With the City Council in the thick of budget hearings, there were not many bills to vote on at the May 15 stated meeting. The measures the council did pass, though, dealt with three persistent city problems: solid waste, traffic and construction safety.

Veto Override

The council's debate with Mayor Michael Bloomberg over how to deal with electronic waste moved to the next stage as council members overrode the mayor's veto of a bill that would require manufacturers of electronic products to meet certain benchmarks for the recycling of their products.

The measure was one of a series of proposals by City Councilmember Bill de Blasio designed to deal with what he has described as a "tsunami" of electronic waste.

In February, the council passed a single piece of legislation offering a variety of solutions to the problem. The mayor balked at a provision that would require manufacturers to eventually collect 65 percent of goods that they sell or face a $50,000 fine. Bloomberg argued that it did not make sense to put the onus for recycling on manufacturers. Speaking of the measure, he said, "We will not enforce it. And we don't have to enforce it because it violates a whole bunch of federal laws on interstate commerce."

In response, the council broke de Blasio's plan into two separate bills and passed both. Bloomberg signed one -- Intro 728 -- banning the disposal of electronic waste at curbside and requiring manufacturers to devise recycling plans. He vetoed the other -- Intro 729 -- which set the mandatory goals for recycling.

On Wednesday, the council by a vote of 45 to 3 overrode that veto. Councilmembers Simcha Felder, Vincent Ignizio and James Oddo voted no.

At the council meeting de Blasio argued the requirement for industry is essential. "Performance standards," he said, "make the industry move forward and recycle and make greener products."

At the press conference prior to the meeting, both de Blasio and Council Speaker Christine Quinn acknowledged that the administration would certainly not act despite the override.

"They are not going to enforce this bill, " Quinn said. "They believe we have overstepped our authority. They said environmental groups might take the dispute to court or that a new mayor - and there's almost certain to be one in January 2010 - might take a more kindly view of the measure.

At the press conference prior to the meeting, Quinn said in response to a question, criticized a court decision that, for all intents and purposes, lets the administration ignore council actions that it disagrees with, even in the face of an override.

Calling the court ruling "a ridiculous decision," Quinn said she looked forward to a future decision that "would give the veto override the power that it should have."

Monitoring Traffic

In other action, the council unanimously approved a bill -- Intro 199 -- to require the Department of Transportation to report every November on surface traffic in the city.

"As the city is booming, it's not moving," said City Councilmember Gale Brewer, who sponsored the measure. Compiling the data, she said, should enable city officials to know "where exactly are the places where traffic is not moving and what can we do to help it move."

The information, she said, "will give us the tools to be able to work on a sustainable plan."

The measure passed 48-0.

Scaffolding Safety

In what Quinn described as part of the mayor's and council's continuing effort to improve construction safety in the city, the council by a vote of 48 to 0, approved a bill requiring increased training for workers who build or install scaffolding. The measure -- Intro 547-A -- also mandates refresher courses.

With this bill, Quinn said, the city's requirements would exceed national standards and Occupational Safety and Health Administration requirements.

Quinn said the measure, sponsored by Councilmember Erik Dilan, was "not the last piece of legislation you'll see coming from the council on construction safety." She declined, however, to say what other ideas might be on the way, saying there could be a "comprehensive package" of proposals.

Promise Keepers

With little of controversy on the agenda, many council members used their time on the floor to call on the Bloomberg administration to restore its proposed cuts in city funding for school. Education advocates packed the chamber balcony and prior to the meeting opponents of the cuts lobbied council members. During the meeting, many members sported buttons reading" Keep the Promise," a reference to the mayor's pledges on improving and funding public education in New York City.

Councilmember Robert Jackson, chair of the education committee, reiterated his pledge that he will not vote for a budget "that does not restore money to education, specifically to classrooms."

 

The feeling of déjà vu might overwhelm some observers.

Almost four weeks after City Council Speaker Christine Quinn's hastily organized press conference announcing several "reform" proposals aimed at addressing the now-infamous council slush fund scandal, good government groups and the press returned to City Hall for an encore presentation.

These latest proposals -- which have been scaled back in some ways and broadened in others since Quinn's first effort-- could be a quick fix to the speaker's crippled political reputation.

Or maybe not.

Polls show her constituents think something is amiss (52 percent of respondents to a Quinnipiac University poll released last week think Quinn knew the city's budget was riddled with allocations to non-existent organizations). Practically every day another story plastered across front pages alleges misconduct on the part of council members or their staffs or associates.

We have seen two indictments and two sets of reforms, and we still have two ongoing investigations into the council's distribution of its discretionary funding -- the member items (also called pork barrel or, in Washington parlance, earmarks) requested by individual council members and the speaker. The allegations involve money going to nonexistent groups, fiscally defunct organizations and groups affiliated with council members' families, friends or staffers.

While Quinn's plan won praise, many officials and observers recognize that some areas of council spending were left off the agenda entirely. And some critics have said the problem will not end until council ends the practice of member items altogether.

The Reforms

The first time around, Quinn had nearly a dozen council members lined up behind her and representatives of good government groups flanked the podium. That show of support, as we now know, did not amount to much.

A council backlash -- one that included rumors of a coup d'Ă©tat -- had the speaker apologizing to her membership for acting without gauging their support first and sent her staff back to the drawing board.

The result was seen on Wednesday. Quinn, who the second time around had about 20 members with her and representatives from three good government groups sitting quietly in the corner, released a package of eight proposals that set out a process for the distribution of about $200 million of the council's $300-plus million discretionary funds.

For the most part, a majority of council members seemed satisfied with the reforms -- some suggested they were stronger than those governing most other legislative bodies in the country. Good government groups, including the New York Public Interest Research Group, Common Cause/NY and Citizens Union, the sister organization to Gotham Gazette's publisher, championed the proposals.

In a statement supporting the initiative, however, Gene Russianoff of the New York Public Interest Research Group made sure to put the efforts in context. "Are these reforms a strong enough response to recent revelations regarding spending by council members?" he asked. "These reforms are a serious effort. The coming budget season should give us an answer."

Under the new initiative, groups in line for more than $10,000 will have to meet several criteria including having a federal tax identification number, registering with the state Attorney General's Office of Charities and demonstrating they have experience in delivering services and the financial capacity to continue to do so.

Recipients of less than $10,000 will be subject to a council internal review.

Any group that acts as a fiscal conduit -- that distributes discretionary fund allocations to smaller, unregistered charities -- would be subject to the same requirements. Prior to fiscal year 2008, the council did not publicly list these conduits, whose existence enables some small groups to receive funding even though they are not publicly registered charities as required under city rules.

Quinn backtracked on her earlier request for proposal process -- a plan to send about $25 million from the speaker's discretionary pot to the Mayor's Office of Contract Services for distribution based on merit. Council members rallied against that idea, arguing it gave too much of their power to the executive branch. Instead Quinn has issued a series of recommendations requiring groups that receive council funding to be vetted prior to their inclusion in the budget.

"In some ways they are more significant than previous reforms," said Quinn of the latest plan. "It is a level of review that no other, I believe, legislative body in the country has as it relates to putting discretionary items into the budget."

While Quinn recognized she abandoned the pillar to her previous proposal -- the merit based selection of groups that would namely receive support from the speaker's discretionary fund -- she claimed the latest proposals were stronger than the former, because they would cover a much larger percentage of the council's discretionary funding.

The targeted funding will include: about $15 million of individual member discretionary funding, $20 to $25 million of the speaker's discretionary funding and about half of the council's initiative spending, which is about $174 million.

The other half of the initiative spending, the speaker said, goes to agencies for program restorations, such as upping the library budget after it has been slashed by the mayor. The whole council distributes these funds, said Quinn, not individual members.

The speaker confirmed the council would continue to release a list of its discretionary funding, otherwise known as Schedule C, which would include any conflicts of interest, the organization's tax number, and the amount and purpose of the funding, at least 24 hours before passing the budget. The council also intends to appoint an independent compliance office and create a searchable database that would include all of this information. These proposals were a part of the speaker's initial announcement in April.

Continuing Conflicts

What some former city officials have termed "slushwater" has morphed into a proposal that council officials are calling budget "best practices." Those new practices, though, skip over several key aspects that have flooded the press.

