Gotham Gazette

The Place for New York Policy and politics

Open Government

Open Government

State Budget Remains in Limbo


David Paterson
Gov. David Paterson issues the first of almost 7,000 budget vetoes on Monday.

"Is it over?"

That is the question most asked in Albany these days.

"Do we have a budget?"

That's probably the second most frequent.

The answer to those questions isn't as straightforward as anyone might hope.

It has been a back and forth couple of days in the capital as legislators and the governor battled over the budget, using obscure rules and good old-fashioned vetoesto one up each other.

Don't imagine for one second the battle is over. Bills may have been passed, but deals are still being made and the fallout for the city remains obscure.

The legislature passed its budget bills -- making the need for more emergency budget extenders obsolete. There will be no state shutdown. The legislature made a number of restorations to Gov. David Paterson's budget, but the governor has sworn to use his veto stamp almost 7,000 times to stop all increased spending. The legislature could override -- if the Senate had the votes. But Senate Republicans would need to back the Democrats in the effort, and they have told Democrats not to count on them. Meanwhile, the governor's office and the legislature continue to negotiate over the revenue package.

One Big Ugly Mess

Paterson seemed to have the legislature's number. Using emergency extenders to push through permanent cuts that legislators were determined not to make, Paterson seemed set to make his entire budget plan permanent on Monday. He had already dealt with over 70 percent of state spending in his emergency extenders. But this week, the governor's deadline backfired.

Rather than scrambling to negotiate a three-way deal, Assembly Speaker Sheldon Silver and Democratic Conference Leader John Sampson hashed out a deal between themselves -- leaving Paterson on the sidelines. Knowing that governor had some support among their members, the legislative leaders invoked a never-before-used rule that allowed them to reject Paterson's budget extenders. This time they had a funding structure of their own to pass to make sure the state government didn't shutdown.

The legislature managed to pass its budget plan on Monday after substantial effort on Sampson's part to get his conference to vote for it -- but Paterson immediately promised to veto every line of spending the legislature added to his own budget plan, and he has begun to make good on those 6,900 vetoes.

And the legislature has yet to pass its revenue plan. If and when it does, Paterson could veto that plan, sending lawmakers scrambling to reach a new revenue deal.

Legislators have started reaching out to Paterson to restart budget talks. So far, Paterson seems resistant. "I am doing the vetoes. As far as I am concerned, this budget process is over," Paterson told the Associated Press on Tuesday.

The legislature's plan was, at least in some respects, kinder to the city than the governor's. Paterson vetoed the legislature's restoration of $419 million in education aid -- $177 million of which would have gone to city schools.

"I never take any joy in vetoing education money, health care, services for the poor and the indigent," Paterson said at a press conference on Monday night. "It breaks my heart to do this. The only reason I am doing this is because I think that otherwise we are proverbially kicking the can down the road and creating a greater problem."

Education advocates and representatives from the Assembly and Senate say Paterson's veto and the cut in funding will increase class sizes and reduce educational opportunities.

"In high needs school districts across the state, this compromise budget offers a critical margin of protection to the quality of education," wrote Billy Easton of The Alliance for Quality Education. "The governor's veto, if it stands, will hurt the neediest students in the state the most."

Thanks to earlier budget extenders, New York City also is set to lose $302 million in state Aid and Incentives to Municipalities funding.

Black Box Budget?

The state is now left with a mess of a budget that even its authors don't fully grasp. Republican Sen. John DeFrancisco asked Senate Finance Chair Carl Kruger for the size of the budget -- how much spending it includes. "We do not have a number," Kruger replied. If you don't know the total amount of spending, how do you know this budget is balanced?" DeFrancisco demanded.

Eventually, Democrats handed out a memo detailing their budget deal. The total size of the budget is $135.72 billion, slightly larger than Paterson's executive budget of $135.65 billion.

Morgan Hook, spokesman for Gov. David Paterson, said the governor's office expects the budget the legislature passed is around $400 million out of balance, and that number could grow depending on how much funding the federal government delivers in its annual Medicaid payment. Washington coud very well make a devastating cut in the $1.6 billion the state received previously.

If the state does not get the money, Paterson has promised to recall legislators this fall --at the height of election season.

Raising Revenue

The legislature abandoned a number of revenue raisers in Paterson's budget, including a tax on the syrup used in sugary drinks, legalizing mixed martial arts and allowing the sale of wine in grocery stores. "We need to find other sources of revenue," said division of budget spokesman Erik Kriss. "Allowing wine in grocery stores would have given us $150 million in FY 2010-2011. They didn't do mixed martial arts, and they didn't take into account all the spending they added."

