Gotham Gazette

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Campaign Finance Laws Fill Coffers for Cars, Coffee and Court

Albany image (cc) jaxphotography
Are unchecked contributions an easy way up Albany's "Million Dollar Staircase"?

As former New York State Senate Majority Joseph Bruno stood trial this year for multiple federal corruption charges he had an important ally -- his campaign coffers. Bruno was able to utilize more than $600,000 of the money he raised as a politician to pay for his defense.

Campaign funds are the lifeblood of Albany politicians. While, the same can be said for their counterparts across the country, New York's State relatively lax regulations along with little enforcement let money play a particularly prominent role. Generous donations from corporations and interest groups get you elected, the longer you are in office the more power you get, and the more power you get the more money corporations and special interest give you.

Politicians in New York can collect more money than in most other states and have more latitude in how they can use it. Campaign contributions might buy that sweet luxury car you always wanted or even keep you out of jail. And if legislators somehow manage to break the law anyway, they rarely face any punishment.

The Sky's the Limit

"The biggest problem is that state election law is so full of loopholes you could drive all the trucks in the State of New York through them," said Barbara Bartolletti of the League of Women Voters. "And the ones that exist are not easy to enforce."

To start with, New York allows larger donations than most states. Most permit individuals to donate only a few thousand dollars to a candidate for governor. In Pennsylvania and New Jersey individuals can give a maximum of $3,500 and $3,400, respectively, to a gubernatorial candidate per election cycle.

In New York the limit is $55,900 -- a sum much larger than the average New Yorker's salary. Even in California the ceiling for a donation to a gubernatorial candidate is $25,900. New York has a $15,000 limit for Senate candidates and $7,600 for the Assembly -- also larger than that in most states.

Those limits apply to individuals, limited liability corporations, unions and political action committees. Corporations can give only an aggregate of $5,000 per year. But thanks to a loophole that allows affiliated or subsidiary corporations to contribute as well, corporations can actually make much more sizeable donations. Even companies trying to win contracts with the state may contribute.

Many point to Sen. Carl Kruger as a major beneficiary of the current system. Despite having no opponent in his last campaign, Kruger kept his campaign coffers flush with cash. In the beginning of this year he had $1.7 million on hand.

Kruger, a conservative Democrat, had a cozy relationship with Senate Republicans when they were in charge of the Senate. When the Senate flipped, Kruger became the head of the powerful finance committee over a number of other Democrats who had expected to be in line for the job,

Since the beginning of the year Kruger has raised over half a million dollars, which a spokesman says is "the most in the senate." During the recent deficit reduction negotiations, Kruger launched an all-out assault on Gov. David Paterson's proposed budget cuts. He instead pitched a number of one-shot ways to close the budget gap, including collecting cigarette taxes from Indian reservations -- something seen as all but impossible.

Some speculated that Kruger was doing his best to ensure that special interests that support him so well were left unscathed. "He raises tons of money, and I blanch to think about the way he goes about doing it," said one senator troubled by Kruger's behavior. "I think we can use people like Carl as an example to push for reform," the senator said wishing to remain anonymous due to his working relationship with the Kruger.

A spokesman for Kruger said that it is no secret Kruger is an adept fundraiser. Responding to accusations that the money received influenced Kruger's actions during this year's deficit reduction negotiations the aide responded, "He was a big fundraiser before this session even before he was in the majority and before he was finance chair."

When asked what makes Kruger a standout fundraiser, the spokesperson responded, "He's a hard worker, and he's a hard worker."

The problem " is not about one person," said Austin Shafran, a spokesperson for the Senate majority. "The system was broken before we got here and it will be broken after we leave if we don't do anything."

Pumping Up the Parties

It’s not just individual politicians who get to benefit from the state's campaign finance laws. Any one contributor can give a maximum of $95,000 to a political party, but a loophole allows unlimited donations for "party housekeeping." Advocates say this allows interest groups to dump cash into a party in hopes of influencing larger issues. This year, unions and health care interests have donated hundreds of thousands of dollars to Senate Democrats all while being threatened with steep cuts by Paterson. The Senate resisted the cuts to education and health care.