Concern has emerged over organizations that pose possible conflicts of interest for council members. More than a third of members have identified some conflict with groups that the council funds. These conflicts range from remote associations that offer no financial gain to a member to the distribution of funding to a group run by former and current staffers.

In both individual member items and larger council initiatives, the council allocated at least $4.6 million to groups identified in conflict of interest forms filed with the speaker's office for fiscal year 2008.

While some of those conflicts have proven to be extremely suspect -- note the indictment of two council staffers, one the former chief of staff to Councilmember Kendall Stewart, for embezzling discretionary funding -- some members argue they are so involved in their communities that it's difficult to not have connections with the groups they fund.

For instance, Councilmember Lewis Fidler identified eight groups last year that he had "conflicts" with -- the most of any member. In total, Fidler allocated $488,425 to them. Many are affiliated with the spouse of a council staffer and have independently contracted through a competitive bidding process with the city's Department for the Aging and the Department of Youth and Community Development. Those groups also provide the bulk of senior services for his district, Fidler said, and not funding them could shut down four senior centers.

Other conflicts he identified include a school district where his wife substitute teaches a handful of times annually and a youth organization that his son is active in.

Fidler said it is practically impossible to have no connections to nonprofits in the community one represents since these groups provide essential services in the district. "You're asking for the immaculate councilman," he said. "A good councilman has been involved in the community, has worked for non-for-profit institutions. That's how they become a councilman."

The city's Conflicts of Interest Board seems to agree. In the last two decades, the board has issued only two advisory opinions, both in the early 1990s, tangentially regarding whether the council can allocate funds to groups its members are affiliated with. As a result, the council is required to report only conflicts on the "record" that affect their interests, financial or otherwise. If members allocate funding to a group associated with a family member, then that funding cannot go directly to the relative's salary. Beyond that, the board is mute.

Among the council's members, there appears to be varying levels of disclosure with some voluntarily submitting to over scrupulous reporting. Many council members over-reported their interests when, for the first time, they signed conflict of interest disclosure reports on discretionary spending, making sure to reveal any possible connection -- no matter how distant -- to ensure there was no appearance of impropriety.

Noting she served on the advisory board of one group, Councilmember Gale Brewer wrote on her form, "I have no idea if this info is necessary to list -- just in case, I am listing it."

Councilmember Miguel Martinez, who gave more than $406,000 to a group where his sister serves as an unpaid board member, said he technically did not have to disclose that relationship but did for transparency's sake. This allocation raised questions from the press.

"I allocate funding based on the expertise of the organization," said Martinez. "We're public servants if we come from a family of public servants. What's wrong with a spouse of a councilmember sitting on a board and giving out and contributing?"

To a lot of members, nothing. In disclosure reports from fiscal year 2008, 12 members identified groups that were affiliated with a family member and received some sort of council funding.

Some members -- or their spouses -- have become particularly defensive over the practice. After a report revealed Councilmember Leroy Comrie's wife had volunteered at a museum he directed funding to, the councilman released a longwinded statement criticizing the report and defending his spouse.

"The back-handed insinuation that a noble community organization benefited financially because my wife chose to volunteer to help keep alive the history of the Underground Railroad through the King Manor Association was so beneath my critics," read the statement.

But questions persist about ties between some council members and the groups they allocate money to. Councilmember Hiram Monserrate, for example, has been linked to funding a group that has allegedly collected signatures for one of his political campaigns and that is run by his closest aides.

The speaker's proposals require members fill out disclosure forms before their member items can be processed, and the new Schedule C will include any conflict next to the allocation.

Councilmember Peter Vallone requested legislation that would ban members from giving funding to groups that employ family members or current and former staffers. That proposal, Quinn said, will get a fair hearing, though the speaker did not say she would support it. In the past, Quinn said she does not want to restrict funding to groups affiliated with members, since it is hard enough to get voluntary board members. Quinn's partner serves as an unpaid board member to a group, the Hetrick-Martin Institute, which received nearly $330,000 in council funding last year.

Capital Confidential

The speaker's proposals also do not cover the council's capital spending -- estimated to be more than $500 million or double the council's initiative and discretionary spending. Just like discretionary spending, the capital funding is doled out at the request of individual council members.

This year, Quinn said, the council would for the first time include members' names next to the capital items they propose. Beyond that, those millions are exempt from the new vetting process.

Whether or not the city's Conflicts of Interest Board's rulings apply to the council's capital spending also is unclear, though Quinn said conflicts of interests with capital spending would be listed in this year's budget documents.

Councilmember Alan Gerson listed the Friends of LaGuardia Place on his disclosure forms last year even though he sent it $45,000 in capital spending, not discretionary funds. Gerson said he is unaware of how much other members receive in capital spending, but he bets leaders receive more than some other members.

The council's capital spending is more complicated than its discretionary spending, because it is often combined with funding from executive agencies, said Gerson. But overall, he added, the council's part in the process could use some reforms.

"Whatever disclosure requirement we adopt for the expense budget, we should adopt for the capital budget as well," said Gerson.

Quinn said the council, in an agreement with the administration, has limited how the city can fund capital projects in non-city owned buildings. The council requires any capital funding for a group that does not operate on city property go to nonprofits that have a separate, pre-existing contract with the city for that fiscal year. The funding must also go to groups that provide services, which benefit the public, and the specific project must be a "city" purpose. Beyond that, Quinn said she would also be open to hearing other suggestions on how to better distribute capital spending.

Political Gain, Political Fallout

Whatever technicalities of the vetting processes and procedures, the controversy over the discretionary funds also has political implications. Quinn certainly would like to put all this behind her -- before the public begins to focus on the 2009 mayoral campaign.

Could the slush scandal ruin Quinn's prospects for becoming mayor? Some City Hall observers say it depends on how much longer this drags on and whether there are any more serious revelations.

The issue poses a particular challenge for Quinn because she has styled herself as reformer.

"It certainly damages her reputation as a budget reformer," said Douglas Muzzio, a professor of public affairs at Baruch College. "It doesn't have to be fatal even though it is going to be very damaging in the best of circumstances."

Beyond this speaker, Muzzio said, the council, which has been struggling to gain autonomy, power and respectability, also might feel the fallout.

 

The New York City Council has come under intense scrutiny lately for the way members provide funding to not-for-profit community organizations in many of the city's 51 council districts. Questions have been raised about allocations to fake organizations and not-for-profit organizations that employ relatives or staff of council members. (See related story)

The move to greater transparency and accountability in public funding is healthy. Not-for-profit organizations welcome strong accountability measures; our reputations depend on public trust in our work with kids, seniors and all New Yorkers in need.

But while the questionable council funding practices are investigated, all discretionary funding allocations to not-for-profit agencies suddenly are coming under fire. The reality is that the overwhelming majority of not-for-profit agencies honestly manage the city funds that they receive and are accountable to both the law and to the moral code that guides public service.

The Work Non-Profits Do

Every day, not-for-profits make substantial and essential contributions to the citizens and fabric of New York City, providing high-quality services throughout all five boroughs. These organizations work to strengthen communities and are dedicated to important services such as providing day care and foster care, sheltering the homeless, training the unemployed and aiding vulnerable seniors. Yet not-for-profit agencies also struggle daily to secure adequate funding to meet growing needs. Distinctions must be drawn between these not-for-profit organizations and those caught up in the recent controversies.

It is common for not-for-profit agencies to request City Council funding to complement other government funding sources and private fundraising. The so-called council "member items" help sustain programs that are successful but not yet funded by dedicated, budgeted government dollars. City Council discretionary funds also help seed new, innovative programs that require time to evaluate and demonstrate the effectiveness of their work. The money from the council supports specialized after-school programs for disconnected youth, mental health services for the elderly, and HIV/AIDS education programs in poor communities that would not otherwise exist. Without government support, including City Council funding, few not-for-profit social service providers would survive. And without not-for-profits, government would be unable to provide the wide range of vital services offered today.

Meeting Government Requirements

Most not-for-profits that receive council funds comply with all city procedures. They cooperate with oversight by city agencies of their programs and fiscal practices, producing on-time and detailed audits, submitting to interviews and reviews of agency policies and procedures, and filing quarterly reports on accomplishments funded by city money.

