The June 13, 2011 Issue of The Capitol by The Capitol

Page 8

VOL. 4, NO. 11

Ben Lawsky explains his new agency, and his new responsibilities.

Indian tribes gain influence as political fights intensify.

Page 27

Page 15

www.nycapitolnews.com

Manhattan Media 79 Madison Avenue, 16th Floor New York, NY 10016

Two congressional districts are on the chopping block. Who is most vulnerable?

JUNE 13, 2011

With a week left in the session, three uneasy adversaries play their final hands pg. 14

UPFRONT

R.I.P. @RepWeiner: Oct. 2009–May 2011

weeting may have been what got Rep. Anthony Weiner in trouble. But tweeting was also something Weiner undeniably did well. While most elected officials rely on staff to tweet bland links to press releases or promotional reminders (example: “@RepSteveIsrael: Enjoyed today’s parade in North Amityville!”), Weiner was that rare politician who fully embraced the medium and all its pitfalls, using his feed to broadcast to over 70,000 followers his unique brand of loud, liberal snark, complete with hockey references and hilarious, non-trending hashtags. And since it proved to be his undoing in the end—how hard is it not to send naked photos of yourself to strangers?—Weiner’s love for Twitter may just signal the last time an elected official is allowed free rein over social media, unfiltered and uncensored. Here are some of Weiner’s best— non-pornographic—tweets in the weeks before his scandal: March 23: “Ill be here to answer quesions today at 2:30 eastern. I’ll be wearing a tie. #butnosocks”

May 11: “Newt running for Prez. Mitt running from Mitt. Where to begin? #TargetRichEnvironment”

May 26: “Tpaw confuses Iraq and Iran. #ButAtLeastHeShopsAtKay Jewelers”

May 18: “RT @CapitalTonight: AP: Pete King is considering a presidential run in 2012. #DamnThoseEndofTheWorld PredictionsMayBeRight”

May 27: “If i RT a story about my twitter do I fall into some vortex? #SaveMeScotty” May 28: “Traveling to Wisconsin this month. The land of Walker and Ryan. #ButAlsoLaFolletteRemember”

May 25: “Next chapter: GOP tries to squirrel out of their support for ending Medicare. #NoDisrespectToSquirrels”

May 28: “Thanks to all my new followers im drawing close to Bachmann. #ScrappyChasingCrazy” —Andrew J. Hawkins

New York State Budget (in millions)

$150,000

The state budget shrank slightly this year after rising 56 percent in a decade, but debt keeps growing.

$128,877

$132,825

$131,698

$121,572 $112,764 $97,327 $85,044

$100,668

$89,119

$116,058

$120,000

$104,341

Annual Operating Expenditure

$46,772

$46,748

$46,932

$48,095

$51,730

$49,579

$90,000

$54,694

$55,674

$57,939

$60,000

$40,531 $36,620

Outstanding Debt

April 18: “Am I allowed to tweet on Pesach? Maybe I should do tomorows games today also. #OnlyUnleavened PucksForJonathanQuick” 2002

2003

2004

2005

2006

2007

$30,000

2008

2009

2010

2011

2012

Source: Citizens Budget Commission

Calendar (June 13–24) State Senate Homeland Security committee hearing on safety measures since 9/11

End of legislative session

ESDC communications director Warner Johnston’s birthday

Reception for The Capitol’s 2011 Rising Stars, Crowne Plaza

Building Trades Employers’ Association president Louis Coletti’s birthday

Eleanor Roosevelt Legacy’s annual spring breakfast

New York GOP operative Lisa Black’s birthday

City Hall Newsmakers breakfast, featuring NYC chief digital officer Rachel Sterne Assembly Member William Magee’s birthday

Rep. Paul Tonko’s birthday Rep. Jerry Nadler’s birthday

JUNE 13, 2011

www.nycapitolnews.com

THE CAPITOL

PLEASE TAKE NOTICE AN OPEN LETTER TO THE GOVERNOR AND MEMBERS OF THE NEW YORK STATE LEGISLATURE ON A MATTER OF IMPORTANCE RELATING TO THE WATERFRONT COMMISSION OF NEW YORK HARBOR 333 Thornall Street, Suite 3A Edison, New Jersey 08837 Telephone: 732-452-7800 Fax: 732-452-6315 www.nysanet.org

April, 2011 The Honorable Andrew M. Cuomo Governor of New York State NYS State Capitol Building Albany, NY 12224

The Honorable Dean G. Skelos NYS Senate Majority Leader 909 Legislative Office Building Albany, NY 12247

The Honorable Sheldon Silver NYS State Assembly Speaker 932 Legislative Office Building Albany, NY 12248

The Honorable John Sampson NYS Senate Minority Leader 409 Legislative Office Building Albany, NY 12247

The Honorable Brian M. Kolb NYS Assembly Minority Leader 933 Legislative Office Building Albany, NY 12248

Dear Governor Cuomo and New York State Senate and Assembly Members: You will soon have before you for consideration Bills S-4668 (Lanza/Hassell-Thompson) and A-7155 (Cusick/Farrell) which seek to cure a serious flaw in the Waterfront Commission Act. This flaw impedes the ability of employers to recruit and hire new employees who are necessary to sustain and grow the business of cargo handling, which is so vital to the economic well-being of our region. This legislation is NOT an attempt to eliminate the role or necessity of the Waterfront Commission; but it is a rather prudent and responsible action which ensures port employers will have a sufficient number of employees when they need them – not when an agency which has no economic investment in the management of the port or its activities decides they are warranted. S-4668 and A-7155 are intended to repeal Section 5-p of the Waterfront Commission Act, N.Y. Unconsol. Laws § 9920 (McKinney 2002), in the New York State legislature. Section 5-p was enacted in 1966 in response to a provision in the Collective Bargaining Agreement between the New York Shipping Association and the ILA which provided a Guaranteed Annual Income to workers displaced due to the introduction of new technology into the marine terminal environment. At that time, management and labor agreed that keeping the register open did nothing to further our competitive position, and agreed that the “controlled register statute” made sense. Today, the Guaranteed Annual Income program no longer exists and ironically, it is now the constraints placed on employers by the Waterfront Commission pursuant to Section 5-p that threatens the competitiveness of the Port. There are 361 ports in the United States and the Port of New York and New Jersey is the only port in the Nation where employers are denied their prerogative to determine when to add skilled workers to their payrolls and when to replace workers lost through attrition, retirement, or illness. Currently the Commission must approve how many workers can be hired and from where they must be recruited. New York Shipping Association, Inc., on behalf of the port employers has repeatedly stated both privately and publicly that we strongly support the law enforcement, crime fighting and licensing roles of the Commission. However, we who responsibly oversee the business of maritime commerce are better suited to determine the manpower level necessary to maximize the economic contribution of the Port to the quality of life of the tens of millions of people who reside within our service area. With the impending completion of the Panama Canal Expansion and the reconfiguration of the Bayonne Bridge, the Port of New York and New Jersey will be uniquely positioned to handle significantly more import and export cargo. Ports all along the East Coast are preparing to compete for the increase in cargo coming directly to the East Coast. We are hampered by an antiquated process for hiring longshore workers and are put in a competitive disadvantage. This antiquated process must be changed. The State of New Jersey took legislative action in 2007 to amend Section 5-p, recognizing that the Waterfront Commission should not maintain a role as a commercial market regulator long after the guaranteed annual income program has ended. The Port of New York and New Jersey is the largest and most productive port complex on the East Coast and supports more than 270,000 port related jobs in the northeast. The greater New York and New Jersey region must be permitted to reap the full benefit of the economic engine that is the Port of New York and New Jersey. Amending Section 5-p will not alter the law enforcement, investigatory or licensing functions of the Waterfront Commission. We urge you to support the repeal of Section 5-p by voting in the affirmative on S-4668 and A-7155. More information about Section 5-p is available and we would be happy to discuss this further with you in greater detail. Your support for this measure will demonstrate a commitment to a stronger economy for the State of New York. Sincerely,

Joseph C. Curto President

THE CAPITOL

www.nycapitolnews.com

JUNE 13, 2011

Pension “Sweetener” Bills With Bipartisan Support A7781/S5116

epublicans have pushed a fiscally conservative message under isanti) (Abbate/Gr the leadership of Senate e “heart ovisions of th Majority Leader Dean Skelos this t Extends the pr the Departmen ) year, including offering their support lice officers in n po e to n. ld ll” io bi at o tal Conserv for Gov. Andrew Cuomo’s plan to (Abbate/G of Environmen e iz rt o am to create a less generous pension tier ol districts Allows scho York state to the New for new state and city employees. ts en m ay p future stem. Yet a number of Senate Republitirement sy teacher’s re ) cans have simultaneously introduced ate/Martins b b A ( so-called “pension sweeteners” that dimin ployers from em c li b u p s it would increase pension costs for state Prohib efits and (Thiele/LaValle) surance ben in h lt ea h l e and local governments, according to an ca lo d an ishing th e at Revives the presum s of retired st update compiled by the fiscally conservaption contribution ) a z n re lat a ing to certain lung dis . es L ye tive Citizens Budget Commission. / lo p e em abiln ities incurred by fire (Tito lement Democrats in the Senate and Assembly p fi gh p ter u s. s le k ew Yor s variab have introduced the vast majority of the Extend t to retired N ing ymen , hous 38 bills flagged by the CBC. Still, six are fund pa e, firefighters correcc d li n backed by the Senate GOP, which has ns, City po nsit police a a y pensio s. r t it , il largely reoriented itself toward less unionb a is d police iarie cers on benefic friendly policies under Skelos. SOURCE: CITIZENS BUDGET COMMISSION tion offi ds benefit to (Weprin/Lanza) n e t x e —Chris Bragg and e health Permanently sets retire schoold an al loc te, benefits for sta level offered district employees at the comes law. 30 days after the bill be

067

A6309/S4

15 A6536/S45

A7267/S4853

4474 S / 2 2 A53

A2007/S4371

Speaking Conservatively

ichael Long, the chairman of the Conservative Party in New York, celebrated the party’s 49th anniversary in Midtown Manhattan in early June with a rundown of its recent successes. The party helped elect six new members of Congress, nine new Assembly members and four new state senators, helping like-minded Republicans retake the upper house. Even the event’s title, “Recovering Row C,” drew attention to the third position on the ballot line the party recaptured. But one of the biggest political issues of the moment, same-sex marriage, didn’t warrant a mention in Long’s remarks—even though conservative opposition may be the biggest

www.nycapitolnews.com Publisher/Executive Director: Darren Bloch

JUNE 13, 2011

obstacle to gay marriage in New York. Several party officials said the issue went without saying simply because there was no need to remind anyone where they stand. “That’s a given,” said Ed Walsh, the Suffolk County party chairman. “It’s in our platform, just like we’re right-tolifers. Those are issues that don’t come up a lot, but when they do come up a lot in government—hey, listen, we’re going to fight for the unborn. We’re going to fight for traditional marriage. That’s just what we do.” Last year Walsh pushed for his party to endorse Suffolk County Executive Steve Levy, who supported civil unions but opposed same-sex marriage. Two past gubernatorial candidates opposed

EDITORIAL Editor: Adam Lisberg alisberg@nycapitolnews.com Managing Editor: Andrew J. Hawkins ahawkins@nycapitolnews.com Reporters: Chris Bragg cbragg@nycapitolnews.com Laura Nahmias lnahmias@nycapitolnews.com Jon Lentz jlentz@nycapitolnews.com Photography Editor: Andrew Schwartz Intern: Jeff Jacobson

to gay marriage, Carl Paladino and Rick Lazio, were among the honorees at the party’s bash. With deals announced on a property tax cap and ethics reform, gay marriage could well become the one major post-budget failure for Gov. Andrew Cuomo. Conservative Party leaders have resolved that lawmakers who vote in favor of same-sex marriage will lose the party’s endorsement, which in some districts makes the difference between winning and losing.