The Republicans generally have garnered donations from the real estate and banking sectors. They have also, along with the Independence Party, benefited from the generosity of Mayor Michael Bloomberg, who has contributed nearly $4 million since 2001 to the Republican Party. More recently he gave $250,000 to the Independence party after its put him on its ballot line for November.

Incumbent politicians can draw in substantial donations not necessarily because they face a challenge, but based on the power they have in the legislature. As a result incumbency rates in New York are staggeringly high as challengers find it increasingly difficult to raise cash for a credible race.

According to a report by Citizens Union, the sister organization to Gotham Gazette's publisher, over the past 10 years only 25 legislators lost their re-election bids, while 31 left office to work in the private sector, 54 went to a different office and 14 left because of ethical misconduct or criminal charges. So if legislators usually do not face much of a challenge what do they use all that money for?

A Blank Check?

Senate Majority Leader Bruno felt within his rights when he used campaign cash to buy a $1,300 pool cover or an $8,000 trip to Italy. Sen. Jeffrey Klein tends to spend a lot on food. He used $32,000 in campaign funds on meals at posh restaurants in Albany as well as trips to the donut shop.

When former Sen. Martin Connor decided he needed $70,000 for a new Jeep and all related expenses, having a lot of cash on hand came in handy. Assemblymember Peter Rivera, who apparently also has a taste for automotive luxury, used $54,000 in campaign funds to pay for two Mercedes.

Campaign funds also can help in tough times. Former Sen. Guy Velella, used campaign funds to unsuccessfully defend himself from bribery charges, Even Bruno, who now stands trial for allegedly using his influence to benefit unions and businesses who gave him gifts, has spent at least $633,000 of his campaign funds to pay for his defense. And according to the state Board of Elections, Bruno is doing nothing wrong.

When the Loopholes Aren't Enough

Despite the laws' lax provision, politicians still blatantly skirt them. Senate Majority Leader Pedro Espada Jr., has racked uparound $10,000 in fines for not properly filing and reporting to the campaign finance board -- a feat considering the maximum fine per indiscretion is $500.

The Board of Elections routinely sends a list of those with outstanding violations to the Albany district attorney. According to Heather Orth, spokeswoman for Albany District Attorney David Soares, the office sends letters to the politicians on the list, "telling them they are in violation, and then most get in contact with the board." Orth said she could not recall an incident where Soares's office took any further steps. "Our job is to assist the New York State Board of Elections," she said. Sen. Neil Breslin speculated that the district attorney's office has a limited budget and is more concerned with prosecuting serious crime.

Charges against politicians like Bruno and former Assemblymember Anthony Seminario didn't come from the state -- but the federal government.

The Board of Elections has frequently said that it is too overworked and understaffed to properly enforce the law. The board has 18 people working under its investigative wing with only one full-time investigator. The State Board of Election has a budget of $19.9 million for the fiscal year 2009-2010 and full time staff of 63. But its responsibilities extend far beyond campaign finance as it oversees the general running of elections as well as campaign finance filings.

A System Designed To Fail

Bartoletti said it isn't that simple. "Sure, they are overworked. They don't have the staff. But they are underfunded for a reason. They are all appointees; they are not independent watchdogs at all. They don't have the impetus to do anything that might hurt the people who appointed them." The board is headed by four commissioners appointed to two-year terms. Two appointees are made by the Democratic Party and two by the Republican Party.

Bartoletti pointed to Assemblywoman Carmen Arroyo, who has repeatedly failed to file campaign finance reports. Arroyo owes the board around $30,000 in fines. "She has thumbed her nose at the board and said, 'come and get me!'" said Bartoletti. "And so far they haven't been able to." The dysfunction just sets an example for other legislators, Bartoletti said: "They see what's going on and see they are ignoring fines and they have no reason to pay attention."