The not-for-profit sector fully supports even greater transparency and accountability in the funding and delivery of services. At the same time, we must ensure that funds needed to meet the current and emerging needs of communities continue to be available. The impact of proposed reforms on small community-based organizations, in particular, must be considered. These organizations are vital, bringing a unique perspective to the delivery of social services. Such groups often have a particular ability to understand the issues and barriers faced by clients of color or recent immigrants and have strong ties to their local communities. They are trusted by those they serve because they grew out of the community. It is critical that the value of these organizations be recognized and that reform efforts not impede their ability to flourish.

As the city seeks to reform the current discretionary funding process, it must allow organizations to receive funding in a timely manner. Under the current system, delays are common, both in the allocations of funding and in implementation of contract. This greatly complicates planning and financing for social service groups.

Many of the reforms to the council's budget allocation process announced on May 7 by City Council Speaker Christine Quinn deserve quick consideration, review and implementation. Including the names of all organizations set to receive money, for example, will result in a more transparent process while helping to get funds to legitimate agencies in a timelier manner. Likewise, having pre-clearance lists will ensure that the not-for-profits set to receive funds are in good standing with the city and also will work to move funds into communities more quickly.

Changes that have the potential to make it more difficult for honest not-for-profits to obtain council support, including procedures that significantly complicate the application process or delay the flow of funds to programs, should be considered more carefully. Those who misuse funds -- whether a not-for-profit entity or a public servant -- must be held fully accountable. But we need to consider the impact of reforms intended to catch those who act illegally on the ability of organizations to serve our neighborhoods effectively, efficiently and compassionately. We must not create more barriers for those charged with the difficult tasks of lifting communities out of poverty, caring for our disadvantaged children and elderly, working with the mentally ill and homeless populations, and generally assisting our most vulnerable residents.

Michael Stoller is executive director of the Human Services Council of NYC. Allison Sesso is deputy executive director. The council seeks to build recognition and support for not-for-profit human services sector in New York. 

The mayor's 2009 executive budget holds spending steady for the first time in five years, and at least 12 city agencies are seeing their spending slashed to varying degrees (this graph was created by Gotham Gazette from figures in the mayor's Fiscal Year 2009 Executive Budget).

Say sayonara to superfluous city spending, adieu to rosy revenue projections and farewell to fat city coffers.

For the first time since 2002, Mayor Michael Bloomberg's executive budget slams the brakes on agency expenditures -- ending the spending increases of the last five years. At the same time, Bloomberg has tentatively agreed to keep the 7 percent property tax reduction for one more year and continue the $400 tax rebate indefinitely.

At City Hall on Thursday, the mayor -- dressed in a crisp blue suit and red tie -- pointed to the slips and slides of Wall Street and to gloomy economic forecasts. Those predictions, the mayor contends, cannot be ignored.

"The numbers are scary," Bloomberg said during a presentation that kicks off his formal budget negotiations with the City Council. "Wall Street, which we depend on for tax revenues, is having some serious problems."

Those problems affect city agencies, and now the mayor is proposing to slash 6.4 percent of city funded expenses in fiscal year 2009. What started as a so-called across the board cut -- which the mayor first announced last year -- is beginning to play favorites, with certain agencies and programs, like the city's Department of Youth and Community Development, slated for more cuts than a few other areas, like the Department of Information Technology and Telecommunications, which is getting an increase in city funding.

The largest proposed cuts come in programs that are key City Council priorities.

Though these decreases are not definite -- the City Council and the administration must reach an agreement and pass a balanced budget by July -- you can bet this latest budget battle will be far less congenial than those of recent years.

While much of the growth in city spending is grinding to a halt in the 2009 executive budget, some departments have fared better than others. At least nine agencies could see an increase in spending from fiscal year 2008 (This graph was created by Gotham Gazette from figures in the mayor's Fiscal Year 2009 Executive Budget).

An Overview

On Thursday, the mayor proposed a $59.1 billion budget -- a small increase from his $58.5 billion proposal released in January. The budget includes $1.3 billion in cuts for fiscal year 2009, which starts in July.

Higher than expected revenues and a 33 percent increase in foreign tourists since 2000 have provided some cushion for the city. But, according to Bloomberg, our fiscal horizons remain cloudy. For fiscal year 2010, the mayor said he expects a deficit of $1.3 billion, growing to $4.6 billion in fiscal year 2011.

Because of that, the administration plans to roll back the 7 percent tax break, passed in 2007, to raise $1.22 billion -- but not until fiscal year 2010. (Some officials see that proposal as a stretch, since next year is an election year, and politicians dislike raising taxes the year their name is on the ballot).

One official said it was not impossible, though unlikely, that the City Council would revisit the tax rate this year, depending on the economy.

"Obviously if we needed revenue we could raise the property tax by a percent or two," said the council's Finance Committee Chairman David Weprin. "The sense of the council is everyone would like to see the property tax stay in place for the most part."

In what many have termed a significant but needed cut, the mayor also proposed to extend the city's four-year capital plan to five years, effectively slashing 20 percent of the program's cost by extending proposals -- not eliminating them. The administration has not determined which projects will be pushed back and plans to release that information in September.

For the most part, the city's fiscal watchdogs saw the mayor's proposal as sound -- a realistic approach to a teetering stock market and an economy that, some analysts say, is ensnared in a recession. But critics have already emerged and are gearing up for a contentious battle over some of Bloomberg's planned cuts, particularly in education.

Wall Street Pains

While tourism continues to boost revenues, Wall Street's woes have barreled down Broadway and into City Hall. Wall Street firms lost more than $11 billion in 2007, after posting record profits the previous year, according to the mayor's office.

Because Wall Street drives the city's economy (wages in the securities industry alone account for 25 percent of city salaries), any volatility there can threaten city programs.

Much of his hour-long budget presentation was devoted to the financial sector's impact on the New York City economy. In slide after slide, the mayor reiterated Wall Street's influence, despite efforts to diversify city revenue.

"Everyone in this city should pray that Wall Street does well," said Bloomberg gesturing to a slide with his presentation's typically morose statistics.

The city's fiscal watchdogs and observers have echoed that sentiment. While little can be done about the impacts of this economic slowdown, some experts suggested the administration should attempt to limit Wall Street's impact in the future.

Nicole Gelinas, a senior fellow at the Manhattan Institute, said the city should explore other sources of revenue, so it is not held hostage to the ebb and flow of the stock market. "A lot of this is designed on our tax structure," said Gelinas. "We could make this a lot easier if we designed a structure that attracts new businesses."

Where the Cuts Run Deep

A pillar of the Bloomberg's fiscal year 2009 budget is that no one is immune -- all city agencies must shoulder the burden of hard times, which some see as a fair approach to fiscal policy.

"From a fairness point of view, you don’t want to have any sacred cows," said Charles Brecher, executive vice president and director of research at the Citizens Budget Commission. "Everyone has to pitch in."

Although Bloomberg directed all agencies to submit approximately 3 percent cuts last year and another 5 percent for fiscal year 2009, some departments are now bearing more of the burden than others.

According to an analysis of budget documents, several agencies are seeing more than 10 percent cuts in city spending. The Department of Youth and Community Development has a 27.6 percent decrease in city spending for fiscal year 2009 compared to the projected city spending in fiscal year 2008. The Department for the Aging, Department of Cultural Affairs, Department of Homeless Services and Housing Preservation and Development are all slated for large cuts in city spending -- ranging from about 11 to 19 percent.

"Any further cuts to the Department of Aging, is serous business in my backyard," said Councilmember Vincent Gentile.

Other departments have been spared. The Department of Information Technology and Telecommunications is seeing a 20 percent increase in city funding, catapulting their funds from $202 million to $243.7 million. The increase, according to the mayor's executive budget, will go to the city's new wireless network for emergency personnel and to support the city's 311 information hotline.

Some of the rising costs, however, are out of the administration's control. For instance, the Department of Sanitation's expenditures have risen by 2 percent from 2008, which, according to budget documents, are attributed to the rising personnel and waste export costs.

Overall, some of the agencies that see large decreases in city funding may have gotten a boost in funding from the state or from Washington. Others, like the Department of Youth and Community Development, saw their federal funding actually decrease as well.

