity for real reform.”

The response to reports that Vance had accepted large campaign contributions from lawyers affiliated with the Trumps and Weinstein, before and after each case was closed, recalls another flare up involving Attorney General Eric Schneiderman, during his $40 million lawsuit against Trump University, which started in 2011 and spanned about six years, though the office does abide by internally enforced campaign finance guidelines.

Schneiderman’s office came under scrutiny for his campaign’s acceptance and alleged solicitation of funds from members of the Trump family while engaged in litigation against the university, which was widely seen as a scam. Trump has given $12,500 to help get Schneiderman elected as attorney general, and Ivanka Trump reportedly gave $500 to Schneiderman’s campaign in 2012. Trump aides claimed the mogul was told Schneiderman’s campaign solicited contributions from Ivanka offering to make the “very weak” ongoing investigation “go away,” and filed a complaint with the Joint Commission on Public Ethics (JCOPE), though the ethics advisory organization decided not pursue the case.

It would not be not the first time Trump was accused of attempting to buy his way out of the legal mess surrounding Trump University. In 2013, Florida Attorney General Pam Bondi, who was up for reelection, reportedly solicited Trump for donations while acknowledging that she was considering joining Schneiderman in his Trump University suit, but decided not to pursue the case after the mogul made a $25,000 donation to an organization, called And Justice for All, that was backing her campaign. Trump was fined by the Internal Revenue Service, not for the obvious pay-to-play element -- which is legal -- but for making the political contribution from his foundation rather than his personal bank account.

Trump settled the Trump University suit, including paying $25 million to individuals who had enrolled in the school, and Schneiderman has continued to pursue cases against Trump, a fact that his representatives cite as evidence that the attorney general is not influenced by donors to his campaign.

Even prior to his ongoing battles with Trump, Schneiderman adhered to the policies of his two most recent predecessors by refusing to accept contributions from individuals or entities who have a matter before the office or have had such within the prior 90 days, according to a spokesperson for his office.

Furthermore, “every contributor who is personally solicited is subject to an extensive vetting process, and the office has both returned and refused to accept contributions from individuals and attorneys who have had matters before this office,” said Amy Spitalnick, press secretary for the attorney general, in a statement.

The policy was tweaked after JCOPE put out an advisory opinion last year expanding this ban to one year for matters in which the attorney general was personally and substantially involved or for contributions that were personally solicited.

The ethics advisory commission, which has jurisdiction over state officials and lobbyists, also ruled that directly soliciting and knowingly accepting contributions from the active subject of investigations and enforcement proceedings violates Public Officers Law 74. Other conduct, such as directly soliciting from an attorney that is appearing before the office, would be evaluated on a case-by-case basis, according to JCOPE spokesperson Walter McClure.

County-level prosecutors like district attorneys, of which there are 62 across the state, are not under the purview of JCOPE. The city’s Conflict of Interest Board does not deal with conflicts related to campaign finance, and neither the city’s Campaign Finance Board nor the state’s Office of Court Administration, which supervises the conduct of judicial candidates, have power over district attorneys, leaving these law enforcement officials a rare level of latitude and impunity.

The massive pay-to-play scandal involving former State Comptroller Alan Hevesi similarly resulted in self-imposed reforms for that office. In 2011, Hevesi -- who had resigned four years earlier as part of a plea bargain for an unrelated scandal -- admitted to accepting $1 million in gifts for himself and friends in exchange for offering "preferential treatment" and $250 million in state pension investments to Markstone Capital, which was owned by Elliott Broidy. Broidy, in turn, gave $500,000 to Hevesi’s reelection campaign.

Following his election in 2007, Comptroller Tom DiNapoli enacted a series of reforms, including an executive order and interim policy that banned pay-to-play practices, which went into effect in 2009.

The order prohibited the state pension fund from doing business with any investment adviser who made a political contribution to the state comptroller or a candidate for state comptroller, and applied for two years from the date of the contribution. The regulations were put in place ahead of 2010 rules issued by the U.S. Securities and Exchange Commission, which they closely parallel.

“The point was to ban the practice without waiting for the SEC rule, which was then in the proposal stage. The SEC rule went into force in 2011, at which point it became the law of the land and superseded or obviated the Comptroller's executive order,” said DiNapoli spokesperson Matthew Sweeney.

Recommendations from the CAPI review of Vance’s practices are due in January. Meanwhile, at least two Democratic Assembly members have proposed bills that would significantly curb contributions to district attorneys.

One bill was sponsored by Assemblymember Tom Abinanti in February and calls for publicly-financed elections of district attorneys and State Supreme Court justices. It has a handful of co-sponsors, but it never went anywhere.

"As an attorney, I've always been troubled by a system where judges are elected on the basis of money of people who appear before them,” said Abinanti, who represents Greenburgh and Mount Pleasant. “It's just unseemly.”

More importantly, Abinanti said, for prosecutors, who are law enforcement officials, publicly-finance elections would enable them to more honestly express their views on issues like drug policy, immigration, and bail reform, at pre-election forums and debates.

The issue arose in the recent Democratic primary for Brooklyn District Attorney, when Acting District Attorney Eric Gonzalez was criticized for accepting money from the bail bond industry.

Another piece of legislation, expected to be introduced in January by Assemblymember Dan Quart of Manhattan, would compile a statewide database of criminal defense attorneys and firms and steeply reduces the amount these individuals and entities can contribute to a district attorney candidate's campaign (up to $320 per election cycle). It also would prevent the bundling of donations to district attorney candidates.

“It would create greater transparency and limit the influence of criminal defense attorneys,” said Quart, who noted that the system was based on the “NYC Doing Business” database. Entities listed on the database are greatly restricted by the city’s campaign finance system in what campaign donations they can give to candidates for city offices.

Though the New York State Assembly’s Democratic majority conference convened for several hours on Tuesday in Albany, a legislative response to questions raised by the Vance controversy was not discussed, according to Assembly Speaker Carl Heastie.

“I understand where people are coming from,” said Heastie of the public outrage. “We didn’t get a chance to talk about that, I don’t want to just make a decision without talking to members of our conference, but we are always open to election reforms that will give the confidence to our constituents that there are no inherent conflicts.”

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by Rachel Silberstein, State government reporter, Gotham Gazette
     

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Vance Fallout Echoes Other Controversies that Led to Reforms Thu, 19 Oct 2017 04:00:00 +0000
Even Without Federal Cuts, Signs of Trouble for State Finances http://www.gothamgazette.com/?id=7102:even-without-federal-cuts-signs-of-trouble-for-state-finances http://www.gothamgazette.com/?id=7102:even-without-federal-cuts-signs-of-trouble-for-state-finances dinapoli phillips

State Comptroller Tom DiNapoli, right (photo: @NYSComptroller)


State Comptroller Tom DiNapoli is calmly ringing alarm bells about the New York economy and budget outlook. DiNapoli, the state’s chief fiscal officer, recently announced that overall tax collections for the first quarter of Fiscal Year 2018 -- April through July -- fell by $1.2 billion from the same period last year, a decrease of 6.1% in revenue.