ADVERTISING Associate Publishers: Jim Katocin, Seth Miller Advertising Manager: Marty Strongin Senior Account Executives: Ceil Ainsworth, Monica Conde Director of Events and Marketing: Joanna Vitello Marketing Coordinator: Stephanie Musso Executive Assistant of Sales: Jennie Valenti

www.nycapitolnews.com

Walsh, who heads “probably the biggest conservative county on the planet,” said he didn’t expect wavering from any Republican senators. “Mike Long is the head of our party, and he’s the conscience for a lot of these Republicans,” Walsh said. “Could elected officials try to take the easy way out? We both know the answer to that. Mike, being the head of our party—he doesn’t let them off the hook.” Jerry Kassar, the Brooklyn party chairman, said he didn’t know of any past endorsements where the party had made an exception. “This position hasn’t come up that much,” Kassar said. “It comes up in the Assembly a lot, but this is only the second time it has come up in the Senate. In past years, it hasn’t been a big deal.” —Jon Lentz

PRODUCTION Production Manager: Mark Stinson Art Director: Joey Carolino Advertising Design: Heather Mulcahey Assistant Production Manager: Jessica A. Balaschak Web Design: Lesley Siegel

MANHATTAN MEDIA President/CEO: Tom Allon CFO/COO: Joanne Harras Director of Interactive Marketing and Digital Strategy: Jay Gissen

The Capitol is a division of Manhattan Media, LLC, publisher of The Capitol, City Hall, Our Town, The West Side Spirit, Chelsea Clinton News, The Westsider, New York Press, N.Y. Family, City Arts and AVENUE magazine.

Editorial (212) 894-5417 Advertising (212) 284-9715 Fax (212) 268-2935 General (212) 268-8600

THE CAPITOL

What is NeW York MissiNg out oN? the fastest groWiNg sport iN the World. The sport of Mixed Martial Arts (MMA) is sanctioned in 45 states and across Canada. Itâ&#x20AC;&#x2122;s televised on cable and network TV. MMA athletes are college and Olympic wrestlers and martial artists. It sells out arenas and fills local restaurants and hotels creating jobs and millions in economic activity. And some of its biggest stars are New Yorkers, including two former New York State high school wrestling champs.

Sanctioned Actively bans Doesnâ&#x20AC;&#x2122;t regulate No state athletic commission

so WhY is NeW York the oNlY state that aCtuallY baNs the sport of Mixed Martial arts? Call Your asseMblY MeMber aNd tell theM to briNg MMa to NY! go to WWW.MMafaCts.CoM/phoNe paid for bY Zuffa, llC

between LDCs and regular nonprofits that promote economic development is blurry. The ABO defines an LDC as a job-creating nonprofit that has a direct relationship with a local government. For instance, a nonprofit that gets government funding for development projects and has board members appointed by local governments would likely be defined as an LDC. But tracking down those links through tax documents, and then monitoring

New York State Local Development Corporations The comptroller’s office says there are 279 known local development corporations, but some believe that is just the tip of the iceberg.

Everyone agrees that LDCs are proliferating, and that there is nothing close to a comprehensive list available. Number of LDCs by County None 1 to 5 6 to 10 11 to 17 39 (NYC) Source: NYS Comptroller’s office

Arrested Development Before Albany can rein in local development corporations, they must be counted BY CHRIS BRAGG

ov. Andrew Cuomo wants to ax them. Comptroller Tom DiNapoli wants to crack down on their spending. But before the state’s debt-ridden local development corporations (LDCs) can be reined in, someone might want to count them. The Independent Authorities Budget Office (ABO), which was formed in 2009 under the sweeping public authority reform act, knows of 210 of the quasigovernmental groups. The comptroller’s office, meanwhile, puts the number of known LDCs at 279. Many experts and lawmakers say there may, in fact, be thousands of LDCs around the state. Everyone agrees that LDCs are proliferating, and that there is nothing close to a comprehensive list available. “There’s hundreds, if not thousands, of entities, and it’s very difficult to find them,” Independent Authorities Budget Office executive director David Kidera said. “It takes time. Some are covered by us, and others we determine are purely private and shouldn’t be on the list.”

JUNE 13, 2011

That is a problem, critics believe, since LDCs have seen more than their fair share of waste, fraud and patronage over the years. One recent audit of the Monroe County Airport Authority found that its executive director had used authority funds to buy $17,000 worth of cigars and spent $4,000 at strip clubs. This year alone, 65 of the known LDCs have a combined $8.5 billion in debt. But local governments argue that LDCs act as nimble engines of job creation that are successful precisely because they do not face normal governmental bureaucratic hurdles, such as procurement rules. Over the next year, Cuomo’s Spending and Government Efficiency (SAGE) Commission will mull how to slash the ranks of LDCs and other layers of government. DiNapoli has introduced legislation that would restrict LDC spending and give his office greater authority to launch audits. The ABO has a staff of only eight to audit and regulate the 500 known authorities, so tracking down new ones is not always the top priority. Another problem is that unlike public authorities created

by the Legislature, LDCs can form simply by filing incorporation documents and registering with the Attorney General’s Charities Bureau—and can easily fly under the ABO’s radar. In fiscal year 2009–2010, the last time legislative member items were doled out, 61 organizations that received member items defined themselves as “development corporations.” Not a single one, from Queens and Staten Island economic development corporations to the Lower Manhattan Development Corporation, is currently regulated by the Authorities Budget Office, according to a side-by-side review of member-item grants and the ABO’s list of regulated entities. Kidera said it was certainly possible that some of these nonprofits fall under the jurisdiction of the ABO. But because of the way LDCs are created, Kidera’s office only becomes aware of them through painstaking Internet searches. At a recent hearing before the Assembly Committee on Corporations, Authorities and Commissions, Kidera put forth legislation that would at least force the Department of State to notify the ABO when a local development corporation is incorporated. Another problem is that the line

www.nycapitolnews.com

LDCs that have had free rein for years, is also incredibly time-consuming. “The hardest issue we face is how you define a local authority, and how you capture it,” Kidera said. And LDCs often dispute that they are, in fact, LDCs—an understandable motivation since under the 2009 reforms, LDCs must submit to annual financial audits, hold open meetings and respond to Freedom of Information Law requests. In 2009, the Griffiss Local Development Corporation, which was formed with state money to redevelop a former Air Force base in the 1990s, filed litigation stating that it should not be regulated. The case is still tied up in court. In recent months the Fulton County Economic Development Corporation followed suit. In total about two dozen LDCs currently are protesting their designation as such by the Authorities Budget Office. Meanwhile, of the 210 LDCs currently regulated by the ABO, only half have filed required paperwork this year. These problems may be the tip of the iceberg, if some state lawmakers have their way. Assembly Member Tom Abinanti, who sits on the Assembly’s authorities and corporations committee, says many nonprofits that are not currently considered LDCs should actually be similarly regulated. As a former longtime Westchester County legislator, Abinanti said he knows that local government would often use nonprofits as a backdoor means of financing millions of dollars of development projects, but says that these nonprofits would not fall under the current definition of LDCs. “These are not small little legal service organizations providing legal services,” Abinanti said. “I’m talking about entities that are designed to make [economic development] decisions.” Kidera signaled he is open to expanding the definition. But if more nonprofits were counted as LDCs, their numbers would only grow—further exacerbating the problem of tracking them all down. cbragg@nycapitolnews.com

THE CAPITOL

“We want to dance at both our kids’ weddings.”

adly for Fred and Heidi Perkins, they’ll only be able to celebrate at their daughter’s wedding. That’s because their son, Michael, is gay. In New York, that means he’s not allowed to get married. Let’s change the law so that all New Yorkers in loving, committed relationships can marry the person they love.

Make sure Albany knows you support Marriage Equality.

NewYorkersUnitedforMarriage.org Paid for by New Yorkers United for Marriage

Clinton

New York is set to lose two congressional seats before the 2012 elections. With the state Legislature split between parties, conventional wisdom holds the eliminated districts will include an upstate Republican and a downstate Democrat.

St Lawrence

Franklin

Owens NY-23 23

Most Vulnerable

Lake Placid Essex

Jefferson

Vulnerable

Lewis

Slaughter NY-28 Wayne

Hochul Genesee

Monroe

Seneca

Ontario

Livingston

Wyoming

Oneida

Syracuse

Yates

Fulton

Gibson

Saratoga NY-20

Madison

Reed NY-29

Tompkins

Schuyler Chemung

Tioga

Hanna Chenango 24 NY-24

Cortland

Broome

Safe

Rensselaer

Cayuga

Steuben

Allegany

Herkimer

Utica

Onondaga

NY-26 26

Cattaraugus

Oswego

Buerkle NY-25

Orleans

Niagara

Higgins NY-27

Warren

Oswego

Washington

Hamilton

Otsego

Greene

Delaware

Columbia

Dutchess

Serrano NY-16 Rangel 15 NY-15 Maloney NY-14

8Nadler NY-8 Clarke NY-11 Grimm NY-13

Crowley NY-7

Bishop NY-01 Israel 2 NY-2

Ackerman NY-5

Velázquez NY-12

Towns NY-10

McCarthy 4NY-4

King 3 NY-3

Meeks NY-6

Weiner NY-9

The Short Straw Which two of New York’s congressional districts are on the redistricting chopping block? BY COLIN CAMPBELL

t helps to represent an island— whether a literal island or an island of minority voters. It helps not to be surrounded by too many people like you. And it really helps to be a veteran of the process. With two of New York’s 29 congressional districts set to be eliminated before the 2012 election—and no one scheduled to retire in the meantime— politicos are speculating, strategizing and even lobbying to keep their seats in the U.S. capitol. “It’s about survival,” said political consultant Michael McKeon. “You’re either going to win it or you’re not.” The basic rules are familiar to New York’s representatives, but this year brings unexpected wrinkles. Rep. Kathy Hochul’s recent upset win in Western