City Council tends to put a high priority on spending for community-based groups and programs that tend to get funding from the city's youth department and other departments slated for spending cuts, such as the Department of Cultural Affairs, which is facing an 11 percent cut in city spending. In the past when such programs have been cut by the administration, the council has restored their funding during budget negotiations -- a process called the budget dance. Some observers have crticized this maneuver, saying the executive branch's reductions are meaningless, since they are always restored, allowing council members to score easy political points .

"We've come a long way to ending the budget dance," said Weprin, alluding to the back and forth between the administration and the council. "It always seems to be that when there are cuts, council priorities seem to go first."

Battle Lines Drawn

One priority close to the Bloomberg administration, education, has been thrust to the budget debate's center stage. A coalition of more than 40 organizations, including the city's powerful teachers union, already is preparing to launch a publicity campaign slamming the administration for backing down on its promise to fund education.

While the city's education funding is actually up from fiscal year 2008, by about 3.5 percent, advocates contend higher costs for food, energy and the overall impact of inflation mean the Department of Education and classrooms will end up losing out. In this year's state budget, education funding saw a 7 percent increase compared to the last fiscal year.

On the steps of City Hall on Wednesday, the day before Bloomberg released his executive budget, city officials and advocates railed against the mayor -- urging him to "keep the promise" of continuing to increase education funding.

"Turn this car around," said Robert Jackson, chair of the council's Education Committee, who pledged to vote against the budget if the department's funding was not restored. "You're heading in the wrong direction. You're supposed to be the education mayor," he added, alluding to Bloomberg's takeover of the public schools.

Following the release of the mayor's budget, Council Speaker Christine Quinn called the total budget proposal responsible, but hesitated to lend her full support because of the proposed funding to the education department. "While the news of continued relief for homeowners is a positive step, the cuts to a number of city agencies, most notably to the Department of Education, are a cause for concern," she said in a prepared statement. "The council remains committed to ensuring that the necessary cuts have the least possible impact on our classrooms."

It is likely the Department of Education will not be the only battleground at City Hall this fiscal year. Libraries, which have often been the focus of the City Council and the administration's budget dance, are making an encore appearance on the dance floor.

Though the budget shows a 70 percent decline in city funding for the city's library system, funds have been prepaid to keep services up for fiscal years 2008 and 2009. But cuts elsewhere, like to the nearly $50 million needed to keep branches open six days a week, are being cited by some members as a priority.

"Sixty percent of the money added last year for six day service would be eliminated, which would in effect destroy six-day service," said Gentile, who chairs the council's subcommittee on libraries.

Other areas identified as council priorities, like the Quinn's suggested tax rebate for renters or her proposal for a sales tax free week, were left out of the mayor's budget. So far, the council's suggestions to cut spending in the administrative offices of the Department of Education and out of the classroom have not seen a response from the administration.

Photo (cc) Dennis Mojado

An individual can contribute as much as $56,000
towards a NY gubernatorial candidate.

In March, Barack Obama raised $40 million for his presidential campaign. Hillary Clinton brought in over one million dollars from a single Elton John concert in April. Mayor Michael Bloomberg spent more than $70 million of his own money on his reelection campaign in 2005.

Candidates today are raising and spending more than ever to run competitive campaigns and win elections. Some argue this campaign spending spree and steroidal growth of campaign fundraising detracts from the meat of campaigns, as candidates spend less time talking about issues and more time soliciting contributions.

The issue is particularly pressing in New York State. While contributions for campaigns for president of the United States are capped at $4,600 for both the primary and general election, individuals can contribute up to $15,500 to New York State Senate candidates and $7,600 to candidates running for State Assembly. A person can give someone running for governor $56,000.

Some advocates want governments to take more responsibility for financing election campaigns, and an increasing number of states and cities are adopting systems that allow public dollars to be dedicated to campaigns. Here in New York, reformers are seeking changes that would establish public financing, but there is not yet consensus about what form that might take. Public matching and full public financing are the most notable systems being pursued, but what do these terms mean and what system would best serve the voters?

Where Things Stand

In spring 2007, many good government organizations, including the New York Public Interest Group (NYPIRG), Citizens Union (whose sister organization publishes Gotham Gazette), Common Cause/NY and the League of Women Voters, were preparing for then Gov. Eliot Spitzer to make a deal that would bring about sweeping campaign finance reform. The package was set to lower campaign contribution limits, close loopholes, strengthen enforcement and provide more disclosure of contributions for public scrutiny. An agreement was outlined in a press release but legislation was never introduced as tensions increased between the governor and legislators in Albany due to the "Troopergate" scandal.

Today many of these same organizations continue to push for stricter regulations of campaign financing and greater transparency for contributors and their links to the candidates they donate to. The advocates want limits to so-called soft money contributions -- or funds intended to support the organizational activities of the political parties and their housekeeping accounts, but which are often used to support the individual candidates. They want to close loopholes that allow corporate subsidiaries to make additional contributions and require that campaign contributors and "bundlers" -— individuals who gather donations from others and deliver them to campaigns as a bulk contribution -— disclose their names. These changes, however, are only part of the package to reform campaign finance. Many groups are also advocating that public money be made available to state candidates for campaigns.

Matching Funds or Partial Funding

New York City and a number of other places use a public matching fund system that gives candidates a certain amount of public money to use for their campaign. In order to receive the funds, candidates must agree to a spending cap and in many cases must meet threshold requirements for individual contributions to demonstrate their viability. The money must come from a certain number of contributors, not just a couple of wealthy individuals.

Public matching ratios range from small to generous. Here in New York City, the public matching system provides candidates with $6 of public money for a significant portion of the private money they raise. If there is a self-financed opponent (such as Michael Bloomberg), there are additional spending triggers that provide challengers that participate in the public financing program a higher match ratio or increased expenditure limits to level the playing field.

The presidential primary system also employs a public matching system. After candidates meet a number of fundraising goals, they are eligible to receive a dollar for dollar match of the first $250 dollars a contributor donates. Candidates have to adhere to spending caps both in total spending and state-by-state limits. In 1999, George W. Bush became one of the first presidential candidates since 1976 to refuse public matching funds in the primaries.

Full Public Financing—"Clean Money"

Full public financing also know as "Clean Money, Clean Elections," provides candidates that meet an initial fundraising requirement a grant of public money for their campaigns. Unlike public matching funds, after candidates raise a specific benchmark of private money raised, they will receive one block sum of funds to support their campaign. Once a candidate qualifies and receives full public financing funds, they cannot raise any additional private money. Candidates must also pledge to a spending cap, as with public matching funds, and are not allowed to accept any private money after they receive public funds. Many systems also have trigger provisions that provide additional funds to participants in the program when outside groups run ads against them or when they face a non-participating candidate that spends more than the public grant.

Some states, including Arizona, Maine, New Mexico, North Carolina and Vermont, have already enacted legislation providing candidates with full public financing. It is set to begin in Connecticut for statewide races this year.

Participating in the Program

At the federal level, presidential candidates running in the general election automatically qualify for a campaign grant. The money comes from the Presidential Election Campaign Fund, and includes funding from taxpayers who contribute when filing their tax returns. In 1992, President Bill Clinton and his opponents Bob Dole and Ross Perot received $29 million each. In 2004 general election nominees were eligible to receive $74.62 million in public funds for the general elections. Each presidential cycle the grant totals are adjusted for increases in the cost of living. This year, grants to candidates will be approximately $85 million. As candidates fundraise almost half that amount per month, rumors are spreading that candidates are shying away from full public financing in the general elections.

With both public matching funds and full public financing, participation is voluntary. Candidates can choose to fund their campaigns through private donations, or if personally wealthy, they can fund their own campaigns. The internet has provided candidates with a new fundraising tool that allows them to reach large audiences of people quickly and cost efficiently. If Barack Obama wins the Democratic nomination, there is some speculation that his fundraising success may sway him against using public funds in the general election, especially if his presumed opponent, John McCain, chooses to also fund his campaign through private contributions.

Why Do We Need Public Financing, Anyway?