Not only did tax revenues decrease by $1.2 billion from the prior year, but they were also $1.7 billion below a projection made by the Comptroller’s office in February, an indication that things are significantly worse than expected.

The findings were compiled in the comptroller’s monthly state cash report, issued in late July. In an accompanying statement, DiNapoli diagnosed a potential cause of the unanticipated shortfall in state revenues.

"We're three months into New York's fiscal year and personal income tax collections are falling short of what was expected," DiNapoli said. “Taxpayer anticipation of federal tax changes has contributed to the decline. Offsetting that, business tax collections are well over estimates.”

The comptroller, a few days after releasing the cash report, also released a larger fiscal analysis of the state’s enacted budget and other spending plans, including the capital program, which funds infrastructure projects. Already on unstable footing due to lower than expected revenues and questionable uses of budgetary windfalls, the situation is made worse by the looming cuts in federal aid by President Donald Trump and the Republican Congress, who have proposed deep cuts in areas integral to New York ranging from affordable housing to transportation and health care.

The comptroller’s fiscal report signals a potential crisis for the state in spite of what the DiNapoli refers to in his accompanying message as the nation’s “ninth year of economic expansion.” The larger analysis shows decreases in federal aid could have a large impact on the state’s ability to provide healthcare, for instance, with Medicaid funding at particular risk. Medicaid funding saw a significant increase in the new state budget, which was passed in early April after an agreement between Governor Andrew Cuomo and the two houses of the state Legislature.

The balance in the state’s General Fund, which is the state’s destination for non-earmarked revenue, is $7.7 billion, according to the report. According to DiNapoli, the figure “is substantially higher than the levels in the period during and immediately after the Great Recession, largely reflecting monetary settlements received in the past three years. But the State’s budgetary cushion is shrinking: the Enacted Budget Financial Plan projects that the General Fund balance will be one-third lower at the end of the current fiscal year than its recent peak two years previously.”

DiNapoli criticizes the apparent lack of credence paid to the very real threat of cuts in federal aid from the Republican-controlled Congress and White House in Washington D.C. The $153 billion state budget for Fiscal Year 2018 includes in its sources of revenue about $56 billion in federal aid, about a third of the $161 billion in revenue for FY18 according to the Citizens Budget Commission (CBC).

It is unclear just how much the federal budget could cut aid to New York, but the comptroller’s report suggests that the state’s Financial Plan doesn’t sufficiently account for the impact of the increasingly likely scenario of significant cuts in federal grants to New York. Cuomo and the Legislature did pass a new provision that allows the state greater flexibility to adjust the budget mid-year in the face of significant federal cuts, DiNapoli notes, but it is not completely clear how that process will play out and whether the state is truly prepared for such measures.

The comptroller also critiqued the use of funds acquired via financial settlements, which have amounted to about a $9 billion windfall over the past several years, as of January. The comptroller’s message states that the settlement money, which is “nonrecurring,” should be put towards financing capital projects rather than to balance budgets. According to the comptroller, through March 31, “the State had spent over $3.1 billion of its extraordinary windfall in settlement resources. Nearly half that amount had been used for various forms of budget relief, and another $461 million is planned for such use this year.”

In a statement to Gotham Gazette, David Friedfel, the director of state studies at Citizens Budget Commission, noted shared concerns between the comptroller and the nonpartisan, nonprofit budget watchdog.

“We echo many of the Comptroller’s concerns,” he said, “specifically the increasing use of settlement funds to close budgetary gaps. Likewise, it is concerning that personal income tax receipts continue to fall below projections, especially in light of potential cuts in Federal aid.”

Both CBC and the comptroller’s report also cast doubt on Cuomo’s claim that annual spending growth has stayed below 2 percent annually during his tenure. In May, CBC released a report explaining how Cuomo manipulated the numbers to tell his preferred story. The comptroller’s report says similarly, listing such budgetary tricks as “the use of prepayments; certain program restructurings which result in costs being reflected as reduced receipts rather than disbursements; shifting spending to capital projects funds; deferring expenditures to future years; and the use of off-budget resources to pay for certain program costs,” which, when accounted for, results in a 4 percent spending increase this year rather than Cuomo’s touted 2 percent.

“We are glad to see OSC voicing the same concern that state operating spending is really growing in excess of 2 percent,” Friedfel said. “The actual growth rate is still below historical norms, but by utilizing accounting adjustments and financial plan reclassifications, the State is undermining transparency to fit an artificial spending growth cap.”

Another nonprofit budget watchdog, Empire Center, had a similar reaction to the report.

"As usual, the Comptroller’s report was fairly thorough in identifying some of the most important budgetary trends obscured by the governor’s spin as well as the financial risks ahead,” said E.J. McMahon, research director at Empire Center, in a statement to Gotham Gazette. “However, one serious risk surprisingly overlooked by the report is the Trump administration’s proposal to eliminate the federal income tax deduction for state and local taxes, also known as the SALT deduction."

SALT refers to state and local taxes. The average SALT deduction claimed by New Yorker taxpayers is $21,038, the highest in the country and nearly double the national average, according to McMahon, in a July blog post.

"Given the state’s inordinate dependence on taxes paid by wealthy residents,” McMahon told Gotham Gazette, “the repeal of the SALT deduction could seriously undermine our tax base by increasing the net tax “price” of New York compared to states with low or no income tax, such as Florida.”

Other gloomy projections the report makes include $5.7 billion more in capital spending for the five-year plan than projected in the 2016-17 budget capital plan; a total lack of deposits to rainy day reserves in the previous fiscal year and the year that has begun; and an increase of $11.2 billion in out-year budget gaps from last year, to $17.4 billion. DiNapoli forecasts outstanding debt to increase by 4.1% to $63.9 billion this year and to $73.7 billion by the end of the current Capital Plan period in 2022.

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by Ben Brachfeld, Gotham Gazette

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Even Without Federal Cuts, Signs of Trouble for State Finances Tue, 01 Aug 2017 04:00:00 +0000
Comptroller vs. Governor: An Old Story in New York http://www.gothamgazette.com/?id=7047:comptroller-vs-governor-an-old-story-in-new-york http://www.gothamgazette.com/?id=7047:comptroller-vs-governor-an-old-story-in-new-york 6637183655 d9a3047ea6 z

Governor Cuomo (left) and Comptroller DiNapoli (center) (photo: Governor's Office/Flickr)


State Comptroller Thomas DiNapoli and Governor Andrew Cuomo have been airing public disagreement in the news media over the past several months. It is the latest chapter in a long story here in New York -- the Governor and the Comptroller sometimes agreeing but often challenging each other.

Calling out Cuomo's fiscal policies
DiNapoli's analysis of the recently-enacted State 2017-2018 budget (crafted by Cuomo and enacted through his negotiations with the Legislature) warns of fiscal risks ahead with uncertainty about the federal budget and $10.5 billion in new state bonded indebtedness. The budget, which also included a number of public policy changes, was enacted with little time for public review, DiNapoli’s report says. It also raised additional concerns about "transparency, accountability and oversight."