JUNE 13, 2011

Hayworth NY-19

New York’s 26th District could leave her protected as a Democrat in a Republican region. In New York City, though, Anthony Weiner’s Twitter photo scandal could leave the outspoken congressman, and his district, suddenly vulnerable. All of New York’s 27 redrawn districts must have equal populations, but courts will also want proof that the new map protects minority voting rights, said redistricting attorney Jeff Wice. “Right now under current law, the only requirements that New York needs to deal with are population equality and the Voting Rights Act,” Wice said. “You must maintain the same number of effective minority districts in the new plan as you do in the current plan.” That makes it very unlikely that one of New York City’s majority-minority districts will be on the chopping block, despite the heavy population loss

recorded in districts like that of Rep. Yvette Clarke in Brooklyn. Other city representatives likely made safe because of their majority-minority districts are Charlie Rangel, Ed Towns, Gregory Meeks, José Serrano and Nydia Velázquez. On the other hand, the two white Republicans in and around the city are seen as relatively immune from elimination. Michael Grimm’s isolated Staten Island district is difficult to divide, and Long Island’s Pete King is insulated by his seniority in the Republican delegation. “With the Legislature divided, it’d be very hard for the Democrats to carve a district that’s very hostile to me,” King said. Most observers agree with King, and expect state legislative leaders, split between the Democratic Assembly and Republican Senate, to compromise on a map that specifically eliminates an upstate Republican and a downstate Democrat. And recent events may have added

www.nycapitolnews.com

additional layers of complexity to the redistricting landscape. “I think that is complicated by the recent congressional election in NY-26,” said Alex Camarda, director of public policy and advocacy at Citizens Union. “If a Republican had won that seat, they’d be the least senior person, so that would make it easy to potentially redraw that district. Now that a Democrat has won, the emphasis switches to the five [recently elected] Republicans.” Those five endangered Republicans are Reps. Nan Hayworth, Chris Gibson, Richard Hanna, Ann Marie Buerkle and Tom Reed. All were first elected last year. If one of them loses the game of musical chairs, Hochul and her Western New York Democratic colleagues Brian Higgins and Louise Slaughter would most likely breathe a sigh of relief. Not so in the New York City region, where quiet rumors used to concentrate on Gary Ackerman or Carolyn McCarthy. Now, after a media implosion, Anthony Weiner finds himself at an increased risk of losing his district. Not even the more powerful members are taking any chances: Queens’ Rep. Joseph Crowley—head of the county’s Democratic organization—has reportedly hired Brian Meara, a lobbyist with strong ties to Assembly Speaker Sheldon Silver, to pressure Albany on his behalf. Other lawmakers are considering their own hired guns as well. Other congressmen are slightly less worried. “I’m going to rely on my good looks and charm,” King joked, saying he had no intention of lobbying Albany. Of course, Albany may not have the final say on the new map. If a legislative stalemate throws the map into court, a judge could appoint a “special master” to draw new lines without worrying about politics or lobbyists—sending new fear into incumbents’ hearts. And although former New York City mayor Ed Koch’s proposed independent redistricting commission appears to have stalled, proponents aren’t giving up the fight. “We’re working hard to make it happen. I will concede that this is an uphill fight,” said Citizens Union’s Camarda, whose group wants to reform the process. “Political gerrymandering has happened since the beginning of the country.” If one thing is certain, it’s that redistricting in New York looks likely to be as contentious and uncertain as ever. “We’ve never had a situation—since the Democrats controlled the Assembly and Republicans controlled the Senate— of a smooth redistricting process,” Wice said. “It’s always ended up before a court. Courts may or may not adopt their own plan.” editor@nycapitolnews.com

THE CAPITOL

...Track Confidently!

News Thatâ&#x20AC;&#x2122;s Newsworthy The NEW YORK PRESS ASSOCIATION

Legislative Digest

is now available in electronic PDF format... only on LRS!

2010 Better Newspaper Contest Excellence Awards Coverage of Elections and Politics First Place & Second Place Coverage of Local Government First Place & Second Place

Daily Sheets

(Also available in hardcopy)

Best Front Page Second Place

Weekly Book

(Also available in hardcopy)

Annual Volume (Hardbound ONLY)

CALL TODAY! Free two week TRIAL-ID! (800) 356-6566 or (518) 455-7677

http://nyslrs.state.ny.us 1450 Western Ave., Suite 310, Albany, NY 12203

the final design has been approved!

support investment in new york

end me the vectorized files of the logo, g:

the grey text banner out the banner (just the LRS) k and white version scale se with box around it (for printing on dark und)

Support the Solar Industry & Jobs Act

Fo r m o re i n fo r m a t i o n g o t o : w w w. s o la ra l l ia n c e . o rg end me an invoice for the $400 total payment you (it can be emailed to me). I have also bout you doing the lettering on our office nd will let you know if that is a possibility.

gain for all your help!

THE CAPITOL

www.nycapitolnews.com

JUNE 13, 2011

BEYOND THE CAPITOL

Coverage of government, policy and politics outside Albany

Gas Houses

Hydrofracking drilling leases may violate fine print on mortgages, title insurance BY SUSAN ARBETTER

generally open to leasing their drilling rights, the Assembly recently passed a group of Tompkins County resi- year-long moratorium on the controversial practice, because they fear dents believe they have hydrofracking will contamifound a troubling new nate the water supply. consequence of “hydrofracking” “Natural gas locked gas drilling in New York—not within the Marcellus Shale environmental but financial. isn’t going anywhere. Reading the fine print on We’re not going to lose it,” residential mortgage and title Speaker Sheldon Silver insurance requirements, they said last week. “There’s too found many New York properSusan Arbetter much at stake not to err on ties have tight technical restrictions on the size and location of drilling the side of caution.” Though the shale isn’t going anywhere, structures. That means homeowners who lease cash-strapped New Yorkers in struggling their drilling rights to the oil and gas areas of the state are going bankrupt. industry for hydrofracking may no longer Some are going into foreclosure. Others be covered by their title insurance. They are hanging onto their homes a month at a may not be able to take out second mort- time, waiting for the state to allow drilling. This friction between upstaters who gages on their properties. In the worst case, they may not even be able to sell support and oppose fracking is on vivid their land as long as a drilling lease is in display in Tompkins County, home to the city of Ithaca, one of the only growth hubs effect. in a region marked by poverty. Ithaca has insulated itself from its neighbors’ economic problems with the help of its 25,000 college students. Yet like the conservative farming communities that border Tompkins County, Ithaca sits atop 500 trillion cubic feet of natural gas. Tompkins County discovered the “Economic development is expected to be the upside of this activity,” said potential mortgage and insurance pitfalls Carol Chock, a Tompkins County legis- of hydrofracking after it formed a task lator who headed a local committee force last winter to consider the impact reviewing how gas drilling would affect of gas drilling. At Chock’s request, Gregory May, the property assessments. “The understanding is that if we’re vice president of residential mortgage willing to take the risk, the reward will be lending at Tompkins Trust Company, economic,” Chock said. “But are we sure began digging into the assessment and valuation issues. His four-page report, that’s true?” Gas drillers say the worry is over- issued in March, stunned county officials. One problem he found: New York enviblown, but it has made its way to the ronmental regulations require a 100-foot governor’s office. Assembly Member Barbara Lifton setback between a drill and any dwelling. arranged for Chock, two local mortgage But the secondary mortgage market, lenders and a real estate agent to meet including Fannie Mae, Freddie Mac and in Albany last month with three aides to the State of New York Mortgage Agency, Gov. Andrew Cuomo—Anthony Giardina, requires a 200-foot separation. If a setback falls short of 200 feet, May Jim Malatras and Tom Congdon—as well as with officials from the Department of wrote, a prospective buyer may not be able to get financing, and sellers may find Environmental Conservation (DEC). The DEC is scheduled to release a fewer purchasers for their land. Another problem: To qualify for title detailed blueprint for gas drilling in New York by July 1, but the Cuomo administra- insurance, properties with gas leases tion has not said whether land financing in New York must not be used for any commercial purpose, have structures will be addressed. While landowners in economically taller than 35 feet or store gas-drilling depressed regions across the state are equipment on site.

“The understanding is that if we’re willing to take the risk, the reward will be economic. But are we sure that’s true?”

JUNE 13, 2011

Homeowners who lease their drilling rights to the oil and gas industry for hydrofracking may no longer be covered by their title insurance. If a property owner or a gas company that has leased the owner’s drilling rights violates those terms, May wrote, the title insurance on that land could be invalidated—blocking a homeowner from taking out a home-equity line of credit. “The inability to sell loans to the national secondary market could potentially impact property values because of the lack of competitive mortgage financing available in the marketplace,” he wrote. The Independent Oil and Gas Association of New York, which represents drillers, calls that fearmongering. Randy Hansen, a spokesperson for the group, said no permanent gas-drilling structures are taller than one story, and he believes 200-foot setbacks are standard on most New York leases. “I think common sense needs to be brought to bear in interpreting these regulations,” Hansen said. There is no way to easily check setbacks and other provisions, because drillers aren’t required to file the full terms of a lease publicly. Tompkins Trust Company’s law firm, however, says it has seen plenty of problems caused by lease requirements—and that homeowners affected by them are simply stuck.

www.nycapitolnews.com

“If the gas companies would simply terminate a homeowner’s lease on request, or release the surface rights, this wouldn’t be an issue,” said Randy Marcus, a partner at Barney, Grossman, Dubow, Marcus & Orkin, which specializes in real estate transactions and finance. “The gas companies are absolutely intractable. They want to hang onto these leases.” The state mortgage agency declined to comment, saying it is reviewing the potential problems. But as lawmakers become aware of the issue, nearby landowners who want to tap into gas-lease revenue are becoming impatient. Said Bradd Vickers, president of the nearby Chenango County Farm Bureau: “We have faith in the DEC.” Susan_arbetter@wcny.org

Susan Arbetter reports from the Capitol in Albany for Central New York’s PBS station, WCNY in Syracuse. She hosts a daily live radio show, “The Capitol Pressroom,” and produces “The Capitol Report,” broadcast daily on television across New York State.

THE CAPITOL

Senca president Robert Odawi Porter speaks as Republicans announce a new Indian affairs committee.