Instead, legislators reactivated a sales tax on clothing and footwear retailing for under $110. That measure is expected to raise $330 million. Legislators railed against Paterson's "sugar tax" saying it would hurt New York families by raising their grocery bills. But lawmakers were reluctant to explain how their sales tax on cheap clothing could possibly benefit hard-working New Yorkers.

Originally the legislature proposed limiting the tax deduction for charitable contributions by the wealthiest New Yorkers, allowing those who make over $10 million a year to deduct 25 percent of their charitable donations on their tax returns, down from 50 percent. The rich, especially Mayor Michael Bloomberg who makes substantial charitable donations, have assailed this measure, saying it will drive the wealthy from the state.

"If one half of one percent of the people who pay the highest taxes left this state, our income tax would be cut in half," Bloomberg said.

As a result of the backlash, the legislature amended the legislation to allow New York City to opt out of the measure, since the city has its own personal income tax.

Charitable organizations say the reduced deduction will be extremely damaging to them. "The millions that Albany hopes to gain by this tax hike won't go far to help a state whose operating deficit numbers in the billions," writes Scott Walter on philanthropydaily.com, "but those millions can mean life and death to charities and those they serve."

The bill would reduce the income tax reduction New York City residents can claim to the first $100,000 of their income. That is estimated to raise $120 million.

Video lottery terminals hours will be increased, and more of the income from them will go to the state opposed to the operators of the terminals. That measure is expected to raise $45 million.

Paterson does not have line item veto power over the revenue package and wants more revenue raisers, not fewer. Negotiations between the legislature and Paterson are reportedly ongoing and it isn't clear when the legislature will actually vote on the bill.

However, if the governor does not get what he wants he could veto the entire package and send the legislature back to the negotiating table to find more revenue sources. It would be a power play of epic proportions. "It’s a take it or leave it proposition," commented a Paterson spokesperson, who said she expected Paterson would evaluate the legislation after it passes.

"I can’t even get into the idea of vetoing that bill," said Kriss.

Silver said he doubts Paterson will veto the bill or that there will be major changes to the revenue stream. "I don't envision any great talks about changing it, as far as that goes," Silver said. "I would be surprised. The revenue bill is exactly the same as his bill that he has in that so-called emergency bill with the exception of wine in grocery stores." And yet members of the Senate Democratic conference say they are holding out on passing the revenue measure to come to terms with the Assembly on Paterson's plan to allow SUNY and CUNY to set raise their own tuition without state approval and a plan to deal with the possible lack of Federal Medicaid funding.

An Issue of Counting

Sen. Eric Schneiderman's bill that would count inmates as living in their hometowns rather than at the prison where they are incarcerated is also part of the legislature's revenue bill. It could have major consequences on the future of New York State politics.

The majority of the prisoners now counted as residing in upstate prisons are from the five boroughs. Those inmates now would be counted for redistricting purposes as living in New York City -- not upstate -- severely reducing the number of upstate districts and creating more districts in the city. Last year the legislature passed Rockefeller Drug Law reform in the budget.

In the end the budget battle is not over. There is talk that negotiations could continue after the July 4 holiday because legislators support Paterson's plan to allow SUNY and CUNY to raise their tuition every year and other measures. Lawmakers could conceivably make deals that would see a return of education funds, and Paterson could get revenue raisers he wants like the tax on sugary drinks. It's Albany, who really knows?

Unions Pick Up Tab for Council Members' Fines, Legal Bills


annabel palma
Annabel Palma at a rally for AIDS workers last month.

City Councilmember Annabel Palma had her payday.

Palma has used at least $64,000 from local unions to pay legal fees and fines from violations of the city's campaign finance law during her City Council campaign in 2003, according to several sources familiar with the account. The cash was funneled through a legal defense fund that is not registered with the State Board of Elections or the city Campaign Finance Board and was established by Kevin Finnegan, the current political director for 1199 SEIU, where Palma once worked as an organizer.

Palma was slapped with $30,000 in fines from the Campaign Finance Board because her 2003 campaign allegedly coordinated its activities too closely with 1199 -- the city's large and powerful healthcare workers union. The Bronx councilmember also racked up substantial legal fees during the dispute.