Early in May, the Comptroller issued an audit of the State Economic Development Corporation, the governor's economic development agency, citing it for lax reporting on key projects, particularly those that create tax-free economic development zones to encourage business development. “Too often Empire State Development Corporation is either late or not reporting on the results of economic development programs,” DiNapoli said. “We need better reporting to ensure transparency in economic development spending and to promote an informed analysis on the return of the investments state taxpayers make in these programs.” A spokesperson for the Economic Development Corporation said the Comptroller's audit "cherry-picks information" and "profoundly misrepresents our efforts."

Cuomo has called the Comptroller’s audits “opinion” and sought to undermine DiNapoli’s oversight at several turns.

DiNapoli's office signed off on the state Senate Republican majority's list of stipend payments for committee chairs, where in some cases vice chairs have received payments that typically only go to chairs. Democrats and the media have questioned some of these payments. Cuomo used the issue as an opportunity to criticize DiNapoli. "If it was not legal, the Comptroller shouldn't have done it," Cuomo said. "If it's not legal, the Comptroller should call up and say, 'Whoops, I made a mistake, I need the money back.'" A spokesperson for the Comptroller's office responded that "the comptroller's office is not a court of law" and the issue "needs to be decided by the Senate itself, or the legal system."

DiNapoli has often been critical of the Governor's spending plans. Four years ago, in 2013, he issued a report that New York's debt, counting bonds issued by public benefit corporations, amounted to $63.3 billion — about $3,253 per state resident. "We spend billions each year to repay existing debt, so fewer resources are available for more pressing needs," he said. Much of the debt has been developed by public authorities. "Taxpayers have little or no say in how much the state borrows, but they're the ones who have to foot the bill," DiNapoli continued.

The Comptroller responded to an alleged bid-rigging scandal within Cuomo’s economic development programs -- for which nine Cuomo associates and donors have been charged by federal authorities, with a trial set for October -- by proposing more oversight through his office. Cuomo has made his own proposal in response to the scandal, which does not include restoring contract approval by the Comptroller for certain types of programs.

A history of tension and balance
Established in 1797 as an appointed position, the Comptroller's position has been constitutionally based and elective since 1846. The state constitutional convention that year, recognizing the need for an independent Comptroller, made it an independent position, elected by the voters. Until the early 20th century, the position rivaled the Governor's in power, including compiling the state budget, receiving taxes, monitoring banks, and preparing financial reports. That power diminished with the reorganization and consolidation of state government, including the creation of the Division of the Budget, carried out by Governor Al Smith in the 1920s.

But the Comptroller remains the state's chief financial officer, controls payment of state funds, borrows and invests for the state, manages the state retirement fund, reports on the state's fiscal conditions, and audits both state agencies and local governments. The Comptroller's website notes that the Comptroller "is the State’s chief fiscal officer who ensures that State and local governments use taxpayer money effectively and efficiently to promote the common good."

Governors and Comptrollers usually have good working relationships. But there is a potential inherent tension in a relationship between the state's chief executive, who uses public tax dollars to initiate and administer state programs, and the state's chief fiscal watchdog, who makes sure that the state stays fiscally solvent and strong and that those tax dollars are used well.

Comptrollers have challenged Governors many times during the course of state history.

For instance, Arthur Levitt (1955-1978), the longest serving Comptroller in the state's history, criticized borrowing practices that bypassed state constitutional referendum requirements for incurring state debt. Levitt, a Democrat, was a frequent critic of Republican Governor Nelson Rockefeller (1959-1973), whose administration expanded state government and constructed the Empire State Plaza governmental complex in Albany, often relying on bonds.

In a February 1964 speech, Levitt assailed Rockefeller as a "pseudo pay-as-you-go governor" who through the "subterfuge" of selling authority bonds had imposed on the people of the state "a staggering burden of debt without their consent." Rockefeller responded that Levitt "is a partisan, organization Democrat, not an independent, nonpartisan, nonpolitical watchdog of the public treasury, as he likes to be projected." Levitt's motive was "to discredit the fiscal integrity and soundly solvent fiscal policies of this administration."

Levitt had a number of run-ins with Rockefeller, including lawsuits to require more detailed budget information and to open up the books of the Metropolitan Transportation Authority. Summarizing his years of working with Rockefeller, Levitt concluded, "I haven't been soft on him at all."

"As the people's auditor, I have reported factually to the people in accordance with my constitutional mandate," Levitt said. He made the office a high-profile watchdog and force for fiscal restraint and probity.

Many years earlier, in the 1830s, the state was spending money lavishly on enlarging the Erie Canal, building additional canals and providing loans and other aid to railroads, mostly by issuing state bonds.

Democratic Comptroller Azariah Flagg (1833-1839 and 1842-1847) published an alarming report in 1838, warning that the state had reached "the utmost verge of prudence" and should curtail borrowing.

But Governor William Seward, a Whig (the Whig Party was then one of New York's two most important parties, along with the Democrats), told the Legislature in 1839 that "history furnishes no parallel to the financial achievements of this state." He added that "taxation for the purposes of internal improvement is happily unnecessary," since future canal user fees would provide funds to pay off the bonds.

Seward in 1840 called for spending $4 million more each year for 10 years for canals and railroads. The Whig majority in the state Legislature kept pushing up the debt.

Comptroller Flagg's warning turned out to be warranted.

The state entered a downward fiscal spiral. Recession sparked by the Panic of 1837 cut into state revenues. Canal construction costs rose. Even Seward admitted "severe shock" at learning that canal expansion would cost twice what he had estimated. The Erie Railroad fell behind on its repayment of state loans. Selling state bonds became more difficult as nervous creditors began to worry about New York's solvency. State debt rose to $27 million in 1842, a huge sum in those days.
Comptroller Flagg warned that New York was at "the very brink of dishonor and bankruptcy" and "it is a question of solvency or insolvency."

The voters heeded Flagg's warning. They gave fiscally conservative Democrats a majority in the next Legislature. They curtailed or suspended canal work and railroad aid. With Seward's reluctant concurrence, they enacted a special tax to keep the state solvent. The debt began to decline. Creditors' confidence returned, and state securities regained the status of good investments.

The lure of higher office
Some Comptrollers have had political ambitions and used the position as a stepping-stone to higher office, occasionally another source of tension with Governors.
William L. Marcy, Comptroller 1823-1829, went on to serve as Governor, 1833-1838. Silas Wright served as Comptroller from 1829 to 1833 and Governor, 1845-1856 (in those days, governors were elected every two years). Washington Hunt, Comptroller 1849-1850, went on to become governor, 1851-1852. Lucius Robinson, Comptroller 1862 to 1865, went on to become Governor, 1877-1879.

Martin Glynn, Comptroller 1907-1908, was nominated and elected Lieutenant Governor in 1910 and became Governor when William Sulzer was impeached and removed from office in 1913. But Glynn was defeated when he ran for Governor in his own right in 1914.