Divided Nations New Indian committee aims to open dialogue on cigarettes, casinos and jobs By Jon Lentz

ew York will soon have a Native American committee for the first time in years, and the state senators behind it are touting the chance for improved relations and job growth. But the story is as much about political alliances, campaign dollars and volatile struggles over taxes, casinos and land rights. The latest conflict involves taxing cigarette sales on Indian land, which the state has long pursued but which has been mired in the courts. Gov. Andrew Cuomo has promised to collect taxes on Indian-sold cigarettes. The issue, which has boiled over before, could heat up again soon. A state judge lifted an injunction blocking the collection of taxes last week, but the Seneca Nation of Indians won another stay until June 20. Incensed by the Democrats’ attempts to collect cigarette taxes, the Senecas last year contributed $250,000 to Senate Republicans. In May, Senate Republicans announced a Committee on State– Native American Relations, the first of its kind since 1995. “Over the last couple of years, there was no hiding the fact that we were quite upset with the Senate Democrats in their effort to impose this new tax legislation on us,” said Seneca president Robert Odawi Porter. “We tell people we thought they were disrespecting our treaty rights, and we would be getting more involved, and we have. And I believe we’ll continue to be.” Not all Senate Democrats are bad in the Senecas’ eyes. The committee’s bipartisan membership reads

like a list of the top recipients of Seneca cash, including Sens. Shirley Huntley, Cathy Young, Eric Adams and Ruth Hassell-Thompson, who each received $5,000, and all of whom have been highly supportive of the tribe’s issues. Other members, like Sens. Tim Kennedy, Pat Gallivan and John Bonacic, received smaller contributions. But perhaps the key driver behind the committee was the

“I have no doubt that if there is a committee in the State Senate that has any possibility of influencing casino policy, they’ll buy it.”

THE CAPITOL

promotion of Sen. George Maziarz, a longtime Seneca ally, to the thirdranking spot in the Senate Republican leadership this year. “It’s an area we’ve got to get involved in,” Maziarz said. “This cigarette tax issue is not going to go away. But there are other issues.” Ex-senator Craig Johnson, who last year recommended the creation of such a committee, applauded the move. Johnson, who was nonetheless targeted by the Senecas for supporting the collection of cigarettes taxes, also defended their political contributions. “They have every right, as a special-interest group, to make their voice known, both through the power of advocacy, as well as through the power of the purse,” Johnson said. “You could look at any committee and point to particular people who get campaign contributions.” Yet some observers wonder if the committee will be an avenue

to promote Indian casinos, another hot-button issue its members will be looking at. “I have no doubt that if there is a committee in the State Senate that has any possibility of influencing casino policy, they’ll buy it,” said Bruce Jackson, a University of Buffalo professor who has closely followed a lawsuit over a Seneca casino in Buffalo. “They’ll spend a fortune on lobbying those people and contributing to campaigns.” Joel Rose, chair of the statewide Coalition Against Gambling in New York, offered a mixed assessment of the committee. “Maziarz is a big supporter of the Senecas,” Rose said. “He kind of carries water for them. He’s a big supporter of casino gambling.” “I don’t know what people’s motivations may be, whether this is payback or something, but sometimes good things happen for bad reasons,” Rose added. “I don’t see how anything but good could come from the state Legislature developing a focus on Indian issues.” Lawmakers and Indian leaders say it’s about much more than casinos and cigarettes. “I think that responsible legislators that want to educate themselves—frankly, even those that disagree with sovereignty and with our nations—at least there will be a forum for some discussion and some interaction on these issues,” said Porter. “It’s been a policy wasteland, and I’m hoping this committee will help all of us improve over time.” The last time the state had an Indian affairs committee was in the early 1990s under Gov. Mario Cuomo. Gov. Eliot Spitzer had a point man on Indian issues, and this spring Gov. Andrew Cuomo named a deputy counsel to oversee Indian issues. But up until this spring, New York was one of only 4 of the 20 states with the highest Native American populations that lacked a freestanding committee or office on Indian affairs in the executive or legislative branch. Porter said he wants the state to be less intrusive in the affairs of the Senecas, which he claims would allow them to create more jobs. In Western New York, one of the state’s most economically depressed areas, the tribe lays claim to $1 billion in economic activity from its casinos and other businesses. “It’s not the cigarette issue; it’s the treaty issue,” Porter said. “If we don’t fight back on these issues as it relates to the cigarettes, what’s it going to be tomorrow? Microchips? What are we going to make tomorrow that the state is going to want to tax?” jlentz@nycapitolnews.com

www.nycapitolnews.com

Our Difficult Border War to Retain Business By Al Samuels

While the economy may be pulling out of the recession for some New York State communities, those of us at ground level fighting the war to retain and attract jobs are experiencing an awful lot of friendly fire in addition to a barrage from other states trying to woo our businesses away. A challenge for Rockland County economic developers is that we are often pitted against New Jersey to our south. One distinct disadvantage and often a key deciding factor for a business when it seeks to expand or relocate, is the cost of energy. New York has the nation's third highest energy costs. New Jersey which shares Rockland’s border ranks eighth. In 2009, New York's average retail price of electricity to customers per kilowatt hour was 16.24 cents, while it was 13.9 cents in New Jersey. The commercial rate difference is 15.68 cents per hour in New York as opposed to 13.64 cents in the Garden State. For significant energy users the difference adds up quickly. While Governor Cuomo is off to a good start in transforming our business climate, there is still much work to be done. A 2010 report from the Public Policy Institute of New York State (“Short Circuiting New York's Recovery”) recommends that Albany reject any new taxes or fees on the energy industry, roll back 2009’s 18-A increases which had a negative impact on manufacturing, adopt a property tax cap and use off-budget alternative fees to develop the alternative energy industry and minimize greenhouse gas generation. For far too long, Albany has pushed the business community off to the sidelines on this issue, while prices have climbed and costly energy regulation and mandates have been heaped upon those who still want to produce electricity within New York. A prime example is Indian Point, which for decades has provided our region with the affordable, reliable and clean electricity we need to be competitive. Another quick step needed is passage of a new power plant siting law so energy investors might be encouraged to stay in New York and not continue to be chased away by red tape and regulatory hurdles. Let’s keep the jobs and tax base in New York. To do so, Albany must make a dedicated effort to reduce energy costs and both maintain and expand our current sources of power. Al Samuels is the President and CEO of the Rockland Business Association as well as an Advisory Board Member of the New York Affordable Reliable Electricity Alliance.

S P E C I A L

S P O N S O R E D

S E C T I O N

New York AREA’s membership includes some of the state’s most vital business, labor and community organizations including the New York State AFL-CIO, Business Council of New York State, Partnership for New York City, New York Building Congress, National Federation of Independent Business and many more. W W W. A R E A - A L L I A N C E . O R G JUNE 13, 2011

PERSPECTIVES

Republicans Support Massive Debt Increase BY RICHARD BRODSKY

elcome to Nassau County, Republican bastion and heart of the propertytax-payer revolt that dethroned popular anti-tax Democratic County Executive Tom Suozzi and replaced him with a Republican stalwart named Ed Mangano. The county has the highest property taxes in the world, is nigh on bankrupt, has a control board running its finances and has a bus system close to shutting down. Therefore, the Republicans who control the county Legislature just approved a referendum to allow the borrowing of $400 million to build a new home for the local ice hockey team, the New York Islanders, to be paid back by those same beleaguered property-tax payers. This follows another Republican’s successful initiatives to build three new sports facilities with taxpayer money. Mayor Michael Bloomberg structured $10 billion or so worth of deals for the

Yankees, the Mets and the Brooklyn Nets. pattern of distressed and broke governWith Republicans like these, who needs ments cutting schools, hospitals and libraries—you name it—but finding the Socialists? The economics of taxpayer-built sports money to build a stadium. Mangano understands he’s swimming facilities are almost always awful, with taxpayers receiving little or no benefit a bit upstream. The press strategy emphain return for massive outlays of public sizes that the cost of the arena will be paid dollars. The physical and human infra- by the Islanders. Problem is, there’s no structure across New York is crumbling agreement to that effect, and the local law adopted at Mangano’s request and going to get worse, says the bonds will be repaid by especially if Republican property-tax payers. He asserts budget cutters get their all kinds of economic benefits, way. Just listen to the histriwhich history teaches us do not onics of the Washington materialize. and New York Republicans So while Republicans are about no more borrowing: for cutting spending and “It’s bankrupting our chilborrowing on schools and dren.” “This time we mean Richard Brodsky trains and roads and hospiit.” What Mangano and his allies have tals, they favor increasing spending figured out is that the electorate and poli- and borrowing for the construction of ticians go slightly nuts when professional sports and entertainment facilities. The real question is whether Nassau sports and government intersect. All the ideological purity and defining political voters will drink the same Kool-Aid. In slogans go out the window. There’s a real what passes for political strategy, Mangano

has scheduled the referendum for August 1, apparently on the theory that there will be little public debate, the press will not pursue the reality of the deal, nobody will be around and a targeted get-out-the-vote effort can muster enough support to pass it. Maybe there’s a strategy in this for those of us who believe in public investment in public infrastructure, who think that our society and economy will flourish only if our private and public institutions are sound. If we could only get House Speaker John Boehner to view the rest of the country as one big sports franchise… Richard Brodsky is a senior fellow at both Demos, a NYC-based think tank, and at NYU’s Wagner School of Public Administration. He served in the state Assembly from 1983 to 2010 and chaired the corporations and environmental protection committees. He appears regularly as a contributing editor on WRNN-TV.

New York’s Transportation Crisis BY JOHN FASO

Ominously, the DOT estimates that approximately $50 billion is required for verlooked in all the hubbub major projects including the Tappan Zee surrounding New York State’s Bridge, the Peace Bridge from Buffalo to financial crisis has been another Canada, the Gowanus Expressway, the developing mess: the urgent need to Kosciuszko Bridge and a host of other finance capital plans for New York’s road, major projects. The essential problem is that transbridge and mass-transit systems. portation funding doesn’t Gov. Andrew Cuomo was have a loud, vocal constituable to achieve spending ency fighting for funding like cuts and reforms by the health-care and education shrewdly picking off potenlobbies. It is no surprise, then, tial adversaries, particularly that state and city funding in New York’s health-care to support the operating and industry. But he has yet to capital budgets for roads, show his hand as to how he bridges and transit have been proposes to deal with transJohn Faso declining for the last 15 years. portation financing issues. Even worse, the approach of the Unlike the budget issues faced earlier this year, transportation finance can’t be past—more debt, piled upon additional addressed merely by slowing or canceling refinanced debt—can no longer be used projected spending increases. Instead the to paper over the problem. Debt service for past capital programs state and city have dramatic needs for increased expenditures on road, bridge now absorbs much of the revenue generated by existing tax streams. This year and mass-transit repairs and upgrades. Unfortunately, New York has a multi- the state dedicated-highway fund—estabyear bipartisan history of botching crit- lished in 1992 to supply revenue for road ical transportation issues—particularly and bridge repair—instead spent 70 percent of its almost $2 billion in funding capital funding. The New York State Department of for debt service for prior projects. Meanwhile, the federal highway trust Transportation warned four years ago that it would need $175 billion over 20 fund—which provides a significant years to pay for road and bridge capital- portion of annual funding for New York’s funding needs, but existing funding transportation program—faces an uncertain future, since gas tax revenues aren’t streams total just $75 billion.