For some, the notion of government funding campaigns just doesn't sit well. Some critics of using public money to finance campaigns argue that they should not be forced to contribute their tax dollars to fund the campaign of candidates they do not support. In addition, there is some disagreement about the role government should play in financing campaigns at a philosophical level, with some believing it is an inappropriate use of tax payer money and government resources. Other critics believe campaign finance laws in general restrict the public's ability to exercise their first amendment rights.

Supporters argue that public financing is a concrete way to break the link between large contributors and special interests and candidates by making it possible for candidates to run without their support. Advocates argue that money plays too big a role in elections now, swaying politicians and forcing them to spend enormous amounts of time raising funds. If candidates were not under so much pressure to raise tens of millions of dollars in one month, as is the case for the presidential candidates, they could spend more time developing the positions on the issues and communicating with voters.

Supporters of public funding of elections also argue it will level the playing field by enabling people who are not wealthy or do not have the ability to raise funds from large donors to run for office. They believe that this will increase the diversity of the candidates and allow voters more choices on Election Day. And when those candidates make it into office, they can spend more time on their public duties and less time fundraising for the next election. There are many organizations that support Clean Money, but also support public matching funds as a step in the direction towards full public financing.

Other advocates disagree, however, about the merits of full versus partial public financing. Proponents of full public financing argue it is the best way to free public officials and candidates from the influence of special interest money and large donors. Candidates would compete on an equal level with campaign spending tamped down by spending limits put in place. This would further empower citizens in the elections process.

Those who support public matching funds argue that by not allowing voters to contribute to the campaign of their choice throughout a campaign, full public financing limits a voter's right to free speech. This, in turn, could alienate voters from the democratic process. In addition, critics of Clean Money also worry that if contribution limits for qualifying requirements are set too low, such as $5 or $10 dollars, contributors may not take their donations seriously.

In any case, supporters of both systems agree something needs to change in New York State. Gov. David Paterson sponsored the Clean Money bill in the Senate when he served as Minority Leader. Advocates of public funding of campaigns are working to make reforms; how far these changes will go toward providing public dollars to campaigns is still uncertain. Until then candidates continue to rake in donations, hoping to out-raise and possibly out-spend their competitors to victory.

 

The indictment of two City Council staffers completely overshadowed an attempt to get back to business at City Hall last week, but Council Speaker Christine Quinn tried to move on anyway.

At its stated meeting Wednesday, the City Council approved a bill providing greater protection to taxi and livery drivers during the dispute process at the Taxi and Limousine Commission. It also approved a resolution calling for the immediate bailout of the city's Off-Track Betting Corp.

Getting Back to Business

While Quinn continued to ward off questions on the ongoing phantom organization investigation, another press conference blocks from City Hall highlighted alleged corruption in the allocation of the council's discretionary funds.

Two staffers, including the former chief of staff to Councilmember Kendall Stewart, were indicted on federal charges of mail fraud and money laundering for redirecting funds from an educational nonprofit for their own personal use. The funds originally came from the council's discretionary funding. (Check out our previous coverage of the council's discretionary funding here and the scandal here).

That announcement occurred while the speaker gave a routine press conference prior to the body's stated meeting. Needless to say, not a question was asked regarding the legislation under consideration by the council.

A "Victory" For Cabbies

Though little attention was paid to the bill, the council approved legislation Wednesday that gives greater protection to taxi drivers who face complaints in front of the Taxi and Limousine Commission.

Currently, when a cab driver faces a complaint at the commission, only a written statement is needed from the accuser for the cabbie to be found guilty. The bill, (Intro 256) which was sponsored by Councilmember Miguel Martinez, would encourage the commission to provide witnesses through teleconferencing or videoconferencing. The commission, however, would not be required to produce witnesses, but show only reasonable efforts that they attempted to, according to the bill.

"It's about due process," said Martinez. "We have drivers understanding that they are not guilty until proven innocent, but rather they are innocent until proven guilty."

It was approved unanimously by a vote of 51 to 0.

Off-Track Betting Salvation

About 1,500 pink slips went out to employees of New York City's Off-Track Betting Corp. this week, according to Councilmember David Weprin -- an outspoken supporter of keeping OTB afloat.

The city's betting locations are poised to shut their doors this summer, because they are soon to become insolvent.

For months, members of the City Council and Mayor Michael Bloomberg have blamed Albany for the corporation's failure to remain profitable, arguing the state has devised funding formulas that treat the city's locations unfairly.

In response, the council approved a resolution (Reso 1235) urging the state to move quickly to save OTB before it closes all of its locations in the city by June 16. The move followed a commitment last week by Gov. David Paterson, Assembly Speaker Sheldon Silver and Majority Leader Joseph Bruno, who promised to work with the city to keep them open.

According to Weprin, OTB brings in $1.1 billion of revenue annually.

 

Gotham Gazette image by Ya-Hsuan Huang

This story was updated on Tuesday, April 15, to reflect recent developments. Other updates throughout the week can be found here.

A week after the story broke that the City Council had allocated funds to non-existent organizations, Council Speaker Christine Quinn declared that the council has "reformed" its decades long practice of hoarding extra funding for pet projects -- the so-called routine process that gave rise to the scandal.

Leaders of several of the city's good government groups flanked Quinn Friday as she announced the changes aimed at creating a more transparent process for the council's allocation of discretionary funding. The more than $20 million a year previously handed out solely at the speaker's discretion will now be distributed to the city's nonprofits via a merit-based proposal process.

But while some congratulated the speaker on her new initiatives, including the 10 council members who stood behind her as she announced them to reporters, the issue shows no sign of disappearing.

Two investigations -- one city, one federal -- into the council's finances are still ongoing as New Yorkers await a specific explanation on how millions of dollars were earmarked to fictitious organizations in the council's discretionary budget. There were reports of possible fraud charges against those -- whoever they might be -- who set up the phony groups. And Quinn reportedly has hired a criminal defense lawyer, although she has also said that she is not a target of any of the inquries into the secret funds.

On Friday, the speaker declined to describe how approximately $4.7 million could possibly have been allocated under her watch to groups that did not exist. Several city agencies, including those that are most associated with the council's discretionary funding, such as the Department of Youth and Community Development, refused to comment on the issue. These agencies also would not explain the funding process, claiming that too is part of the investigation.

Even so, City Hall observers, officials and citizens have not hesitated to point fingers at one another. Those involved include Quinn, the council's finance department, Finance Committee Chair David Weprin, City Comptroller William Thompson, the mayor's Office of Management and Budget and the respective city agencies that were slated to contract out the funding to the particular nonprofits.

All of these individuals or entities will be subject to questions at some point, if not now, certainly in 2009, when Quinn, Thompson and Weprin all may run for higher office.

The Way the Process Worked

Here's what we know.

Each year City Council members receive money to dole out to youth and senior programs and funding for discretionary programming -- termed the council's member items or in the eyes of some, pork barrel spending.

Last year, each council member received $340,464 in discretionary funds, of which $151,714 was devoted to youth programs, $108,750 to senior initiatives and $80,000 to allocate as he or she wanted. While the items are approved by the speaker's office, members often select their own programs with relatively little interference. The council's discretionary funding is outlined in a budget document called "Schedule C."

Schedule C is not released until the day the budget is adopted. Even council members do not know which initiatives or items are being funded before then. (One of Quinn's proposals announced last week would be to release this budget document at least 24 hours before the council approves the budget, which it must do by July.)

This funding is in addition to about $300 million given to the council for larger, citywide initiatives. Those programs are under the control of the speaker and are chosen with council members' input. The speaker also has had an additional pot to distribute solely as he or she saw fit. For the first time, Quinn announced the total amount. This year, she said, that funding is approximately $22 million, but that sum has risen to as much as $35 million under previous leaders.

Though the City Charter contains a chapter titled "Budget Process," nowhere does it cite the council's discretionary funding or the process by which it should be allocated. The City Council's rules also do not address this process. Some council members, even veterans who have served in city government for decades, do not know specifically how this process plays out.

Once it is determined which programs will receive discretionary funding -- from the speaker and or individual council members -- the city agency involved draws up a contract. Those contracts then go to the city's comptroller's office, which reviews them for economic efficiency and so-called legitimacy. The role of the mayor's Office of Management and Budget, which refused to comment because of the ongoing investigations, remains unclear. Though it oversees all agency spending, unlike the comptroller's office, it does not have an auditing responsibility.