Nathan L. Miller, Comptroller 1901-1903, defeated Al Smith in his campaign for reelection as Governor in 1920, running on a platform of fiscal restraint and criticizing Smith's administration for overspending. But Smith returned to oust Miller in 1922.

Millard Fillmore served in the House of Representatives before being elected Comptroller in 1847 (the first person elected rather than appointed to the office). He was nominated for Vice President in 1848, elected along with presidential nominee Zachary Taylor, and became President upon Taylor's death in 1850. He ran for President in 1852 but was defeated.

Cuomo and DiNapoli both playing appropriate roles
Comptroller DiNapoli is playing an appropriate role, in line with many of his most impressive and judicious predecessors such as Arthur Levitt and Azariah Flagg. His reports are clear and readable, his warnings measured and documented, and his custody of the state retirement fund reassuring.

On the other hand, Governor Cuomo, like Nelson Rockefeller, Al Smith, William Seward and other bold, expansionist-minded Governors before him, is inclined to use public funds for innovative programs that he sees as investments in New York's future.

The conscientious Comptroller and the proactive Governor are well-suited to their respective positions. Their views, while sometimes at odds with each other, complement each other and offer the public contrasting visions for New York's future. That is useful for public debate and, hopefully, for creation of sound state fiscal policies.

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Dr. Bruce W. Dearstyne's latest book is The Spirit of New York: Defining Events in the Empire State's History, published in 2015 by SUNY Press.

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Have an op-ed idea or submission for Gotham Gazette? Email opinion@gothamgazette.com

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Comptroller vs. Governor: An Old Story in New York Mon, 10 Jul 2017 04:00:00 +0000
What's The [DATA] Point? $780 Million, with Comptroller DiNapoli http://www.gothamgazette.com/?id=7034:what-s-the-data-point-comptroller-dinapoli http://www.gothamgazette.com/?id=7034:what-s-the-data-point-comptroller-dinapoli whats the data point


What's The Data Point? Episode 3 -- $780 million, with Comptroller Tom DiNapoli. [You can download What's The Data Point? wherever you get your podcasts, including on iTunes]

For the third episode of What's The [Data] Point? we were joined by New York State Comptroller Tom DiNapoli, the state's chief fiscal watchdog. With hosts Ben Max and Maria Doulis, DiNapoli discusses his thus far unsuccessful efforts to reform the state's contracting processes in the wake of the $780 million bid-rigging scandal that broke last year with federal charges brought against nine associates of and donors to Governor Andrew Cuomo. DiNapoli also talks state budget matters and the importance of monitoring how taxpayer dollars are spent.

Listen and let us know what you think: Ben Max of GG (@TweetBenMax), Maria Doulis (@MariaDoulis) of CBC, and special guest state Comptroller Thomas DiNapoli (@NYSComptroller):

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by Ben Max, Gotham Gazette
     

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What's The [DATA] Point? $780 Million, with Comptroller DiNapoli Thu, 29 Jun 2017 04:00:00 +0000
With Session Ending and Trial Looming, No Legislative Response to Bid-rigging Scandal http://www.gothamgazette.com/?id=7007:with-session-ending-and-trial-looming-no-legislative-response-to-bid-rigging-scandal http://www.gothamgazette.com/?id=7007:with-session-ending-and-trial-looming-no-legislative-response-to-bid-rigging-scandal Cuomo Flanagan Heastie

Flanagan, Cuomo, Heastie (photo: The Governor's Office)


With just three scheduled days left in the legislative session and the corruption trial of several close associates of Governor Andrew Cuomo for their roles in a bid-rigging scandal scheduled to commence in October, the Legislature has yet to pass any meaningful legislation to prevent such abuses of the procurement process.

State Comptroller Tom DiNapoli has introduced a comprehensive bill to address the issue, which is the basis for a Senate bill sponsored by Senator John DeFrancisco, a Syracuse Republican, and sister legislation by Assemblymember Crystal Peoples-Stokes, a Buffalo Democrat. The legislation would restore authority of the Comptroller to pre-audit all state contracts over $250,000, particularly for SUNY and CUNY affiliated non-profits, a power that was stripped in 2011.

That year, Cuomo and legislative leaders (who are now headed to jail) said that the scaling back of oversight was necessary in order to expedite approval for the governor’s signature economic development initiatives. The idea that the Comptroller’s contract review slows down projects is misguided, according to budget watchdogs. The Comptroller has up to 30 days to approve a contract, but on average approves contracts within six days, according to April figures provided by DiNapoli’s office.

The absence of an independent oversight body appears to have cleared the way for the massive $800 million bribery scheme that took down close Cuomo associate and friend Joe Percoco, as well as then-SUNY Polytechnic President Alain Kaloyeros, who Cuomo had heaped praise and responsibility on, and several major donors to Cuomo who were awarded large contracts. The alleged scheme was uncovered by the office of then-U.S. Attorney Preet Bharara.

More recently, Bart Schwartz, head of Guidepost Solutions LLC, who was hired by Cuomo to probe the contracting process and what might have gone wrong, found significant flaws. In his review of the $417 million awarded to vendors at Buffalo’s SolarCity project and other upstate initiatives, he found that at least $49 million was awarded using a “sloppy process.” The Buffalo News first reported the details of Schwartz’s report, which the Cuomo administration had failed to make public, but was obtained through the Freedom of Information Law (FOIL). Schwartz was paid as much as $1 million for his investigative work and the Cuomo administration has indicated that it accepted his recommendations for cleaning up contracting processes.

While DeFrancisco’s bill has passed the Senate’s finance committee, and the Assembly on Wednesday tweaked its version of the bill to match the Senate’s, legislative leaders offered reserved endorsements of the legislation, and it has yet to be calendared for a floor vote in either house.

Both Republican Senate Majority Leader John Flanagan and Democratic Assembly Speaker Carl Heastie have said they support the restoration of pre-auditing powers to the comptroller’s office, but that they are working towards a “three-way agreement” with the governor before advancing the legislation, which is backed by good government groups and many rank-and-file lawmakers.

Meanwhile, the governor has been defiant, saying that the powers should not be returned to the Comptroller. Instead, Cuomo in his 2017 policy book proposed expanding the oversight powers of the state inspector general to include procurement at CUNY and SUNY nonprofits, as well as new inspectors general, appointed by and reporting to the executive branch. In the aftermath of the scandal, Cuomo also vowed to create a chief procurement officer in the executive branch.

“The proposed legislation does not address the issue and is both burdensome and duplicative,” said Cuomo’s counsel, Alphonso David, in a statement to Gotham Gazette. “The vast majority of these contracts are subject to OSC [Office of the State Comptroller] post-award oversight and these measures only add significant delays and increase costs for New York taxpayers.”

David’s statement highlights a key difference between the governor’s proposal and the “clean contracting” legislation backed by the comptroller and government reformers, which emphasizes prevention, making SUNY and CUNY projects subject to the same early scrutiny and standards as other state-funded projects, rather than after-the-fact oversight.