JUNE 13, 2011

keeping up with funding needs. As cars and trucks get more fuel-efficient, the trust’s revenues per mile continue to slip. Similarly, the MTA— serving one-third of all transit commuters in the nation each day—is suffocating in debt. Largely due to policies implemented during the Pataki administration, which forced the MTA to refinance past debt to pay for a new capital plan, the financial chickens have come home to roost. The need is clear: New York needs a massive new investment in transportation infrastructure over the next 20 years. This means recognizing that transportation is just as important as education and health care to the economic future of the state. It also means reforming public employee pensions, health care and union work rules so operating expenses do not swallow up any additional resources. New financing could be available from private-sector sources. Legislation just introduced by Senate Transportation Committee Chair Chuck Fuschillo Jr. would authorize publicprivate partnerships to build major

www.nycapitolnews.com

road and transit systems with private capital. Public officials and citizens need to appreciate and understand the critical nature of the financing challenge and act without delay to address this issue. John Faso is a former minority leader of the state Assembly and was the Republican candidate for governor in 2006. He is a partner in the Albany office of the national law firm Manatt, Phelps & Phillips, LLP.

THE CAPITOL

The New Fraud State’s Medicaid inspectors tackle fraud and abuse, mostly centered in Brooklyn BY LAURA NAHMIAS

rooklyn is ground zero in the latest form of organized Medicaid abuse— home-care aides who bilk the state by claiming to have been in two or more places at the same time. State health officials and law enforcement have recently begun auditing home-care agencies— most of which are located in Kings County—and have noticed a slew of aides with contradictory billing reports. After the state’s Medicaid program paid an agency, the auditors would receive a conflict report—“a report that says one aide was in two places at the same time,” said Medicaid Inspector General James Sheehan at a recent seminar on the issue. “We have a very narrow, 19th century-physics idea that one person cannot be in two places at the same time,” Sheehan said. “So one of those reports has to be wrong.” The state comptroller’s office began looking at conflict reports in 2007, when the office found that $5.7 million in Medicaid payments had been made to home-care providers who claimed they were caring for patients who were actu-

ally in the hospital. The investigation triggered the Office of the Medicaid Inspector General to audit more than 5,000 licensed home-care agencies in the state, and turned up a pattern of home-care aides failing to report for work or claiming they had been helping two or more patients at the same time in different locations. The IG declined to name which home-care agencies were the sources of particular fraud, because investigations are ongoing. But Sheehan said cursory audits showed single agencies operating in Brooklyn with as many as 500 conflict reports. “In New York, it’s all in one borough,” he noted. To uncover more, the IG is subpoenaing the agencies. Sheehan has also pulled investigators from other parts of the state—Rochester, Syracuse, Buffalo—and sent them to Kings County to do more police work, he said. The Department of Health said it wasn’t sure why the borough has bred home-care Medicaid abuses, but Republican Sen. Marty Golden had some insight. “It’s easier to get the license to open a home health-care agency than it is to open a liquor store,” he said.

MEDICAID FRAUD BY THE NUMBERS

$52 BILLION Annual Medicaid spending in 2010, including federal matching funds

$5 BILLION

Estimated portion lost to fraud and waste

$1.6 BILLION Medicaid fraud recovery by Ofﬁce of the Medicaid Inspector General in 2009 (most recent year available)

150%

Percentage growth in home-care jobs in Brooklyn between 2000 and 2008

75%

20-1 Medicaid fraud and abuse recoveries in downstate regions compared with other areas of the state

Growth in home healthcare agencies in Brooklyn between 2000 and 2008

20,000,

FOUR TIMES AS MANY SINCE 1990 Number of home health-care employees in Brooklyn SOURCES: NYS DEPARTMENT OF HEALTH, NYS OFFICE OF THE MEDICAID INSPECTOR GENERAL, NYS DEPARTMENT OF LABOR—LABOR STATISTICS, U.S. BUREAU OF LABOR STATISTICS, SENATE REPUBLICAN MEDICAID FRAUD TASK FORCE (2009), LABOR MARKET INFORMATION SERVICE ANNUAL REPORT (2009).

THE CAPITOL

Another culprit, Golden believes, is Brooklyn’s thriving organized crime population. “You’re thinking Italian-American right? But in Brooklyn, the Russian, Hispanic, Asian populations all have their own organized crime,” he said. And in Brooklyn, Golden says, prosecutors lack the funds to prosecute the wide-scale frauds being perpetrated by Russian-American organized criminals. “What we’d like to see is the inspector general take what they do and use it for takedowns across the city,” Golden said. “Had they taken technology and used it to overlay the county of Kings, you’d find the same people are committing similar crimes.” At present, the IG can only refer cases of fraud to the state attorney general. This leads to less localized law enforcement, Golden said. In response, he and other Senate Republicans passed a bill last week that would reserve a portion of money recovered for local district attorneys, to encourage them to prosecute potential frauds. Meanwhile, Sheehan is doubling down under renewed pressure from the Cuomo administration to make good on nearly $2.3 billion in Medicaid cuts from the state’s $52 billion budget this year. The agency is only six years old, and collections have doubled each year of its existence, to almost $1.6 billion in retrieved funds last year. But the feds think the state can do better. New York ranks 26th in its ability to retrieve misspent Medicaid money, according to the U.S. Department of Health and Human Services. And those millions are just a fraction compared with what auditors and health experts suggest could be as much as $5 billion a year in wasteful or fraudulent spending in New York. Cuomo has made no secret of his belief that the rise of home-care agencies—a lightly regulated, for-profit industry that has exploded since the mid-1990s, and was one of the largest job generators in New York State last year—is a major source of cost growth in the Medicaid budget. Cuomo prominently cited home care as a source of waste in his budget address in February—a speech in which he called the state’s health-care spending a “special-interest protection program.” The new investigations also extend Cuomo’s years-long interest in home-care fraud, a field he probed during his time as attorney general. The muscle behind the new audits recalled his warning shot to homecare agencies during the address: “Medicaid,” he said, “is not about supporting the home-care industry.” lnahmias@nycapitolnews.com

www.nycapitolnews.com

Exporting Jobs Hurts New York’s Economic Recovery By Carl J. Cannizzaro, P.E.

A recent report from New York State Comptroller Thomas DiNapoli details the chilling impact of rising energy costs on New York’s working families. According to Comptroller DiNapoli, the statewide average cost to heat a home by oil was $2,757 from April 1, 2010 to March 31, 2011, an increase of $492 from the previous 12-month period. If current prices are maintained over the next 12 months, that same home will cost an additional $535 or $3,784 to heat. That’s a 45 percent increase or $1,027 more in just two years with even bigger increases for those living in colder regions of upstate New York. Comptroller DiNapoli’s report also details the impact of rising energy costs on government budgets. New York City’s May 2011 financial plan forecasts energy costs of $903 million rising to $1.1 billion in FY 2015. The Metropolitan Transportation Authority’s (MTA) energy costs nearly doubled from $261 million in 2003 to $515 million in 2010, as oil and natural gas prices rose and utility companies increased rates and charges. The MTA’s February 2011 financial plan projects energy costs to hit $698 million by 2014 with recent trends pushing that higher. Additionally, working families have also witnessed unrealistic proposals to close Indian Point – a safe, coststable baseload power resource directly responsible for tens of thousands of regional jobs. With no power plant siting law on the books, closing Indian Point would only force New York to export these jobs, along with billions in economic activity, while further leaving New York State at the mercy of cost-fluctuating power imported from out-of-state, all with no economic benefit to New York. Candidly, it makes no sense. To spur growth, Albany must do more than commit to rebuilding our crumbling infrastructure and facilitate greater private sector investment in communities large and small. Our state leaders must also work to reduce the cost of energy, maintain the state’s existing baseload energy capacity, lift the moratorium on natural gas development of the Marcellus Shale and implement a new power plant siting law. The simple fact is New York is already paying handsomely for reliance on imported power – and receives none of the benefits. Importing more power from out of state not only makes New York State less energy independent, but will only impede New York’s long-term economic recovery. Carl J. Cannizzaro, P.E. is the Vice President of Ensign Engineering, a LEED Certified and WMBE firm based in The Bronx. He is also a member of the New York Affordable Reliable Electricity Alliance.

S P E C I A L

S P O N S O R E D

S E C T I O N

The New York Affordable Reliable Electricity Alliance (New York AREA) is a diverse group of business, labor, environmental, and community leaders working together for clean, low-cost and reliable electricity solutions that foster prosperity and jobs for the Empire State. W W W. A R E A - A L L I A N C E . O R G JUNE 13, 2011

WHAT I WANT

By Adam Lisberg With a week left in the session, three uneasy adversaries play their final hands Photos by Kayla Galway 14

JUNE 13, 2011

www.nycapitolnews.com

THE CAPITOL

irst came the good-government reformers, to stand in the back without saying a word. Then came Gov. Andrew Cuomo, leading the heads of the Senate and Assembly into the Capitol’s Red Room, where they would tell the state they had all signed on to a plan to drain New York’s ethical swamp. Cuomo did not smile. He stared into the middle distance, his eyes hard, never once looking at his special counsel for ethics reform, Jeremy Creelan, who was saying all the right things in his introduction. “This is a truly historic package, and it’s my honor to be here today,” Creelan said. “Let me introduce one of the reasons why we’re here—thanks to the leadership of the governor, to the speaker and the majority leader—let me introduce Speaker Silver.” Cuomo pivoted to his right, toward Senate Majority Leader Dean Skelos. Without actually looking at the state’s top Republican, Cuomo murmured something out of the side of his mouth to him. Skelos quickly flashed a grin, and slowly the governor started to smile. “Thank you, Jeremy, for your generous introduction,” Shelly Silver deadpanned. Cuomo stared straight ahead as his smile grew. Someone laughed, and he started laughing too, until he finally unclasped his hands, gestured to Skelos beside him and faced Silver directly. “Better than Dean’s!” Cuomo said. Skelos laughed along with the rest of them. Not once did the governor look him in the eye.

n their sixth month of working together, the state’s “three men in a room” have shown it is once again possible to actually run the state of New York instead of watching it careen off the rails. They may not trust each other. They may not like each other. But their uneasy partnership has let them reach goals that have eluded other leaders—a balanced budget, a 2 percent cap on property taxes, an ethics deal. Now they head into their final week of bargaining, each with their own priorities, each with a canny perspective on how the other two negotiates. Some of Silver’s top priorities are out of his hands: Gay marriage and a oneyear moratorium on “hydrofracking” gas drilling are stymied in the Senate. He wants to extend the “millionaires’ tax” on high earners but already lost that battle during budget talks, when it mattered. That leaves one issue, and he’s almost guaranteed a win: He wants to expand the rent regulations on New York City apartments, not just extend them. Real estate interests are resigned to a deal, in exchange for renewing a lucrative tax break to build affordable housing. The negotiations all involve split-the-difference percentages and dollar amounts; everyone This story was reported by Chris Bragg, Jon Lentz, Laura Nahmias and Adam Lisberg