To further complicate matters, the differences between the individual council member funding and the speaker's funding has remained unclear until now. Though Quinn spearheaded a policy to attach council members names to their particular initiatives last year, she has admitted that the speaker's funding in particular was not spelled out in budget documents.

Her announcements on Friday, especially her proposal to distribute the speaker's discretionary funding through the request for proposal process, are an attempt to create more transparency.

Who's at Fault

Although this discretionary funding process winds its way through City Hall and through most of the city's agencies, some of the city's elected officials contend, it is mostly under the control of the speaker's office, which includes the council's finance department.

Given that, some say the current controversy can entirely be attributed to Quinn and her predecessors. One of her colleagues, Councilmember Charles Barron, who has clashed with Quinn in the past, has called for her to step down.

On Friday, Quinn took responsibility for the scandal, though she has continued to reiterate her innocence in the matter. She argues she found out about the fictitious groups last year after she directed her staff to stop hoarding away funds for mid-year budget fixes. Her staff, she says, disregarded her directive.

"Obviously, I am the speaker," said Quinn. "I take full responsibility."

It is unclear whether the funding allocated to fictitious groups was from the member item funding or from the speaker's discretionary funding. The last budget document that contains the names of the fictitious groups was in fiscal year 2007, prior to the speaker's initiative to name council members next to certain programs.

Though more than a dozen fictitious groups have been allocated funding under Quinn, none of them ever received funding. The fictious groups were used to "park" funding, which was doled out to certain groups, such as Little Leagues or park associations, mid-way through the budget year. One report found that Quinn's district received about a quarter of all of the funding.

According to the council's Schedule C from fiscal year 2007, several of these phony groups were slated to get some of the council's largest appropriations. The American Association of Concerned Veterans, which we now know does not exist, was set to get $422,763 -- the fifth largest appropriation of any member item that year.

Since the Finance Committee holds budget hearings, some think Committee Chair David Weprin should also bear some responsibility. Weprin, who has remained relatively silent on the issue for the past week, claims he is not at fault. Though his committee is charged with holding budget hearings, he, like any other member, does not get the list of the council's discretionary funding until moments before the budget is passed. Also, Weprin said, his committee does not hold specific hearings on the council's discretionary funding.

Weprin, who is running for city comptroller, said because the city's budget is so large -- nearly $60 billion -- it would be impossible to weed out a minute number of fake groups out of the thousands the council funds. "There is no possible way that I can personally vet all of these organizations," he said. "That’s why we have staff… obviously there are a lot of other players in the process."

Individual council members may also be at fault, said some advocates. If members received funding, advocates wondered why they did not question where this money was coming from. "The only other massive suspect I would point to is council members who are massively brokering funding," said Maria Doulis of the Citizens Budget Commission.

More than a dozen council members got funding that was originally slated for the fake groups. One of them was Councilmember Gale Brewer. Brewer said, however, she was never notified that the group in her district had been funded mid-way through the budget year.

Brewer, who also sits on the council's finance committee and its budget negotiating committee, said she was unaware that the speaker's office, both under Quinn and her predecessor Speaker Gifford Miller, had extra funding stashed aside in "holding codes" -- or accounts to be used for mid-year budget fixes or mid-year discretionary funding.

"I don't feel responsible," said Brewer. "There was no way for us to know what this item is."

Councilmember Daniel Garodnick, who also was named in budget documents as having received funding, said his office assumed the additional funding was part of a larger City Council initiative, which had not allocated specific funding yet.

The Comptroller and City Agencies

Then there is the comptroller's office. Last week, Thompson hand-delivered a letter to Quinn stating that his office would be reviewing any agency agreement or contract paid for with council member discretionary funds before funding is disbursed. Some chalked this up to politics, since both Thompson and Quinn are potential mayoral candidates in 2009.

Technically, some City Hall observers have argued, the comptroller's office should have been doing that already. According to the City Charter, the comptroller is responsible for auditing every city agency or entity at least once every four years. So far, since Thompson assumed office in 2002, he has audited the City Council once. That report was released last year and examined the council's expenses for fiscal year 2005. Though it uncovered the City Council had violated the charter when disbursing printing contracts, it said nothing about its discretionary spending.

The comptroller's press office did not return repeated calls for comment. Thompson has said elsewhere, though, that it would have been impossible for his office to uncover the practice because he only audits contracts, and the fake groups never got that far along in the funding process. The fictitious groups were designed to park extra funding, and therefore city contracts were never drawn up for them.

Elsewhere, the role of the city's agencies has raised some suspicions. Because agencies also play a part in disbursing discretionary funding, some have questioned what agencies knew what when. On Friday, Quinn partly exonerated them. She said agencies never received the names of these fictional groups.

Moving Forward

Whether it's because of her mayoral ambitions or her purported interest in reform, Quinn is attempting to move on from the phantom group mess by putting forth several proposals to "restore confidence" in the council's budget process.

For one, beginning with the fiscal 2009 budget, which the council must approve by June 30, she will limit the speaker's power over discretionary funds by doling out money based on merit and a formal proposal process.

The speaker's office, with advice and recommendations from individual members, will draw up the requests for proposals, and the mayor's Office of Contract Services will award the contracts. Good government groups, including Citizens Union, the sister organization to Gotham Gazette's publisher, and the New York Public Interest Research Group, hailed the move.

Since Quinn released her proposal on Friday, a backlash has emerged in the council, starting with closed-door borough delegation meetings. Many members -- some elected officials have said a "vast majority" -- argue the proposal hands over even more power to the already influential mayor.

"If you get caught with your hands in the cookie jar, just let go of the cookies and remove your hand, and maybe give yourself a slap on the wrist," said Councilmember John Liu in a prepared statement last week. "But do not tie the hands of all the successors."

Councilmember Lewis Fidler said the Brooklyn borough delegation agreed on three parameters at its meeting over the weekend including the following: It would not export power to the executive branch, it wants to protect small groups from an exhaustive and confusing proposal process and, given that the budget needs to be passed by July, the reforms done for fiscal year 2009 cannot be too overwhelming.

Though the council's personal member item pots will not be affected by the request for proposal process that Quinn is proposing, Fidler said many small groups that individual members or borough delegations cannot fund often get funding from the speaker's pot. Thus they are concerned for small groups in their own districts.

"Let's be frank -- it's her money, but it's our money," said Fidler. "It's her decision, but it's not done without the input of members."

Members said the backlash is unlikely to derail Quinn's reforms, but merely modify them.

In response to this opposition, the speaker's Spokeswoman Maria Alvarado released the following statement: "The speaker is seeking input and ideas on the best way to implement the reforms she announced on Friday. We are at a point in the process where ideas need to be made more specific. As we do so, we are confident there is a way to meet both the goals that were laid out on Friday and the concerns that have been raised."

Some of the proposals released last week have also caused little to no controversy. The speaker intends on hiring an independent compliance officer to assure the council meets all of the charter's requirements and procurement rules. The speaker will also release Schedule C at least 24 hours in advance of its projected approval and create a searchable database that lists all organizations that apply for funding through the council, similar to Attorney General Andrew Cuomo's Project Sunlight.

After a rocky week, it seems Quinn may be back in the good graces of good government groups. Dick Dadey, executive director of Citizens Union, admitted that the group had wanted more from the speaker when she announced reform measures, like naming council members next to member items, last year. That, at least in part, is what they are seeing now and had discussed with her previously.

"Out of the public disclosure of this years long practice," said Dadey of the budget scandal, "has come a good thing."

 

The week that City Council Speaker Christine Quinn released her third budget response she also admitted that previous budgets, going back to at least 2001, were riddled with allocations to fictitious organizations .

After the charges appeared, Quinn responded that she did not budget the money herself. She blamed the problem on her staff and said she was taking immediate steps to remedy the situation. Her staff chimed in that ultimately the funding always ended up supporting worthwhile causes -- groups like the American Performing Arts Collaborative or the City University of New York's project Bridge to Medicine.

Though the speaker's office has attempted to stay ahead of the story since it broke Thursday, there remains many more questions than answers. Among them are whether this was simply a way to give city officials some leeway over a small percentage of the multi-billion dollar budget, or whether it was a cover up for political favors and arm-twisting by a speaker who has made government reform a hallmark of her tenure.