“The governor's proposal utterly and totally misses the point because it creates addition inspector generals who are appointed by the governor,” said John Kaehny, executive director of the government reform group ReInvent Albany. “The problem...was bid-rigging; the state contracts were rigged to favor one vendor over the others, and that could have been prevented by independent, pre-contract review.”

Representatives from the Reinvent Albany, New York Public Interest Group, League of Women Voters, and Citizens Budget Commission gathered at the Capitol this past Wednesday, with the blessing of other government reform groups, to call on Albany to pass the legislation -- with or without the governor’s support.

“If lawmakers are at all serious about addressing the problems that happened with last year’s bid-rigging scandal they need to support prevention of these crime -- and that means independent pre-contract review,” said Kaehny.

They noted that the Legislature is granted power to enact legislation without the governor’s support, first by passing it through both houses. If Cuomo does not then sign or veto the bill, it would automatically become law in 10 days. If the governor vetoes it, the Legislature could independently reconvene to override his veto. More than a majority, two-thirds of each house, must vote in favor in order pass legislation rejected by the governor. As a result, veto overrides are rare; the last time the Legislature successfully overrode a gubernatorial veto was in 2006, during a tumultuous budget negotiation that took place during the last year of Governor George Pataki’s final term, when legislative leaders went to bat over a property tax rebate and cuts to state university funding. 

Among those who floated the idea of the Legislature passing the bill without the governor’s support is Senator DeFrancisco, who expressed frustration the procurement reform legislation was not calendared earlier.

“I try to advocate for it all the time. I know the governor is apoplectic against it and he’d rather have an inspector general that he can control,” DeFrancisco told reporters at the Capitol on June 12. “Hopefully reason will prevail.”

When asked to elaborate on the problems with the governor’s proposal, DeFrancisco said, “What he wanted in the budget was to have an independent inspector general, appointed by him to review his contracts. I don’t think you have to be a lawyer, you just have to be somewhat sane to realize that that’s not a check and balance on anybody. He doesn’t want to lose that control and have that oversight. There’s no other logic why he wouldn’t do it.”

Speaker Heastie, in an interview with Gotham Gazette, remained coy about the possibility of passing the legislation and reconvening to override a potential gubernatorial veto.

"Those are always options, that are there but again you are asking me what you are going to do on failure, I don’t like to report on failure,“ he said, adding that there is always “the summer” and “next session” to pass legislation.

“The end of session is a deadline, but it’s not the end of the world if there is ever a need for us to do anything legislatively. We said we’ll come back if the actions in Washington dictate us to come back,” he said. “If we have to come back, the members will come back."

Majority Leader Flanagan expressed only slightly more enthusiasm about the idea of procurement reform. Calling the oversight measure “extraordinarily important,” Flanagan said, “I expect we will have procurement reform before the end of the session, whether it’s [legislation proposed by] Senator DeFrancisco or a variation of that bill, I expect we will move in that direction.”

The bill has widespread support in the Legislature; minority leaders say they also support the comptroller-backed proposal, which also ends contracting for non-academic purposes by state-controlled non-profit organizations, and transfers all economic development awards to the the Empire State Development Corporation.

However, Independent Democratic Conference (IDC) Leader Senator Jeff Klein struck a different tone Thursday, saying he opposed DeFrancisco’s legislation. The IDC and GOP have a power-sharing alliance in the Senate. Klein said he intends to introduce a new bill this week, which instead of restoring the comptroller’s powers would appoint an independent investigator to look at claims of misconduct. When pressed, he did not clarify how this proposal differed from the governor’s proposal.

“Right now the power of the comptroller is post-audit -- so what I would assume is if there is any problem in the procurement process, you’d be able to spot any problem post-audit. Then why would you need to have pre-audit ability?” said Klein. “I think what we need is a downright investigator -- someone who has the power to investigate the contracting process as it moves forward, to make sure there’s no favoritism, to make sure there’s no bribery.”

This past week, the bill’s Assembly sponsor, Peoples-Stokes, also expressed second thoughts about how the legislation could slow the approval for contracts for minority- and women-owned businesses that are awarded grants by the state’s Empire State Development Corporation, or impact healthcare organizations like Roswell Park Cancer Institute, a public not-for-profit that would be subject to increased scrutiny.

“The last thing we want is processes to slow down their ability to grow...At first blush, it seems like great legislation, when you delve in there’s some things that need to be tweaked,” said Peoples-Stokes. “I’m grateful there’s some lawyers and a team around here that can help me straighten something out. I think what happened in 2011, that maybe we should takes some looks at, but all these other things.”

Earlier this year, a month after talks of a long-awaited pay raise for lawmakers turned sour, legislative leaders seemed ready to take a different approach than they are now, vowing to stand up to the executive branch.

In January, during his remarks on opening day of the 2017 session, Flanagan urged his fellow lawmakers to stand up to the governor over the economic development programs, which were marred by the alleged bid-rigging scandal and other accountability problems. Urging his fellow legislators to “ask tough questions” on the progress of economic initiatives like Start-Up NY and Regional Economic Development Councils, Flanagan cited the Legislature’s power as a check on the governor.

“It’s very simple, the legislative power of the state is vested in the Senate and the Assembly,” Flanagan said in January. “Not the attorney general, not the controller, and not the governor.”

In the budget deal passed in April, Cuomo’s signature economic development and infrastructure programs were fully-funded and no new oversight measures were passed.

Another bill, sponsored by Senator Thomas Croci, a Long Island Republican, would create a searchable “database of deals,” cataloguing all businesses that have been awarded state subsidies -- a system in place in six other states -- has made no headway in the Senate or Assembly.

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by Rachel Silberstein, State government reporter, Gotham Gazette
     

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With Session Ending and Trial Looming, No Legislative Response to Bid-rigging Scandal Sun, 18 Jun 2017 04:00:00 +0000
Reviews Are In: What Watchdogs Say About The New State Budget http://www.gothamgazette.com/?id=7003:reviews-are-in-what-watchdogs-say-about-new-state-budget http://www.gothamgazette.com/?id=7003:reviews-are-in-what-watchdogs-say-about-new-state-budget Cuomo budget presentation

(photo: The Governor's Office)


A new state budget was passed in April in typical Albany fashion: with almost no time for public scrutiny of the bills or proper review by the legislators who quickly voted them through. Since the $153.1 billion budget was passed, watchdogs both in and out of government have released analyses, helping to better inform citizens and increase accountability.

The budget was adopted a little over a week into the new fiscal year, which begins April 1, after compromises were reached among legislative leaders and Governor Andrew Cuomo on contentious issues such as raising the age of adult criminal responsibility, education aid, a college tuition affordability program, the allocation of large sums of affordable housing monies, and more. The frantic and secretive nature of state budget adoption leaves a lot to digest afterward.

Now, about two months after the budget was passed, those analyses by watchdogs can bring to light a few common themes and several other key points.

Aside from general criticism of the process itself, there are the issues of the large lump sum appropriations, projects funded by mysterious sources, and the governor faulty marketing of his budgetary discipline.