According to filings at the State Board of Elections, 1199 contributed a total of $51,675 to the Annabel Palma Legal Defense Fund -- making one donation in December of 2006 and another in August of 2009. The Bronx Democratic County Committee, a local UAW, United Federation of Teachers political action committee and a local International Union of Operating Engineers also contributed to the Palma defense fund.

Palma said she was not involved with setting up the fund.

"That fund was created separate and apart from my knowledge," said Palma. "It’s an independent fund. Through conversations, [it] was created by my supporters that believed that someone like myself, who came up through the ranks, needed help in paying off these fines."

The account predates Finnegan's tenure as the political director of 1199, he said, and it was established while he was still a partner at Levy Ratner -- a labor-linked law firm.

At least two other current City Council members have used independent funds to pay off fines associated with their campaign activity. According to files at the State Board of Elections, council members Joel Rivera and Elizabeth Crowley also have similar accounts.

These accounts, which are legal, are not subject to contribution limits or disclosure and may operate completely independently from the campaign finance system, despite the fact that the three officials accepted public dollars for their campaigns.

Unregistered Accounts

While state elected officials often set up private accounts or use their state campaign accounts to pay off hefty attorney fees -- recently convicted former State Sens. Joe Bruno and Efrain Gonzalez both did -- it has been completely under the radar on the city level.

Eric Friedman, the director of external affairs at the Campaign Finance Board, said candidates can use personal accounts or campaign accounts to pay fines. Friedman said the board is currently researching how other jurisdictions handle the disclosure of legal defense funds.

"We don’t currently audit candidates' personal bank accounts," said Friedman. "We don't do that nor do we think that is appropriate. The question is: Is there something that is appropriate to advance the values of our campaign finance system?"

In Palma's case, she said she had nowhere to turn when she received her hefty campaign penalty in 2007.

"I had no idea how I was going to pay this. The CFB was calling me on a daily basis just like a creditor would," said Palma. "Was the fund a blessing? I think so. If not, I would have been over $100,000 in the hole to this day."

Both Palma and Finnegan said they went to the city's Conflicts of Interest Board for a ruling on whether the Palma defense fund would represent a conflict of interest for the councilmember. They both said the board approved the use of the fund to pay Palma's fines.

Wayne Hawley of the Conflicts of Interest Board said the board has not issued a public opinion on the Palma case. Many of the board's decisions are private.

Finnegan argues legal defense funds are entirely separate from the campaign finance system, because they do not expressly advocate for the election or defeat of a candidate.

Others disagree.

"I'm stunned that this practice is permissible," said Dick Dadey, the executive director of Citizens Union, the sister organization to Gotham Gazette's publisher. "It undercuts the integrity of the campaign finance penalty system for gross violations and misuse of public funds."

When asked whether getting her campaign fines paid off by powerful city unions had the appearance of undue influence, Palma said she was not beholden to any special interest.

"As an individual, I think I'm smart enough to be able to make an independent decision separate and apart from anyone asking me to do certain things," Palma said.

An Unusual Practice?

The use of legal defense funds on the city level isn't unprecedented. Palma's current colleagues in the council have done the same thing.

According to filings at the State Board of Elections, the "Crowley for Council CFB Debt Fund" received at least $24,000 between 2006 and May 2008 -- just before the newly elected councilmember ran in a special election for an open seat in Queens. Money came from unions, including the International Union of Operating Engineers, 32BJ SEIU, 1199 and the Uniformed Fire Officers Association, among others. Crowley was slapped with $80,000 in fines by the Campaign Finance Board for fundraising irregularities associated with her 2001 campaign, which she lost to former Councilmember Dennis Gallagher.

Crowley did not return calls for comment.

Candidates cannot receive public financing unless their debts to the Campaign Finance Board are paid off.

Councilmember Joel Rivera, the council's majority leader, had to pay the Campaign Finance Board $56,245 in 2003 for failing to verify certain expenditures.

According to filings at the State Board of Elections, a fund titled "Rivera CFB Fund" received more than $19,000 from political action committees across the city, including the Uniformed Firefighters Association, 1199 and the Correction Officers' Benevolent Association, among others. The fund's address is the same as his city campaign finance account.

Yesterday Rivera said he could not recall the account, but he did say he fundraised to pay his campaign finance board fines.

"We did some fundraising, and we used the fundraising to pay off the fines," said Rivera.

The campaign finance system is complicated, he added, and candidates can get entangled in its regulations.

"There needs to be a remedy," Rivera said. "Because we're not rich."