For years now the New York Public Interest Group, the League of Women Voters, Citizens Union of the City of New York and Common Cause of New York have presented the Board of Elections with a list of possible violations and missing filings. For 2008 the groups found 350 apparent violations of the $5,000 limit on corporate donations as well over 5,000 instances of the violation of the requirement that the name and address any person who donates over $100 be given to the Board of Elections. Bartoletti said each year the response is the same. "'Thank you. We have received your complaint.'"

Blair Horner of the New York Public Interest Research Group puts it in more blunt terms. "It's like beating a dead horse. All they do is lay there."

Sen. Eric Schneiderman, who has been a reform advocate in the Senate, said the failure of the enforcement mechanisms is "not worth opining over. They just don't work."

"The system is designed to fail," agreed Horner. He has been calling for the abolition of the Board of Elections for years. Horner sat at a table in a cafeteria at the state capitol. For the last two hours he had sat and watched as the state Senate debated and then voted down a bill approving gay marriage. Earlier they passed a deficit reduction package, an authorities reform bill and a Tier V pension package. "This session was a failure for reform," he said.

Promises, Promises

For years Assembly Speaker Sheldon Silver would propose and pass campaign finance reform, only to have it ignored by the Republican controlled Senate. "Now that Democrats by some twist of fate are in charge, guess who is more recalcitrant about doing it?" asks Bartoletti. "Mr. Silver."

But the Assembly did pass a campaign finance bill this year. The legislation would have created optional public financing for statewide candidates. Some said the bill did not go far enough and did not strengthen the Board of Elections. Horner said the bill basically "grafted the public finance system on top of an already disgraceful and dysfunctional system."

Horner finds it amazing that the Senate was not able to pass a significant piece of reform legislation. "In a year when we saw (the) inspector general issue a report slamming the state ethics board, the Seminario scandal and the former Senate Majority Leader Joseph Bruno on trial for corruption, they couldn't come up with anything?"

To be fair, the Senate was set to vote on a package of reforms on June 8 -- the day Espada and Sen. Hiram Monserrate defected to the GOP, setting off the Senate coup.

Currently, Squadron and Schneiderman are negotiating with the Assembly on a new ethics package. Part of that legislation is to strengthen the enforcement arm of the Board of Elections by providing more funding and the ability to levy stiffer fines.

The City’s Way

If New York State wants to clean its campaign finance system, a number of good government groups and scholars, think it could follow New York City's example. A key to the city's system is public financing of campaigns. Candidates who want to receive public matching funds must agree to tight restrictions on the amount a donor can give to them, thereby making politicians reach out to more people and reducing the clout of any single contributor. In New York City, corporations and limited liability corporations are not allowed to donate to candidates, and there is a limit on how much unions can give.

The city also has a ban on using campaign cash for personal reasons. (No buying pool covers with campaign money.) The New York City Campaign Finance Board requires candidates file timely disclosure statements that are made public whether or not the candidates opt in to public financing.

New York City's Campaign Finance Board is considered well staffed and nonpartisan. It has a "personal services" budget, which includes funding for staff, of around $6 million and employs 83 full time staff members.

Significantly, the board has the power to subpoena and audit campaigns, as well as to take back public financing. While it can't officially issue fines, it can "make civil penalty assessments" and use the courts to enforce them. The board issues fines as high as $10,000.

The system has its critics. Some point out that it lets wealthy self-financed candidate, most notably Mayor Michael Bloomberg, ignore the system altogether. Others contend that by allowing contributions from labor but not corporations it puts too much power in the hands of unions.

After Bruno

Good government types don’t see much chance that politicians will reform the state's campaign finance system to resemble the city's anytime soon. Shafran said that the Senate realizes that reform is needed, and added that Squadron and Schneiderman are focused on reaching a deal with the Assembly as soon as possible. "The Senate certainly understands the ethical concerns, and we stand ready to take action."

But Bartoletti said she isn't sure good government groups will get the true reform they are looking for. "We haven't had a reliable partner in pushing for reform," she said. "Most of these guys don't really want to do anything about it. This is how they got elected and this is how they stay elected."

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