Comptroller Tom DiNapoli
State Comptroller Tom DiNapoli released a report on the state budget that includes critiques of the budgeting process and the end result. The budget continues to rely heavily on appropriations from the federal government, at almost a third of state revenue, despite the unpredictability of state aid from Washington, D.C. under President Donald Trump and the Republican Congress.

“Although the budget came together more than a week into the fiscal year, the Legislature and Executive acted on critical budget issues that will help New York move forward,” DiNapoli said in a statement. “However, billions of dollars in spending lacks key details that would better inform the public about how their tax dollars are being spent.”

The Comptroller’s report included a lengthy chart showing the legislature’s inaction on ethics reform, criticizing the fact that, among other things, the budget “intentionally omits” measures such as requiring advisory opinions on legislators’ outside income, closing the LLC loophole in corporate political contributions, and extending the Freedom of Information Law (FOIL) to cover the Legislature. The Comptroller was equally pointed on the state’s procurement practices, which have come under fire due to rampant corruption in the state’s contracting process, stating that the changes were needed to “ensure spending accountability and transparency” in a statement. A measure to authorize the IG to investigate criminal wrongdoing in the state’s procurements was intentionally omitted.

The Comptroller was critical of the quickness of the process, essentially disallowing public review. Also criticized was the prevalence of lump sum appropriations, which can make state money harder to track.

“It should concern all New Yorkers that budget decisions in Washington may force tough fiscal choices for the state and raise new questions for local governments and nonprofits that rely on state funding,” DiNapoli said. “Federal actions that could adversely affect New York, as well as economic uncertainty, are key risks to this budget.”

Citizens Budget Commission
In a statement on the day the budget was adopted, CBC President Carol Kellermann said “achieving a fiscally sound budget is more important than an ‘on time’ budget,” referring to the emergency budget extender passed when negotiating parties couldn’t reach a deal on time. Still, CBC expressed dismay that the state budget was neither on-time nor fiscally sound.

In a later report, CBC also criticized Governor Cuomo for misleadingly saying that the adopted budget continued his “record of holding State Operating Funds spending annual growth to no more than 2 percent.” In reality, CBC explained, spending growth is closer to 3.7%, well above the 2% benchmark that Cuomo prides himself on. The budget is able to exploit this loophole by not “adjusting for payment timing differences and accounting changes,” such as through premature debt service payments or “shifting expenditures out of state operating funds spending.”

CBC has created a “budget navigator” to allow citizens to see how city and state money is being spent.

Empire Center for Public Policy
Empire Center, a conservative think tank based in Albany, has released a slew of criticisms of the budget. Condemnations expressed on the Empire Center blog cover health care spending, certain tax breaks, and the “free” college tuition program. Empire Center is also critical of the added tax deduction for union dues, “effectively a $35 million gratuity for an already privileged caste of (mostly government) workers.”

“The positives in New York’s FY 2018 budget make up a pretty short list—while the negatives are in some respects worse than usual,” wrote E.J. McMahon, Empire Center’s founder and research director, in a budget breakdown post on the Center’s blog.

McMahon argues for more transparency and accountability with the Water Infrastructure Improvement Act, which he says “used to be put before voters in New York.” Now that doing so is no longer a requirement, McMahon writes, “the governor and Legislature obviously figure, why bother?”

Citizens Union
Citizens Union identifies the budget’s large non-specific lump sum funding in its “Spending in the Shadows” report. The watchdog identified nearly $13 billion in the budget in nonspecific funding: around $3 billion “subject to decisions of one or more particular elected officials,” and nearly $10 billion “in approximately 40 different economic development and infrastructure pots listing no official with spending authority.” The group also found that there was “inadequate reporting as to how these funds are eventually spent.”

Citizens Union calls on the governor and Legislature to publicly identify all nonspecific funding and to publicly disclose information, such as purposes and the requester, regarding these funds, especially ahead of spending, not afterward as is often the case. Further, the organization calls for amending state finance law to introduce accountability and conflict-of-interest identification to public contracting, the disclosure of grants and contracts “awarded under nonspecific lump sum appropriations and reappropriations,” and for “aging the budget bills for three days.”

Reinvent Albany
Reinvent Albany has focused largely on procurement reform, which has become a major point of contention, particularly after the Buffalo Billion corruption scandal broke. Along with other watchdog groups, Reinvent Albany issued a release in May calling for “five clean contracting reforms,” all of which failed to make it into the budget:

1. Require competitive and transparent contracting for the award of state funds by all state agencies, authorities, and affiliates. Use existing agency procurement guidelines as a uniform minimum standard.

2. Transfer responsibility for awarding all economic development awards to Empire State Development Corporation (ESDC) and end awards by state non-profits and SUNY.

3. Empower the Comptroller to review and approve all state contracts over $250,000.

4. Prohibit state authorities, state corporations, and state non-profits from doing business with their board members.

5. Create a ‘Database of Deals’ that allows the public to see the total value of all forms of subsidies awarded to a business – as six states have done.

The groups have continued to call for such reforms, but legislative leaders have been hesitant to challenge Cuomo, who is opposed.

New York Public Interest Research Group
NYPIRG also criticized the opacity of the state budget process, which notorious for taking place largely behind closed doors, especially in terms of the final, major deals reached, with the infamous “Three Men in a Room” process determining what stays and what goes -- largely without public input. (There’s been a fourth man in the room of late given the addition of IDC Leader Jeff Klein along with the governor, Assembly speaker and Senate majority leader.)

“The process by which these decisions were made was awful and arguably worse than in the recent past,” said the organization in a statement shortly after the budget’s passage. “Virtually all the deliberations in developing the budget were conducted behind closed doors. There were no hearings, no open meetings, and with the three day legislative review period waived by the governor lawmakers were voting on bills that they had little time to comprehensively review.”

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by Ben Brachfeld & Jynn Schubert
@GothamGazette

Note: Gotham Gazette is an independent publication of Citizens Union Foundation, sister organization of Citizens Union. ]]>
Reviews Are In: What Watchdogs Say About The New State Budget Thu, 15 Jun 2017 04:00:00 +0000
Whose Job Is It To Investigate The Legislature’s Lulu System? http://www.gothamgazette.com/?id=6941:whose-job-is-it-to-investigate-the-legislature-s-lulu-system http://www.gothamgazette.com/?id=6941:whose-job-is-it-to-investigate-the-legislature-s-lulu-system klein

IDC Leader Jeff Klein (via nysenate.gov)


Reports that state senators have been receiving stipends for committee chair positions that they do not actually hold has drawn scrutiny to the Legislature’s stipend system and raised questions about the legality of the ways in which Senate leadership has arranged such payouts, often called lulus. Those questions have led to others, specifically whose job it is to investigate the potential wrongdoing involved and whether any legal or ethics enforcement entities will take action.