THE CAPITOL

expects them to reach a deal by the end of the session June 20. Silver has been able to accommodate a Democratic governor who isn’t afraid to cut spending and cap taxes like a Republican, without losing the faith of his Assembly Democrats. “Shelly Silver is a master of government,” said Assembly Member Jeff Aubry, a Queens Democrat. “He’s been adaptable to Pataki and Paterson and Cuomo. I don’t see that he won’t be able to adapt to these circumstances either.” Yet his members offer seemingly contradictory impressions of why he can make it work: He carefully listens to the needs of his members, but he also nudges them where he thinks New Yorkers want them to go. “Speaker Silver is a consummate realist, and he understands, as do few others in government, the will and the sense of the public,” said Chuck Lavine, who represents Nassau County’s North Shore in the Assembly. “In years gone by, he may not have been as enthusiastic about a property tax cap. The speaker can only accomplish what his conference wants.” Silver was long seen as an obstacle to ethics reform, which would require him to disclose what he does as counsel to the personal-injury law firm Weitz & Luxenberg, but he realized the mood in New York was sour enough that it was time to support some openness. “How Shelly has been obstructing these bills for two decades and somehow came out a reformer I don’t know,” said one longtime insider with the Senate Republicans. “Skelos didn’t want it, and Shelly didn’t want it, but Shelly was able to get out in front. Shelly is the master of supporting things that he has blocked in the past.” Skelos, in his first real taste of power, is in a far different position from Silver, because his control depends on holding the

“How Shelly has been obstructing these bills for two decades and somehow came out a reformer I don’t know. Skelos didn’t want it, and Shelly didn’t want it, but Shelly was able to get out in front.” votes of all 32 Senate Republicans. Without a single member to spare, he started the year by lining up with Cuomo to pass a budget that Republicans loved. He watched as the governor convinced Silver’s Assembly Democrats to accept spending cuts and let the millionaires’ tax expire. The editorial pages cheered. Skelos looked like a statesman. But when Skelos balked at the details of the governor’s other priorities, the world shifted. He found himself the odd man out

Tax Cap, Ethics, Mandate Relief and Jobs By Dean Skelos When New Yorkers chose Republicans to lead the Senate, we promised them three things: We would bring Albany spending under control, give taxpayers relief from high taxes and help the private sector create jobs. With less than a week remaining in this legislative session, it’s clear that Republicans have kept their word. Working with the governor and Assembly, we passed an early budget that reduced spending and eliminated a $10 billion deficit without raising taxes. And we turned the page on two long years of Democrat dysfunction by showing the Senate could be orderly and functional. Senate Republicans forged an agreement to cap property taxes for homeowners and businesses, an issue we championed for years. While minor details must still be ironed out, we’re confident nothing will emerge as an obstacle to a strong property tax cap law. After arguing that a 2010 ethics bill negotiated in secret and presented to the Legislature was too weak, Senate Republicans crafted a stronger ethics bill this year that will require far greater disclosure for legislators and members of the executive branch. Senate Republicans will continue advocating for mandate relief and other measures designed to save taxpayers more of their hard-earned money, and partner with Governor Cuomo to help create new jobs. This year we’ve made great progress in restoring the public’s trust in its government, and I’m confident it will continue in the days and weeks ahead.

www.nycapitolnews.com

“Senate Republicans will continue advocating for mandate relief and other measures designed to save taxpayers more of their hard-earned money.”

JUNE 13, 2011

when Cuomo and Silver agreed to a property tax cap—jumping on board the train just before it left the station. Meanwhile, an item in Cuomo’s favorite media outlet, Fred Dicker’s New York Post column, stopped just short of accusing Skelos of condoning bribery by not revealing whether his private legal clients have state business. Three weeks later, Skelos was in the Red Room with Cuomo and Silver, laughing at the governor’s jokes. So what does Skelos get out of it? The answer is in what Cuomo didn’t say: For all his bragging about ethics reform, he has stopped talking about changing the slanted process New York lawmakers use to draw legislative district lines. An independent redistricting commission, creating rational Senate districts in a Democratic-leaning state, could leave Skelos a man without a majority by the next election. Cuomo plays his cards close to the vest. But he’s not playing like a man who cares about redistricting anymore. Skelos has reason to smile.

“T

he old ways don’t work,” explained a member of the Cuomo administration. “We don’t have to play by the old rules.” The old rules would have kept Cuomo aligned with his fellow Democrats, standing with Silver against Skelos. But

“By his own admission, he’s not a warm and fuzzy and likable guy. It’s kind of ironic that his popularity is as high as it is. He can capitalize on it—or he could overplay his hand and have it turn around.” Cuomo has proven himself a master of courting and cajoling individual lawmakers while keeping their leaders off balance. If his last two predecessors were too hard (Eliot Spitzer) and too soft (David Paterson), he is the Goldilocks governor—wielding power just right. Lawmakers revolted when Spitzer threatened to steamroll them; Cuomo calls them on the phone just to chat. Under Paterson, the Executive Mansion was the subject of rumors about his personal life; under Cuomo, it’s where he invites legislators to flatter them while he feeds them. With all of his adversaries, Cuomo has offered compromises and emphasized points of agreement. He infuriated Mayor Michael Bloomberg by casually shooting down his bid to repeal the “last in, first out” law governing teacher layoffs—then surprised him by introducing pension reforms Bloomberg has sought for years. Which is not to say that Cuomo is all sweetness and light. He knows how to carry a threat; he just hasn’t had to follow through. During the budget talks, legislators knew he could unilaterally push through his spending cuts with extenders,

JUNE 13, 2011

as Paterson had done. In the ethics talks, he raised the specter of a Moreland Act commission to investigate legislators, while insisting he didn’t want to convene one. They smile when they see Cuomo smile. They don’t know what to do when they see that hard-eyed stare. “By his own admission, he’s not a warm and fuzzy and likable guy. It’s kind of ironic that his popularity is as high as it is,” said Stephen Madarasz, spokesperson for the Civil Service Employees Association. “He can capitalize on it—or he could overplay his hand and have it turn around.” So how does one of the state’s largest unions view a popular governor who has balanced the budget, brought order to Albany, proposed reducing pensions for new employees and drawn up layoff lists for 9,800 current ones? “Frustrated. Happy. All of the above,” Madarasz said. “No one’s going to dispute that he’s shown strong leadership to this point.” The Manhattan Institute’s E.J. McMahon thinks Cuomo hasn’t been tough enough on state unions. They are afraid, he said, and Cuomo ought to make

Rent, Fracking, Marriage and Millionaires’ Tax By Sheldon Silver As we approach the end of the legislative session, the governor and the Legislature must make a concerted effort to deliver the security and the fairness New Yorkers need and deserve. To ensure that working families can remain in their homes and in the communities they love, we must extend and enhance the rent laws by June 15th and enact a property tax cap as well. To give the state time to assess the risks to public health and environmental quality posed by hydrofracking, I urge the state to suspend the issuance of natural-gas drilling permits for one year. The Assembly recently passed a one-year moratorium on this controversial drilling method, and I urge my colleagues in the Senate to join us so we can have time to better assess the impacts of hydrofracking. When it comes to fairness, the reality is that same-sex couples have been denied the rights and privileges enjoyed by married couples for far too long. The state Assembly has passed marriageequality legislation three times, and we await word from our Senate colleagues on whether they will pass it this year. And certainly, in this time when working families are being asked to accept cutbacks, we should not be giving tax breaks to millionaires. By maintaining the existing tax rate on those who earn a million dollars or more per year, we can prevent the layoff of thousands of teachers, restore vital social safety-net programs like early intervention and senior centers, and ensure that we begin the next fiscal year without a budget deficit. It is an ambitious agenda, but one that must be accomplished this year.

www.nycapitolnews.com

“In this time when working families are being asked to accept cutbacks, we should not be giving tax breaks to millionaires.”

THE CAPITOL

If his last two predecessors were too hard (Eliot Spitzer) and too soft (David Paterson), he is the Goldilocks governor—wielding power just right.

the most of it. “They haven’t gotten personal with him, because he has made it clear that if you get personal with him, he will fight back,” McMahon said. “He will react badly to it if you do that. If you make him an issue, then you’re really at war.” While Albany talks about “three men in a room” making all the decisions, that doesn’t happen much. Cuomo is adept at negotiating separately with Silver and Skelos, leaving each of them wondering what the governor has told the other, until they finally come together and find out. In the Capitol’s second-floor offices, the tight circle of advisors privy to Cuomo’s strategy see lawmakers as exhausted by years of dysfunction and ready for adult leadership that will rub off on them as well. “When the governor was a kid, there was politics, but there were leaders that stood up and actually voted on the best interests of the state,” said one of the governor’s close advisors. “And that’s what we think people can be again. Legislators want to be that,” the advisor said. “All this stuff—ethics reform,

THE CAPITOL

the budget, the tax cap—that rebounds on them eventually. The governor’s offering leadership, and he’s offering them a collegial way to do it.” This will not be an easy week. The property tax cap is still a conceptual agreement, not a law on the books. Cuomo has put his reputation on the line to legalize gay marriage; the votes aren’t there yet. Skelos wants mandate relief for his high-tax towns, Silver is serious about expanding the rent laws and the ethics deal is under fire from critics who say the fine print is porous. Yet for the first time in years, New York looks like it’s back on track. The public has noticed. With his smile and his stare, Cuomo has tried to set the agenda in Albany—and for the time being, Silver and Skelos have decided to go along. “He understood that people would respond well to somebody who doesn’t play by Albany rules, and he wasn’t going to get hurt for doing that,” said someone who strategizes with the governor regularly. “The consummate child of Albany is the one breaking all of its rules.” alisberg@nycapitolnews.com

Property Tax Cap, Ethics Reform, Rent Regulations, Marriage Equality By Andrew Cuomo When this legislative session began, I promised the people of this state that we would change the way Albany did business, and that we would bring integrity back to our government. Over the last several months, we’ve worked to do just that. We reformed the budget process and closed a $10 billion budget gap without borrowing or new taxes. We have assembled a top-flight team of professionals to bring performance back to government. And we have focused on economic development initiatives throughout our entire state. As the session comes to a close, I look forward to building on our successes and accomplishing key legislative goals like enacting a property tax cap, cleaning up Albany by passing real ethics reform, extending and expanding rent regulation, and achieving marriage equality. My team and I have traveled the state to speak to New Yorkers about this reform agenda and to involve them in their government. We have already forged historic agreements with our colleagues in the Senate and Assembly, and now we must pass these key pieces of legislation. By keeping the momentum going and maintaining a spirit of collaboration, we will keep moving forward and make this the Empire State once again.