Many have wondered how a practice of putting aside funds for unanticipated expenses turned into accounts labeled with nonexistent organizations. And some question how a speaker who is known to micromanage her staff could have let this "slip" by her.

This is not likely to fade away from the city's newspapers and channels anytime soon since two investigations -- one by the city's Department of Investigation another by the U.S. Attorney's office in Manhattan -- are underway and more are being called for.

A Translucent Agenda

The irony here is at least an inch thick.

A reform-minded speaker, whose agenda called for opening up the budget process and creating more transparency in the City Council, has been thrust into a scandal over that very same budget process and its secret fund.

City hall observers and council members, even Quinn's opponents, such as Councilmember Charles Barron, were shocked by the budgetary revelation first reported in the New York Post on Thursday.

"I guess we just assumed that the speaker had some money, had some discretion, to dole around," said Barron. "I don't think any of us had a clue."

Since she became speaker in January 2006, Quinn has attempted to open up the budget process. She required attaching council members' names to their individual member items, allowing the public to see which member was pushing for what in the council's expense budget. In her budget address on Tuesday, Quinn promised to create the same transparency with the council's capital budget -- attaching names to particular items.

Quinn denies that she personally created the phony organizations and directed funding toward them for political favors. The council's press office, however, has had no explanation as to when these groups were formed and who formed them.

They say since Quinn found out about the practice, now two senior Council Finance Department staffers have left the council. They also contend this practice has a long history in city government, going back to at least the beginning of the decade.

A Matter of Precedent

Officials contend it is not unusual to hoard money in the city budget for unexpected expenses or mid-year fixes. In a nearly $60 billion budget, items cannot always be exact.

The city calls the unallocated accounts "holding codes" -- or ambiguous line items to be doled out to certain projects after budget approval or as needed throughout the fiscal year.

Even in the fiscal year 2009 budget, the Department of Education, according to the council's budget response, has $1.12 billion in holding codes. The city's Law Department could not immediately say whether this practice violated the City Charter.

Former Speaker Peter Vallone Sr., who led the council from 1986 to 2001, said during his tenure the body would hold money under certain agency's holding codes then modify the budget and distribute the money at a later date. They would do this transparently, he said, holding public hearings.

"I don’t know why you would need a fake organization," said Vallone. Ultimately, though, he said, "The point is where was the money used?"

In the spring of 2007, the speaker's office contends, Quinn ordered her staff to halt the "holding code" practice. Several months later, she found out it had not stopped and instead was continuing through phantom organizations.

The council could not provide by our deadline the holding codes that were used before the speaker ordered them to halt the process.

Following the Paper Trail

The city's budget process is long and intricate. Nonprofits have to fill out mounds of paperwork, and the City Council is charged with meticulously reviewing it.

But that seems not to have been done here.

City Council officials could not say whether documents for these fictitious organizations existed, and our request for copies is pending.

The council has distributed documents showing where the $4.7 million initially earmarked to the fake groups ended up in fiscal year 2007 and fiscal year 2008. The largest allocation went to Friends of the Highline, a group converting an elevated rail track to a park in Quinn's district. Other groups that received funding resemble the council's usual budget line items, from little leagues to arts alliances.

A review of the allocations reveals that $3.74 million, or nearly 80 percent, is not attributed to a specific council member. Those projects, 66 in total, do not have a main sponsor, which is in direct contrast to Quinn's requirement that council members' names be listed with such items.

In the documents, 14 members are identified as receiving funds originally destined for the phantom accounts, including Finance Chair David Weprin, who did not return phone calls.

Some would say the lack of attribution raises concern about the intent of the funding. "Often times council members vote a certain way because they are promised certain things for their district," said Barron.

Some City Hall observers said the phantom groups could act as untapped accounts, which the speaker could dole out to reward members at her discretion.

Council members said some of the appropriations seem to be budget fixes. Barron has more than $50,000 in 12 items for fiscal year 2007, all of which were funded through cash initially earmarked in fake organizations. Barron said, and many would agree, there was no way he was getting political favors from the speaker.

"If they use any money for me and Tony (Avella), it was a mistake they were trying to correct," Barron said.

A New Budget Year

The City Council is about to embark on this fiscal year's budget negotiations. The mayor's executive budget is due out at the end of the month, and from there wheeling and dealing will begin. Quinn is slated to play a key role in the discussions over how to spend city money as the days of rising revenues and fat surpluses appear to be coming to an end.

Some question, however, whether Quinn can move on politically from this scandal and whether her mayoral hopes have now been dashed.

A statement from the Citizen Budgets Commission, a fiscal watchdog, reads: "All elected officials bear responsibility for the budgets that they adopt, and Speaker Quinn, in particular, should be held accountable for the City Council’s fiscal practices. She must now rebuild the public’s confidence in the truthfulness of the Council’s budget and its future integrity."

Others have called for investigations into the matter, including councilmember and mayoral candidate Tony Avella. Citizens Union, the sister organization of Gotham Gazette's publisher, has called for the speaker to release any and all information relevant to the scandal and is urging greater oversight of council member items to ensure their legitimacy.

In a rare sign of confrontation with the Bloomberg administration, the City Council at its Stated Meeting Wednesday overrode a mayoral veto prohibiting income discrimination in housing and approved electronic waste legislation the mayor is known to oppose.

It also approved a rezoning plan for nine acres on the East Side between 35th Street and 41st Street, which are owned by Con Edison and are currently largely vacant.

Section 8 Welcome

The city's landlords will no longer be able to discriminate against potential tenants based on their source of income, under new legislation approved by the City Council in February. Mayor Michael Bloomberg vetoed the legislation earlier this month, and the council overrode the veto by a vote of 44 to 7.

The mayor opposed the legislation, arguing it threatened property owners and contradicted established case law. Council members who oppose the legislation have said the Section 8 housing voucher program is often riddled with bureaucratic red tape, making it nearly impossible for a small, independent landlord to navigate.

The legislation would apply to property owners with more than five homes and aim to secure housing for those with the federal housing vouchers. Under the bill, those who have been discriminated against could file a complaint with the Human Rights Commission.

The bill's main sponsor, Councilmember Bill de Blasio, said he had been shocked to find out the city's Human Rights Law did not already cover such discrimination.

"Anything that says, 'No blank allowed,' is problematic in our society," the councilmember said.

According to the council, more than 30,000 landlords rent to 85,313 households with Section 8 vouchers through the New York City Housing Authority. Even so, members argue, income discrimination persists.

E-Waste Lives Another Day

Though the debate is not likely to end here, the City Council avoided a delay in enacting what is being called one of the most stringent electronic recycling laws in the country and the first approved in a major city.(For more on e-waste, play our Garbage Game.)

Earlier this month and following opposition within the Bloomberg administration, the City Council introduced two separate pieces of e-waste legislation. One (Intro 728) bans the disposal of electronic waste at curbside and requires manufacturers to devise recycling plans, while the other (Intro 729) sets benchmarks for manufacturers to meet within the next decade. The bills had initially been combined. Following the administration's opposition, the council split the proposal into two.

The council approved both bills by a vote of 47 to 4.

Residents who put electronics by the curb would face a $100 fine by 2010, while manufacturers who fail to recycle would face a $1,000 fine. The fines are included in the bill the mayor is expected to sign.

The administration opposes the legislation setting the benchmarks, stating manufacturers should not be held accountable for a consumer's failure to recycle. Under the legislation, which the mayor intends to veto, manufacturers would have to recycle 65 percent of their goods in weight by 2018.

The City Council has enough votes to override the mayor's potential veto. While City Council Speaker Christine Quinn has declined to say the City Council would sue the administration for not enforcing the bill, environmental groups have said they would do so.

Developing Con Ed

After years of planning and debate, the City Council unanimously approved a rezoning plan for Con Edison's waterside plant in Councilmember Daniel Garodnick's district. The site will be developed by East River Realty and is slated to add 6.1 million square feet of commercial and residential space along the East River.

The plan includes seven towers and the developer has pledged to contribute $10 million for a pedestrian footbridge over the FDR Drive.