Four Republican senators and three members of the Independent Democratic Conference (IDC), an eight-person breakaway group of Democrats that aligns with the Senate GOP -- all seen as loyalists to Senate Majority Leader John Flanagan -- were recipients of bonus checks ranging from $12,500 to $18,000 a year, despite holding roles as vice chairs, a position that does not include a stipend. The New York Times first reported the potentially fraudulent filings last week, and reported Thursday evening that an unnamed law enforcement entity is now investigating the falsified paperwork. The Daily News then reported that Attorney General Eric Schneiderman's office and the office of the U.S. Attorney for the Eastern District of New York are investigating.

Flanagan, who signed off on payroll requests sent to the New York State Comptroller’s Office, which appear to misidentify the seven vice chairs as committee chairs, has defended the practice. “I believe everything we’ve done in the past and right now is in full accordance not only with the constitution but the legislative law,” Flanagan, a Republican from Long Island, told reporters Monday afternoon at the state Capitol.

Over the weekend, the conference’s attorney, David Lewis, released a memo arguing that there was no impropriety, and noting that the practice started with IDC Senator David Valesky, of Syracuse, was awarded a lulu for a vice chair by former Majority Leader Dean Skelos several years ago.

Critics of the IDC’s coalition with the GOP say that the stipend practice effectively rewards the rogue Democrats for empowering the majority conference. The Daily News reports that IDC Leader Senator Jeff Klein also received a significant pay hike through an increased stipend this year after Flanagan formally named him the chamber’s vice president pro tempore.

Whether the payments are legal is unclear. The distribution of lulus is codified in state law, but it is not specified that an unclaimed stipend can be diverted from a chair to someone who does not hold the position. Furthermore, deliberately submitting false payroll documents to the Comptroller could warrant criminal charges -- the Senate majority leader’s office listed vice chairs as chairs on payroll documents.

But as a blame game ensues at the Capitol, and GOP senators hide out in their chamber to avoid the press gaggle, questions abound over which entity would be authorized to investigate this practice of falsifying information on payroll forms.

Without specifying who might have jurisdiction, Senate Minority Leader Andrea Stewart-Cousins, a Westchester Democrat, has called for “someone in authority” to look into “the obvious violations of state law.

“It seems every day troubling new questions arise and new details are learned about the apparent abuse of the Senate stipend system,” she said. The counsel for the Senate Democratic Conference issued a memo countering the arguments laid out by the Senate GOP’s counsel and pointing to impropriety.

Governor Andrew Cuomo, a second-term Democrat, took reporters’ questions after an unrelated news conference in New York City Thursday, and pointed to the comptroller’s office, saying it must determine whether or not the practice is legal. “If it was not legal, the comptroller should call up and say ‘whoops I made a mistake, I need the money back,’” Cuomo said. “The call is the comptroller’s.”

In response, a spokesperson for DiNapoli’s office said in a statement, “The Comptroller’s office is not a court of law. This issue needs to be decided by the Senate itself or the legal system.”

Previously, DiNapoli’s office had issued a statement saying that the Senate is expected to comply with state law and house practices when filling stipend requests. "When our office receives a payroll request that has been certified by the Senate, or any state entity, we make the payment. At this time, we have no basis to take back this money," said Jennifer Freeman, a spokesperson for the Office of the State Comptroller.

While Cuomo has enjoyed a close working relationship with Flanagan and Klein, he has feuded with DiNapoli, including earlier this week over a new report from the comptroller scrutinizing missed reports from one of the governor’s controversial economic development programs.

Beyond the Comptroller’s Office, other oversight authorities that may have jurisdiction to pursue an investigation include the Attorney General’s Office, the Albany District Attorney‘s Office, and the U.S. Attorney for the Southern District of New York (USASD). All three offices declined to comment on the stipend situation when Gotham Gazette reached out. 

Attorney General Eric Schneiderman’s office is not authorized to pursue an investigation without a referral from the comptroller, the governor’s office, or a number of other government authorities. The situation also could also fall under the jurisdiction of the USASD, a position previously held by Preet Bharara, who became known for aggressively pursuing cases of public corruption, but was fired suddenly by President Donald Trump in March.

Finally, there is the Joint Committee of Public Ethics (JCOPE). While the independent ethics board cannot pursue criminal charges, it can investigate potential violations of the state's ethics law within the Legislature and issue a report, which is then referred to the Legislative Ethics Commission, a body comprised of four-legislative members and five non-legislative members. If the Legislative Ethics Commission accepts the findings of the report, it is authorized to mete out an appropriate penalty. The Senate and Assembly also have in-house ethics committees, which rarely meet. A spokesperson for JCOPE declined to comment on the stipend matter.

Which law enforcement entity is looking into the issue was not clear in the initial Thursday evening report by the New York Times.

Cuomo also pointed to the structure in which lawmakers are paid, which he says is inherently flawed. The governor has called for a pay increase for legislators and a strict cap on or elimination of what income they can earn in other jobs -- legislators are technically part-time, and they have not received a salary increase since 1999. Cuomo did not address eliminating stipends.

“The fundamental problem is the way we pay legislators and the conflicts of interest that are intrinsic in the system,” he said. “The stipend is pennies compared from the salary structure which is premised on the fact that they are part-time, which is premised on a fallacy -- because they are full-time.”

While lawmakers collect $79,500 annual base pay, legislative stipends for committee leadership roles ranging from $9,000 to $41,500 are fairly common in both houses. An Empire Center report from 2016 notes that all 63 senators are eligible for stipends -- though some decline the cash -- and more that half of Assembly members receive supplementary payments through their secondary roles in the Legislature. Lawmakers are also permitted to hold outside jobs in addition to their legislative roles.

Calling for a formal investigation is the government watchdog group Common Cause/NY. “Today’s New York Times report that the Senate filed fraudulent documents to secure ‘lulus’ for members of the Independent Democratic Conference represents an egregious misuse of public monies, and potentially a more serious legal violation, which must be investigated by law enforcement,” Common Cause/NY said in a statement last week. “This is not a clerical error to be blamed on staff, or punted to the comptroller.”

The organization also defended the comptroller’s office saying, “It is entirely appropriate for the Comptroller to trust and rely on the information as certified to him by the designating authority, in this case the Senate.”

Meanwhile, members of the IDC have continued to dismiss the lulu scandal as business as usual.

“Well, certainly it seems as if everyone is obsessed with the 'Lulu Land' here in Albany. But quite frankly, it is a story about nothing," said Senator Diane Savino, an IDC member from Staten Island and one of the seven getting the extra stipends, on NY1 Monday. "Legislative stipends have been in existence for decades here in Albany. It's certainly not something new."

In addition to Valesky and Savino, IDC Senator Jose Peralta, a Democrat from Queens; and Republican Senators Thomas O’Mara, of the Finger Lakes region; Patrick Gallivan, of Buffalo; and Patty Ritchie, of Elmira, have also received payments for their roles on committees they do not chair.

Senator Pamela Helming, a first-term Republican from Central New York, was also misidentified in the Senate payroll documents as a chair, but her office told reporters she has not cashed the checks and intends to return them.

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by Rachel Silberstein, State government reporter, Gotham Gazette
     

Read more by this writer.