Bill Would Change How the State Draws Districts


New York State
Gov. David Paterson tells a recent forum in Albany how redistricting nearly cost him his State Senate seat.

Last week, Gov. David Paterson sat at a forum on reforming Albanyand recalled how the current system of redistricting in New York personally affected him during his time in the State Senate. "It was really just the whims of senior members and antagonisms toward individuals," Paterson said, describing how he found himself representing an entirely different community after district lines were redrawn.

It was a rare glimpse into the dark realities of a system that some say has been used as a tool for legislative leaders to punish and smite their enemies and kept Republican control of the State Senate even when while Democrats enjoyed a five-to-three enrollment advantage.

Why was Paterson uprooted from the Harlem district he had long represented? Republicans wanted to oust another legislator -- Sen. Eric Schneiderman, who had earned their wrath -- and Paterson suffered the collateral damage. Both men managed to win re-election despite the maneuvering.

Every 10 years the leaders of the state legislature get to redraw the lines for the state's congressional, State Senate and Assembly districts, pushing some people into one district and some people out, thereby giving one party or another the advantage on Election Day. It is an ugly back room process based on strategy, political expedience and, sometimes, all-out political revenge. Whoever comes out with the majority in the state legislature this year will be able to control the process after the current census.

Power to Punish

Not many believe that Democrats or Republicans want to give up the power to manipulate district lines, but the discussion is actually taking place. Last week the Senate committee on investigations and government operations approved a bill sponsored by Sen. David Valesky that would take redistricting out of the legislature's hands and give it to an independent redistricting commission. But there are many obstacles in the way of the bill from becoming law, including the Democratic leaders of the legislature and Republicans who say the bill is biased towards Democrats.

The law would have prevented Republicans in 2002 from redrawing Schneiderman's district, which originally encompassed the West Side of Manhattan and parts of the Bronx, to include almost all of Washington Heights and other parts of Northern Manhattan. The shif made the district appreciably more Hispanic and prompted Guillermo Linares, who had represented Washington Heights in the City Council for 10 years, to challenge Schneiderman. "The Republican leadership did everything in their power to alter the district to get rid of me," said Schneiderman. "The alteration of that district is a perfect of example of what is wrong with partisan redistricting." Schneiderman supports Valesky's bill as well as other redistricting measures.

In the end the Republican move did not pay off. Schneiderman won his primary.

Time for Change?

On the day before Paterson told his redistricting story to Albany on the Record, a forum for state officials to talk about reform efforts, former Mayor Ed Koch, onetime city Parks Commissioner Henry Stern and Dick Dadey of the Citizens Union sat before the Senate committee on investigations and government operations and made their case for independent redistricting.(Citizens Union is the sister organization of Gotham Gazette's publisher.)

Dadey said he believes the time is right to pass such legislation, because of voter frustration over the legislature's dysfunction. "They see what is going on in Albany, and they have started to connect the dots. They are beginning to understand that issues like redistricting led to the mess we have in Albany," Dadey said.

Koch, who has been outspoken in his disdain for the current behavior of the state legislature, has already won the pledges of GOP gubernatorial candidates Rick Lazio, Steve Levy and Carl Paladino, as well a of the expected Democratic candidate, Attorney General Andrew Cuomo, to support independent redistricting should they be elected. The former mayor continued his attack on the culture of Albany during the hearing, saying that he had been convinced that simply pushing to "throw the bums out" won't fix the capital and could do some harm. There are some good legislators, he said, and independent redistricting would allow more good ones to be elected.

Sen. Ruben Diaz was incensed by Koch's comments. "This system has been used for years and years," said Diaz. “It has been a good system. But now, when blacks and Hispanics are becoming president and in power, the system is all of a sudden no good.” Koch responded that he had never supported the system and now had the time to do something about it.

After the meeting, Diaz told the Gazette that with Koch and Stern involved, he was sure race was the main motivating factor. "The Koch administration was the most corrupt administration we've had," said Diaz. "Now that we are in charge, we are all bums and he wants to throw us out."

(In 2005, New York City paid $20 million to settle a suit charging that the Department of Parks and Recreation during Stern's time as commissioner systematically discriminated against its black and Hispanic employees.)

The weekend before the senate hearing, Senate President Malcolm Smith said, "With the Democrats in control of the state Senate, we are going to draw the lines so that Republicans will be in oblivion in the state of New York for the next 20 years.” Koch had responded by calling Smith's comments "absolutely dumb."