www.nycapitolnews.com

JUNE 13, 2011

Big Spenders Committee to Save New York, health-care groups dominate lobbying spending this year By Jon Lentz

veryone expected the Committee to Save New York to spend millions of dollars to back Gov. Andrew Cuomo’s budget. But traditional foes of budget cutting like 1199/SEIU, the powerful health-care workers union, and the Greater New York Hospital Association? It turns out they were nearly as supportive of the governor’s budget, and they broke out their wallets to prove it. The Healthcare Education Project, a joint lobbying effort of GNYHA and 1199, spent more than $6.4 million through the first four months of 2011, most of it on adver-

tising promoting cuts recommended by the Medicaid Redesign Team. Its spending is only about $1 million behind the $7.4 million from the Committee to Save New York, which is on track to be the largest lobbying spender this year. Altogether, the health-care groups and the Committee to Save New York, a coalition of businesses, building trades and other interests, poured in $13.8 million to support the budget. “It’s not unusual, in that hospitals and 1199 always spend a lot,” said one Albany lobbyist. “Teachers always spend a lot. Business Council always spends a lot. But that this governor is able to rail against ‘business as

Spendingon on the the Big Spending BigIssues Issues 2011 Lobbying

Campaign contributions, Sept. 2010–Jan. 2011

Total spending

Committee to Save New York

$7.4 million

1199/SEIU & GNYHA Healthcare Education Project

$6.42 million

$1.86 million

$182,000

$2.04 million

$452,224

$210,250

$662,474

1999/SEIU

$111,167

$691,469

$802,636

GNYHA

$545,537

$166,000

$711,537

Association of Realtors

$744,767

Real Estate Board of New York

$118,275

$665,050

$783,325

Rent Stabilization Association

$145,600

$421,674

$567,274

Tishman Speyer

$115,404

$201,000

$316,404

Empire State Pride Agenda

$31,784

$154,200

$185,984

New York State Catholic Conference

$33,716

$118,804

Citizen Action

$75,711

$12,949

$88,660

NYPIRG

$38,718

STATE BUDGET

EDUCATION NYSUT UFT

HEALTH CARE

RENT REGULATION/HOUSING

SAME-SEX MARRIAGE

MILLIONAIRES’ TAX New Yorkers for Fiscal Fairness

GOVERNMENT REFORM

Sources: NYPIRG, New York State Board of Elections, New York State Commission on Public Integrity

JUNE 13, 2011

www.nycapitolnews.com

usual’ in Albany at the same time he’s benefiting from a multimillion-dollar lobbying effort? It’s a little out there.” In past years, some of the top-spending groups have been health-care and education advocates and others trying to block painful cuts. “It’s very rare to have a campaign of this magnitude working on the same side as the governor,” Bill Mahoney, a researcher at the New York Public Interest Research Group, said of the Committee to Save New York. “Often when you see these heavily funded campaigns, they’re working against the specific budget proposal, such as cuts to hospitals or education or something like that.” The plan submitted by Cuomo’s Medicaid Redesign Team was simply “the best way to achieve the health-care reforms New York needs without jeopardizing patient care,” said Brian Conway, a spokesperson for GNYHA. The Medicaid Redesign Team, which included representatives from 1199 and GNYHA, recommended $2.3 billion in budget savings. Trailing behind in the lobbying reports are Cuomo’s three post-budget priorities: a property tax cap, samesex marriage and ethics reform. Far more has been spent on education, health care and housing issues, such as rent regulation, in the first four months of 2011. That is partly because lobbying expenditures and compensation have only been posted through the end of April. Bill Cunningham, a spokesperson for the Committee to Save New York, said the group was continuing to run television and radio advertisements, with the focus shifting from the budget to a property tax cap. A perennial top spender, the New York State United Teachers, spent $1.84 million on advertising and lobbyists so far this year to influence a range of education and labor issues, but still saw major defeats in several areas, such as a millionaires’ tax (rejected) and property tax cap (approved). In early June the union announced it would spend an additional $1.3 million on statewide advertising opposed to the property tax cap. Cuomo struck a tentative deal on a 2 percent property tax cap in late May. Some groups, like the Empire State Pride Agenda, spent significantly more on campaign contributions in the last four months of 2010 than on lobbying this year. Campaign contributions for 2011 will not be public until July. In some cases the figures show that the governor doesn’t always need more dollars to achieve his priorities. Virtually no lobbying was done to support ethics reform, but in early June the governor announced a deal with the Legislature on a new ethics bill that would require lawmakers to disclose outside clients and overhaul the state’s ethics board. A handful of reform groups in favor of stronger ethics laws in New York, such as Common Cause and Citizen Action, have spent tens of thousands of dollars this year on a range of reform-oriented issues, but none have exceeded $50,000. The third issue for the Committee to Save New York, mandate reform, has not drawn significant spending since being pushed aside after a state task force issued its initial report. But if the coalition continues to spend at the same rate, it could end the year as the top spender and possibly one of the most deep-pocketed lobbyists ever in the state. Downplaying the Committee to Save New York’s spending, Cunningham said his organization was a counterweight to the millions spent by other groups like NYSUT, the teachers’ union. “Historically, the people who are on the opposite side of the issues from us have spent money by the bucketloads, and they still do,” Cunningham said. “We certainly aren’t drowning them out. They’re going on television statewide as we’re speaking.” jlentz@nycapitolnews.com

THE CAPITOL

Honorable Mentions The Blue Divide Second-tier proposals yearn for marquee billing By Laura Nahmias

edical marijuana, mixed martial arts, wine in grocery stories, hydrofracking. Call them the perennials—the issues that seem to bloom every year, before withering on the vine in the final legislative weeks. This year, despite passing an on-time budget, lobbyists are still running around the Capitol hoping their issues will get an airing before the session ends June 20. But this year a bill’s best chances are measured by whether its name has passed the lips of Gov. Andrew Cuomo. If it hasn’t, it’s on the back burner. “There would have been a chance if the governor had taken us on and been public about it,” said Vince Marrone, a former lobbyist for the Marijuana Policy Project. For several years a bill legalizing medical marijuana has passed the Assembly and languished in the Senate. The Policy Project calculated the odds that a bill would pass without the governor’s help, bet against it and has decided to move on to other more plausible states. “Unless the governor defines something as important to him, people take no interest in it,” Marrone said. Another bill dying of oxygen deprivation is one that would create an independent redistricting process. The governor hasn’t weighed in on the issue in the months since he first introduced a bill to create a bipartisan redistricting commission. The bill was signed away without sponsors, making it impossible for Senate Democrats to bring it up for debate. Regardless, it remains one of the Senate Democrats’ top priorities. “Senate Democrats don’t believe in putting issues important to New Yorkers on a back burner,” said Senate Democratic spokesperson Austin Shafran. “We will stoke the flames until each are passed.” Lobbyists for low-priority issues were reluctant to comment on their bills’ chances, even as they seemed destined for the dustbin. Many worried that they could potentially jinx the process. Former mayor Ed Koch, a major voice in pushing redistricting reform

through his New York Uprising movement, seemed confident the governor would keep his promise to make independent redistricting a reality, even if not this session. “Andrew has committed himself publicly and to me personally to veto the legislation,” if the lines aren’t fair, Koch said. “He promised at that time when we arranged a joint meeting with Citizens Union and New York Uprising that he’ll talk to the press and tell them what he’s telling us.” This year, in contrast to years past, less money is being spent lobbying these special-interest bills. Without the refereeing of the executive branch, onehouse bills pass into oblivion—until next session. A bill to legalize wine sales in grocery stores, sponsored by Republican Sen. Tom O’Mara and Assembly Member Joseph Morelle, seemed to have widespread support in the Senate but has yet to be brought for a vote. And in the Assembly, members passed another moratorium on hydrofracking, the controversial gas-drilling practice, while in the Senate, led by pro-fracking Deputy Majority Leader Tom Libous, the bill’s chances are slim. Another perennial underdog, the bill to legalize mixed martial arts, has failed again in the Assembly, despite broad support in the Senate. Some lawmakers said they were not necessarily dealing with more legislation, but wondered if perhaps the governor’s hands-on style was slowing the process. Assembly Health Committee Chair Richard Gottfried said the governor was taking an extraordinary amount of time to issue a bill creating a health insurance exchange, a piece of legislation that could cost the state millions of dollars in federal grant money if not passed by the June deadline. Instead the governor has taken the unusual step of sharing a draft of the bill with all lawmakers, without making the drafts public. Gottfried called the tactic a “very thoughtful and very smart effort to try to accommodate legislative concerns.” But like all other interested parties, from winery owners to goodgovernment advocates, he’s counting the minutes. “He deserves a lot of credit for trying to explore issues and work them out before dropping the bill in our laps. On the other hand,” Gottfried added, “time is running short.” lnahmias@nycapitolnews.com

“Unless the governor defines something as important to him, people take no interest in it.”

THE CAPITOL

Cuomo is tacking right on many issues, but will the Democratic base follow? By Erik Kriss

ithin the first six months of his administration, the new governor cut education and health-care spending, rejected a tax on millionaires, won agreement to cap property tax increases, pushed for concessions from unions and fought to reduce pension benefits. Bragging rights for a Republican, perhaps, but this is Democrat Andrew Cuomo’s record thus far. So what must he do to keep himself in the good graces of the liberal-leaning base of his party in one of the bluest of the blue states? In the short term, say key Democrats around the state, Cuomo must fight for same-sex marriage, rent regulation and ethics reform. In the long term, education funding and hydrofracking are among the potential flashpoints. “He does need to find issues that do appeal to the liberal base of the Democratic Party to show that he is ‘one of them,’ ” says Siena College pollster Steven Greenberg. But he notes that Cuomo is the driving force behind same-sex marriage and ethics reform, and suggests that the governor has measured the public’s pulse. State Democrats say Cuomo’s right-ofcenter approach meshes with what voters want from their governor, namely fiscal discipline and straight talk. “We’re in a very blue state, but we’re also in a very broke state, and the base knows that,” said Jay Jacobs, chair of the state party. “I have campaigns already that want him to campaign. I have people asking him to speak. He’s extraordinarily popular, and for good reason. I think the base understands the fiscal crisis we’re in.” Marist Institute pollster Lee Miringoff says the time is right for the Cuomo fiscal agenda—but that it may wear thin over time with his core supporters. “I don’t think everyone’s thrilled in the base, but I think there’s a recognition in the base that the fiscal problems of the state are serious and have to be addressed,” says Miringoff, who notes that Cuomo shrewdly invited stakeholders to help craft the cuts. “At what point do cutbacks in education and health care and services and programs that people from his base hold near and dear take a toll on him?” he said. “Given that he ran on the things he’s doing, he’s getting points for consistency. You get away with that in the short term. The question is, how long is the short term?” Cuomo’s record is resonating so far among upstate Democrats, whether in liberal Ithaca and Tompkins County or in blue-collar Buffalo and Western New York. “I would expect very strong support for the governor’s position on ethics reform,