Note: this article has been updated to reflect that the New York Times reported Thursday evening that an unnamed law enforcement entity is investigating the Senate stipend matter.

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Whose Job Is It To Investigate The Legislature’s Lulu System? Thu, 18 May 2017 04:00:00 +0000
Government Watchdogs Push 'Clean Contracting' Reform in Albany http://www.gothamgazette.com/?id=6927:government-watchdogs-push-clean-contracting-reform-in-albany http://www.gothamgazette.com/?id=6927:government-watchdogs-push-clean-contracting-reform-in-albany Kaloyeros infrastructure

Alain Kaloyeros in 2016 (photo: The Governor's Office)


A coalition of budget and transparency watchdog groups are calling on the Legislature to pass, and for Governor Cuomo to sign, comprehensive “clean contracting” legislation in response to the bid-rigging scandal that rocked the state Capitol last year and continues to reverberate.

Specifically, at a Wednesday press conference the groups called for restoration of reviewing powers to State Comptroller Tom DiNapoli for all state contracts exceeding $250,000, an end to non-academic contracting by state-controlled non-profit organizations, the creation of a comprehensive “database of deals,” and a prohibition against state authorities, corporations, and affiliated non-profits doing business with their board members.

The organizations -- including Reinvent Albany, New York Public Interest Group, Citizens Union, League of Women Voters, Fiscal Policy Institute, Common Cause, and Citizens Budget Commission -- are also urging state leaders to reduce the potential for conflicts of interest by exploring options to limit campaign contributions from anyone seeking a state contract. Nineteen states and New York City -- but not the state -- already have these anti-pay-to-play laws in place.

“The moment of truth has arrived. State and federal prosecutors say $800 million in state economic development contracts were rigged, but so far, the Legislature and governor have yet to act,” said John Kaehny, executive director of Reinvent Albany, standing in the state Capitol. “It’s time they pass common sense legislation that includes independent oversight over state contracts, uniform contracting rules, and transparency that will prevent corruption and abuse before it happens.”

In 2016, an investigation into a sprawling alleged pay-to-play scheme connected to the Governor Cuomo’s Buffalo Billion economic development program resulted in charges against nine men, including a former top aide to Cuomo, Joe Percoco, and the former president of SUNY Polytechnic Institute, Alain Kaloyeros, a close government partner of Cuomo’s, on bid-rigging, bribery, and other charges.

In the aftermath of the scandal, DiNapoli called for comprehensive procurement reforms, including the restoration of his office’s powers to review contracts with CUNY- and SUNY-affiliated non-profits -- a power that was stripped by Cuomo and the Legislature in 2011. The governor and lawmakers had reasoned that they could more quickly move economic development funds to important projects, especially in previously downtrodden Buffalo, where Cuomo has dedicated so much focus since taking office.

Following the enactment of the 2017 state budget, DiNapoli issued a statement noting the lack of procurement reform. “Hopefully before the end of session, the procurement reforms my office has advanced will be addressed,” he said. The Legislature is in session until mid-June. Legislative leaders are looking at some procurement reform measures, while Cuomo remains opposed to what DiNapoli and government watchdogs are calling for.

At the time of the arrests, Cuomo vowed sweeping reform, and proposed a slew of them in his 2017-2018 executive budget. However few of these oversight and transparency measures -- which are different from those being proposed by legislators, DiNapoli, and reform groups -- made it into the agreed-upon spending plan, announced in early April. Additionally, at least one other key oversight and transparency provision -- a mandated report on the governor’s Start-Up NY program -- was actually removed. Instead of focusing on reform, the governor has continued boosting the his signature economic development programs and infrastructure projects, to which the state is dedicating billions of dollars every year.

Senator John DeFrancisco, a Republican from Syracuse and deputy majority leader, has proposed legislation encompassing the Comptroller’s Clean Contracting Bill, which has been approved by the Senate Finance Committee, and some form of it is expected to pass the Senate. A similar bill sponsored by Assemblymember Crystal Peoples-Stokes, a Buffalo Democrat, is currently being considered in the Assembly.

Assembly Speaker Carl Heastie, a Bronx Democrat, and Senate Majority Leader John Flanagan, a Long Island Republican, both expressed support for the legislation during a joint appearance at the Times Union’s new media center in Colonie on Tuesday.

“I truly believe the comptroller plays an absolutely critical role in public policy in New York,” Flanagan said.

“You don’t always have to wait for something bad to happen to restore confidence to the public,” added Heastie.

The “database of deals” -- which has long been advocated by good-government organizations -- was supported by both the Senate and Assembly in their one-house budget resolutions, and the governor agreed in the budget to create a report by January 2018 detailing the spending by each economic development program. However, critics say the database should go further, providing data on the benefits received by each company.

Cuomo, in his executive budget, proposed prohibiting campaign finance contributions to the executive by vendors when they are bidding on and negotiating contracts, and expanding the power of the Office of the Inspector General to include the SUNY Research Foundation and CUNY-affiliated nonprofits. He also proposed instituting a Chief Procurement Officer who would be appointed by the governor, a position that many called redundant and less effective than the position of Comptroller.

“How many scandals and indictments are needed before we enact any meaningful reforms,” asked Ron Deutsch, executive director of the Fiscal Policy Institute, a think tank. “We need to restore the public’s trust and put real accountability measures in place to ensure that we have full transparency and a solid return on investment before we continue to provide billions of taxpayer dollars to private businesses under the guise of economic development.”

The legislation is currently facing opposition from SUNY. A spokesperson for Cuomo’s office said the governor finds the legislation “duplicative” and “overly broad,” and believes it does not address the core of the process on contracting reform. She noted that the comptroller can already perform audits on all procurement contracts before they are paid, he just cannot slow down the initial contracting process when awards are made.

Flanagan has indicated that there may be room for negotiation on the final bill. Heastie has been vague as he plans to discuss the issue with his majority conference.

Cuomo’s former aides, associates, and donors are set to go on trial late this year.

Another spokesperson for the governor, Rich Azzopardi, sent Gotham Gazette a statement attacking the watchdog groups. "This is the same crew who preaches transparency for others and then sues to overturn state law and keep their benefactors secret. If we need a crash course on hypocrisy we know who to ask," he said.

“To create needed independence and effective oversight, the governor and the Legislature must enact sensible clean-contracting reforms,” said Dick Dadey, executive director of Citizens Union. “Not to do so would be an unfortunate and careless shirking of their greatest responsibility to ensure that government operates in the interest of the people. Stronger oversight and increased transparency in the awarding of state contracts, including providing the state Comptroller with increased independent authority for oversight and approval, are principles that a strong and effective democracy must embrace.”

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by Rachel Silberstein, State government reporter, Gotham Gazette
     

Read more by this writer.

Note: Gotham Gazette is an independent publication of Citizens Union Foundation, sister organization of Citizens Union. ]]>
Government Watchdogs Push 'Clean Contracting' Reform in Albany Wed, 10 May 2017 04:00:00 +0000