Community and local officials had raised concerns the development was out of character with the rest of the neighborhood and the proposed skyscrapers, which could be as high as 864 feet tall, would tower over the nearby United Nations Secretariat Building. Both the local community board and Manhattan Borough President recommended the plan be rejected.

The plan, which is estimated to cost $4 billion and covers the largest stretch of privately owned land in Manhattan, includes five acres of open space, which community and local officials had been pushing for for years. It also includes a new public school for approximately 600 students and sets aside 600 units for affordable housing.

 

Gotham Gazette image by Ya-Hsuan Huang

March 31, 2008 -- This story was updated to reflect the latest campaign finance information.

Pink slips are on the horizon for more than 40 of the city's elected officials, and many are scrambling to keep them at a distance.

With hundreds of candidates gearing up for 2008 and 2009, Gotham Gazette's new search tool lets you find out who's vying to represent you in City Hall and in Albany.

Start Here.

To do so, some officials are playing musical chairs, hoping to land seats -- possibly with larger constituencies -- when the music stops in November 2009. Others are shuffling their political decks a little sooner, fishing for possible employment in Albany, where the entire Senate and Assembly will be up for reelection this November (To find out what politicians wants what office, go to Gotham Gazette's "Who's Running for What," our new feature that allows you to check what candidates have already emerged for the 2009 races and where all those term-limited New York City officials may be heading).

All of this is possibly an unexpected consequence of the city's term-limit law -- passed twice by referendum in 1993 and 1996 -- which caps political positions in the city at two full terms. No such limit exists in Albany, where officials can -- and some do -- serve virtually for life.

Aimed at opening up the political process and weeding out career politicians, the city's term-limit law is forcing out about three quarters of the City Council next year, four out of the five borough presidents, the comptroller, public advocate and, of course, Mayor Michael Bloomberg.

While the public clearly passed term limits twice, some question whether the eight-year restrictions breed good policy and if it has bolstered the democratic process and public participation. Others wonder whether term limits perpetuate a system of backroom politics where a stagnant staff controls the reins in City Hall and politicians shuffle between the city and Albany or vice versa.

The Mass Exodus

Following the second referendum on term limits, City Hall saw a complete turnover. Officials who had been serving since the 1970s were kicked out of their offices and a barrage of new blood stormed city government in 2001. Outgoing officials predicted disastrous consequences. Incoming leaders said novel ideas would flourish.

Seven years later and some say a little wiser, there were no catastrophes or revolutions, leaving some advocates to question whether a push to extend term limits is merely the work of politicians who want to protect their jobs.

With another upheaval on the horizon, ask one of the 36 council members who are term limited how they feel about the policy, and you might be able to guess their answer.

"I feel like it should be 12 years," says Councilmember Gale Brewer, who is term limited in 2009. "I think eight years is not good for public service, not good for government, particularly not good for the nonprofit community," which needs to get to know their councilmember to provide quality service.

Question some of the members who still have another term, and some of them have a similar answer.

"I've always opposed term limits and believe that we really should go back and rethink term limits," said Councilmember Letitia James, who is not term limited until 2013. "What we are doing is creating a permanent government that consists of lobbyists and staff members."

Before her election as City Council speaker, Christine Quinn expressed support for expanding the term limit cap from two terms to three -- or eight years to 12 -- a position popular among the council members whose support she needed to become speaker in 2005. At the end of 2007, however, she retracted that position. According to a prepared statement, the speaker said: "I believe that overruling the will of New Yorkers -- who have voted twice in favor of term limits -- would be anti-democratic and anti-reform."

Quinn, by the way, is term limited and eyeing a run for mayor.

Any hope for a term-limit extension is lost, at least for now. And for some advocates, that's good.

"It's worse and disingenuous for the City Council to anoint themselves that they are more important than the voters," said Kenneth Moltner, founder of People to Stop a Self Serving Council -- a group that opposes the council's pursuit of an extension of term limits. "The voters may give them 12, if people want to give them 12. If the voters want to give them 16, give them 16."

The Expected Consequences

So far, 120 candidates have filed with the Campaign Finance Board for a 2009 candidacy. Many of those names are new to city politics. Even more officials are mulling a switch, looking at a New York City position from their perch in Albany (more of that later).

According to an analysis by Gotham Gazette, nearly 80 candidates, both declared and undeclared, do not currently hold public office and are looking toward a City Council run in 2009. Some of those candidates said they were more likely to run because they would not be challenged by an incumbent -- who would most likely have the backing of the city's powerful political machinery and the benefits of name recognition among his or her constituency.

"If there weren't term limits, I would have a much, much harder time getting my voice out," said City Council candidate Constantine Kavadas, who is running to replace John Liu in Queens. "Most of the attention always goes to the incumbent."

Bringing in new faces is one goal of the city's term-limit law. But so is eradicating government paralysis and so-called sedentary politics. If officials are constantly changing on eight or four-year cycles and the city is in a perpetual state of campaigning, the reasoning goes, officials will work that much harder to satisfy their constituents.

"The truth of the matter is there is a disconnect after a certain amount of time," said Terry Hinds, a declared candidate for 45th district, a seat currently held by term-limited Kendall Stewart. "You know you're going to win and you stop taking the concerns of the community as seriously as you should."

Another consequence of term limits is many races already have multiple candidates, forcing some to start their campaigns and their fundraising years before the actual election.

In district 19 in Queens, currently held by term limited councilmember turned mayoral candidate Tony Avella, four individuals have already declared their candidacy. One -- Paul Vallone, whose family has a history in Queens politics -- has already raised nearly $50,000 for the race, which is still almost 18 months away.

For citywide office, candidates, many of whom already hold public office, are chasing campaign cash at a far faster rate. Rep. Anthony Weiner, a mayoral candidate, has raised nearly $3.6 million for his 2009 bid, while Comptroller William Thompson has snagged $4.23 million for the same race.

According to a report by the city's Campaign Finance Board, net campaign contributions have surged, far surpassing what they were during a similar election cycle in 2001. Comparing the most recent campaign contribution filing period to a similar period in 2001, contributions have increased by 30 percent.

And the Not So Expected

Meanwhile some term-limited city officials are turning toward the State Legislature to continue their political careers, while some state officials look to snag a spot closer to home.

Already, nearly a dozen state officials have expressed or are rumored to have an interest in swapping out their state seat for one within New York City -- be it a spot in the City Council, a borough president position or city comptroller. For example, both Assembly members Michael Gianaris and Annette Robinson, who had left the council in 2001, are considering seats on the City Council, while Councilmembers James Gennaro and Charles Barron consider runs for state office.

Those attempting to make the switch from Albany to New York City argue that new blood and fresh ideas will come to both bodies, because the two places work very differently.

"The only same thing is that you're elected and that you have a constituency that you have to answer to," said Assemblywoman Audrey Pheffer, a candidate for Queens borough president.

This shuffle is certainly not unprecedented. Several members of the City Council, including Al Vann and Vincent Ignizio, served upstate before their current positions and vice versa. The trend is on the rise, though, as officials see the effects of term limits settling into City Hall.

"If that’s the case and all you're doing is musical chairs, that begs the question for the proponents of term limits: Have you really met your goal in terms of new leadership and new faces?" asked Assemblyman Ruben Diaz, Jr., a candidate for Bronx borough president.

Under the city's term-limit law, officials are forced out of office when they have served two full consecutive terms. But they are not barred from coming back. So, some former council members, officials who have already been the "victim" of term limits, are hoping for an encore in city government.

Tom Ognibene, a member of the City Council from 1992 to 2001, has declared his candidacy for a special election for Dennis Gallagher's seat in Queens. Gallagher recently resigned as part of plea deal on rape charges. Ognibene said his experience would help him deal with the daunting task of running in back-to-back elections, which is what occurs when an official resigns and special elections are called.

"If you don’t think people should come back and run again, then you don’t vote for them," said Ognibene, who questions the efficacy of term limits.

Swapping Seats and Switching Cities

Voters will have a full house come November 2009, with pairs from Albany or City Hall or even an ace newcomer making their way through the city's political hands. They will see some familiar faces -- and maybe some not so familiar ones.

So turn up the music and watch politicians attempt to swipe seats quickly before their time runs out and their song stops.