Dadey said that Citizens Union has long backed changes in the redistricting system. "We supported reforming this since it has been in the hands of the legislature to draw the lines, regardless of who has been in power," he said.

The Proposed System

The bill Dadey supports would further require these principles to be followed in districting.

I. The most and least populous senate and assembly districts shall not exceed the mean population of districts for each house by more than 1 percent;

II. Counties and county subdivisions shall not be divided in the formation of districts, and where it is unavoidable, more populous counties or subdivisions will be divided in preference to those with smaller populations;

III. Villages shall not be divided ;

IV. Districts shall be as compact as possible; and

V. Districts shall unite communities of interest.

When these principles conflict, the one with the lower number would take precedence.

Valesky's bill would require a reapportionment commission to draw districts so that all congressional districts will have close to the same number of people as possible, and are contiguous. It would also bar the creation of any districts that "abridge or deny minority voting rights" and would require that no district favors or opposes any political party, incumbent or candidate.

Supporters of the legislation say this system will ensure non-partisan districting.

"This measure would shutter the smoke-filled rooms where legislative leaders drew legislative maps that favored incumbents, diluted the voice of certain constituencies by splitting up their communities, and calcified their hold on the levers of power," said Sen. Craig Johnson, head of the Senate committee on Investigations and Government Operations. "I believe that the voters should pick their representative, not the other way around," he concluded.

Protecting Democrats?

But Diaz is not the only one who opposes the bill. Republicans say that, the bill, as currently crafted, favors Democrats.

The measure calls for a nominations committee to select 15 registered Democrats, 15 registered Republicans and 10 people who are registered with neither major party. From that pool, legislative would choose two members each to make up an 8-person civilian reapportionment commission. Those 8 people would then appoint 3 more members, one of whom would be the chair. That group would propose district boundaries for approval by the legislature. If the legislature rejected the recommendations, public hearings would be held before maps were redrawn and submitted for legislative approval again.

Republican criticism centers around the nominations committee. Its eight members would be appointed by the presiding judge of the Court of Appeals, the attorney general, the state comptroller, the governor, the temporary president of the senate, the speaker of the assembly, the minority leader of the senate, and the minority leader of the assembly. At this time, Democrats control a majority of those positions.

Republican Sen. George Winner apologized for his "cynicism, but said he didn't quite buy that Democrats wanted to reform the process. As evidence, he pointed to the proposed structure and pointed to the way the nominations committee would be structured.

Republicans support a constitutional amendment introduced by Republican Sen. Joe Robach that would have a "districting commission" made up of five members. Four of those members would be nominated by the four heads of the legislature. The four appointed members would then themselves appoint a chair. Republicans say this would ensure a non-partisan committee.

"There are elements of the Robach bill that could strengthen the Valesky/Gianaris bill," said Dadey. But he said the Robach bill only tweaks the current system of redistricting, allowing legislative leaders to more or less retain direct control of the system. He said the Valesky bill offers a superior system to ensure independence. "It leaves the power in the hands of the legislative leaders," said Dadey.

Robach did not return requests for comment

The nuances may not matter at all. During Albany on the Record, Assembly Speaker Sheldon Silver and Senate Majority Conference Leader John Sampson were less than enthusiastic about redistricting reform.

Silver insisted that there are certain federal regulations that require district lines to be drawn in contorted ways that seemingly split communities. And other areas have so many voters registered to one party that there is no way to make the races there competitive. ""If Lassie ran on the Democratic line in my district, Lassie would win," said Silver, who represents lower Manhattan. "I’m serious. How do you make that competitive?"

In his initial comments to the reform crowd Sampson said he knew they wanted him to promise to support independent redistricting, but said he would not make that promise.

"When the bill comes to the floor, we will make a decision on that,"said Sampson.



Print Friendly and PDF

Editor's Choice


Gotham Gazette: New York Voters Approve $4.2 Billion Environmental Bond Act
New York Voters Approve $4.2 Billion Environmental Bond Act
Gotham Gazette: 
New York City Voters Approve Racial Justice Ballot Measures
New York City Voters Approve Racial Justice Ballot Measures
Gotham Gazette: 
Housing Development in New York City Slows to a Crawl as Officials Debate Tax Incentives
Housing Development in New York City Slows to a Crawl as Officials Debate Tax Incentives
Gotham Gazette: 
City Council Examines Low Voter Turnout, Moving Local Elections to Even Years City Council Examines Low Voter Turnout, Moving Local Elections to Even Years