www.nycapitolnews.com

same-sex marriage and independent [legislative] redistricting,” says Irene Stein, who chairs both the Tompkins County Democratic Committee and the Democratic Rural Conference. “The most important thing he’s got to do,” says Erie County Democratic Chairman Leonard Lenihan, who recently took a job with the state Democratic Party, “is turn this ship around, and he’s doing it.” Polls continue to show Cuomo enjoying broad support among members of all parties. “His general formula is a proven formula—to be more conservative on fiscal issues and more liberal on social issues,” says Robert Spitzer, a political science professor at the State University of New York at Cortland. Political scientist Jeffrey Stonecash of Syracuse University says that when the economy rebounds, “expectations go up. They’re going to be standing there with their hands out. That’s when it’s going to be tough for him.” But Greenberg says Cuomo, with a four-year term, has time on his side. “He has the ability to pursue an agenda that doesn’t necessarily appeal to the ‘base’ of the Democratic Party this year and still win the base when he runs in three years.” The expiration of rent-regulation laws, near and dear to the New York City-dominated Democratic base, could be Cuomo’s first litmus test. “Keep us in our house,” Assembly Member Eric Stevenson, D-Bronx, was quoted as warning Cuomo during a recent press conference, “and we’ll keep you in yours. Take us out, and we take you out.” With the liberal and environmental faction of the Democratic base opposing drilling into the Marcellus Shale for natural gas, the future of hydraulic fracturing—hydrofracking— also carries political risks to Cuomo. Both Assembly Speaker Shelly Silver and Attorney General Eric Schneiderman have staked out strong positions on hydrofracking, the former passing a moratorium against the controversial method in early June, the latter suing the federal government to spur a study of hydrofracking. A Cuomo spokesperson did not return a request for comment. Democratic political consultant Hank Sheinkopf credits Cuomo with “smart political strategy” for pushing pain to the municipal and school-district levels while simultaneously turning up the heat on the Senate and Assembly to reform their houses. “When the cuts kick in, local officials will be blamed,” Sheinkopf says. “No one will believe the governor’s at fault. He’s the guy who’s cleaning up the mess. He’s taking on the Legislature.” editor@nycapitolnews.com JUNE 13, 2011

Improving the health of New York, one person at a time.

UnitedHealthcare and its more than 3,500 employees across New York State are proud to serve the health care needs of more than 3.6 million New Yorkers through our commercial, Medicare and Medicaid insurance plans. Our relationships with more than 43,000 physicians and other health care providers and 203 hospitals ensure that residents have broad access to the care they need. At UnitedHealthcare, our goal is to assure access to affordable health care for consumers and businesses through healthy competition and a vibrant marketplace. We urge policymakers to preserve consumer choice and avoid unnecessary or duplicative regulatory hurdles as they implement new federal laws that establish a Health Insurance Exchange in New York State. The New York exchange should offer greater choice and competition by enabling all qualified health plans to participate in this new insurance market, maintaining current valued options for small business and individuals, and providing individuals with consistent, uniform information on quality of care so they can make the best purchasing decisions for themselves and their families.

But, access to health care coverage and services is only one piece to improving the health of our state and our country, which is why we are actively engaged in enhancing the health of our communities. We are committed to doing our part to arrest the alarming trend of “unwellness” as illustrated by the increase in obesity, diabetes, heart disease and other illnesses that are most often attributed to lifestyle choices. For example, we recently announced in New York City a partnership with the Y to help individuals at risk for diabetes to avoid getting the disease. From Long Island to Albany to Upstate New York, we are proud to be affiliated with such community-based organizations such as City Harvest, Habitat for Humanity, the Make-a-Wish Foundation, local Ys and Boys & Girls Clubs and many others. We look forward to even greater opportunities with these and other organizations that are dedicated to a similar mission – to help individuals lead healthier lives

uhc.com © 2011 United HealthCare Services, Inc. UnitedHealthcare’s New York insurance products are underwritten by UnitedHealthcare Insurance Company of New York or Oxford Health Insurance Inc. UnitedHealthcare’s New York HMO products are underwritten by UnitedHealthcare of New York, Inc. or Oxford Health Plans (NY), Inc.

ISSUESPOTLIGHT

Insurance

ealth insurance exchanges. “No-fault” auto insurance fraud. The merging of the state’s banking and insurance departments. Rarely has insurance been the focus of such intense negotiation and legislative activity. To that end, The Capitol has devoted the following pages to shining a spotlight on insurance. We take a look at the likelihood of passing a bill to step up health insurance exchanges—a federal requirement with millions of dollars at stake (page 24)—as well as legislation curbing auto insurance fraud, a favored tactic among organized criminals (page 25). We let the advocates sound off on their issues (page 22), and below, let two leading legislative voices go back and forth on what is currently facing the state. Q: Is the insurance industry in New York healthy today?

Point/Counterpoint

Sen. James Seward, chair of the Senate insurance committee: Overall, I think it is. One of my goals has been to create the right environment in New York for a vibrant, competitive, healthy insurance market that is good for the industry and good for the consumer. Giving the consumer choices of coverage; also competiJames Seward tive prices. When there’s competition, generally that helps control costs, and so, overall, I’d say it is a healthy market. Though there is always room for improvement.

Assembly Member Joseph Morelle, chair of the Assembly insurance committee: We’ve obviously had challenges in the area of health insurance, and there are some issues that New York is dealing with right now. We’re trying to create a better environment for companies to do business here. At the same time, we don’t want to give up essential consumer protections, and we don’t want there to be a situation where insurance companies are so focused on competing and end up reducing premiums or do things that get them into financial trouble. The big issue for me is not only having the competitive environment for consumers but to make sure that when companies are actually called on in a crisis to step in—whether it’s to provide resources for a family after a death, or if it’s during some kind of catastrophic health episode—we need to make sure that those companies are solvent and strong and robust, and can stand behind the commitments they make.

in fact, I’m a former president of that group. I get a nationwide perspective, and I often hear about insurance products being approved in 49 states and one not yet approved—and that one is New York. That has been a problem in New York; we need to streamline and modernize regulation.

Morelle: You know, you are always making adjustments; you are always making changes. You are always monitoring Joseph Morelle what industry is like as conditions around the world change and as new products come on line. You are always working at it, and you’re never completely satisfied, but I think New York does as good a job in making sure we’ve started to strike that balance. And we’ll continue to work at it. We’ve been talking about commercial modernization this year for large insurance projects and large companies with sophisticated buyers. So that’s something we’re looking to do that we think can improve the environment for insurance companies.

Q: What insurance issue should the newly merged department focus on first?

Seward: In addition to streamlining and modernizing insurance reg-

ment of Financial Services, how will it affect the balance between safeguarding consumers and promoting the insurance industry?

ulation, there are really two key areas that need attention right away. One is in the area of no-fault fraud. It continues to be a major problem, particularly in New York City, where purchasers of auto insurance are paying through the nose, high auto insurance rates, and part of that problem is the amount of fraudulent claims being paid. We’ve got to clamp down more vigorously on this problem. I’m hoping—Superintendent Lawsky is a former assistant U.S. attorney and has actually prosecuted these cases in that capacity, and of course being in the attorney general’s office as well, so he’s very much attuned. So I hope from both statute and tougher administrative actions on the part of the department, we can begin to clamp down on no-fault fraud. That’s a huge priority for us.

Seward: Frankly, I had concerns with governor’s original proposal. I considered it

Morelle: Well, we’re going to have to continue to spend a lot of time the next few

to be making the regulation of insurance more cumbersome, more difficult to do business in New York State. Increased fines, penalties, prosecutorial powers—frankly, I had concerns the original proposal could do real damage to our insurance industry in New York. And drive carriers out of the state. However, after negotiations, I’m pleased with the end product of the new department. In fact, we even changed the name. The original name was the Department of Financial Regulation. Now we call it the Department of Financial Services. I think it strikes the right balance in terms of helping to foster the insurance market in New York and also protect consumer interests, as well. The framework is in place for this new department to help us not only maintain but enhance New York’s premier role as the financial capital of the world. I’m very upbeat about the new department and the first superintendant, Ben Lawsky.

years on insurance exchanges. That’s a requirement the federal government has asked us to implement, so we’re working hard at that. That’s a big issue.

Q: When the state insurance department is merged into the new Depart-

Morelle: I would expect it will do the same quality job the state insurance department has done, and I think there are some sound reasons why merging banks and insurance and lumping them into consumer protections continues to make sense. I don’t think we’ll lose the beat, in terms of providing adequate safeguards for consumers and at the same time making sure the industry thrives in New York.

Q: Did the old system strike the right balance? Seward: There’s always room for improvement. For example, one of my priorities going forward is to modernize and streamline the regulation of insurance in New York. We do need to speed up the approval of new insurance products in New York. I’ve been involved at the national level through NCOIL, the National Conference of Insurance Legislators;

THE CAPITOL

www.nycapitolnews.com

Q: The deadline to create a health insurance exchange is three years away, but it will take years to create one. Republicans introduced a bill last week. How can the two parties come together to cover approximately 2.6 million uninsured New Yorkers?

Seward: What we need to do immediately is at least set up the basic framework of the health insurance exchange here in New York. That is a 2011 issue. At least set up the basic governing body: begin the procurement of IT and hiring a staff and the governing board and the advisory boards and begin that process. Because we have to continue to show, as we lead up to when we need it up and running, January 1, 2014, the federal deadline—we need to show, over certain benchmark times between now and then, that New York, in fact, will be capable of having, up and running, a health insurance exchange by January, 1, 2014. So we have to begin the process.

Morelle: I’ve been blessed in that in the Assembly the ranking Republican, Will Barclay, and I work well together, and I work very well with Senator Seward, who is a friend with whom I’ve had a lot of dealings over the years. I think we’ll do what we try to always do—and that is, to first of all understand what each [other’s] positions are. And we’ll carefully try to make sure we can find some agreement and compromise on the issues that might separate us. Although right now I think we’re very much in similar places. JUNE 13, 2011

S U N DB I T E S Jessica Wisneski, legislative and campaigns director, Public Policy and Education Fund of New York/Citizen Action of New York

A major priority of the new department must be to get the new health insurance exchange, required by the Affordable Care Act, up and running once legislation is passed to establish that new entity this legislative session. The DFS must be a strong partner with the exchange, protecting New York’s consumers from any improper practices of the health insurance industry. Stacey Rowland, attorney at law, Wilson Elser Moskowitz Edelman & Dicker

Insurance issues are ongoing. The Department of Financial Services will have to continue efforts in conforming to the states’ requirements under federal health-care reform, as well as continue its efforts, either by legislation, regulation or a combination of both, to ﬁght fraud, which is a driving force in rising insurance costs.

TRIAL LAWYERS: COME OUT OF THE SHADOWS Trial lawyers have proposed a so-called “Sunshine Law,” but insurance companies already disclose their financial information. It’s time for trial lawyers to do the same. What do they have to hide? And now there is a proposal to increase attorney fees in certain lawsuits. Bigger paydays for trial lawyers are the last thing the citizens of New York need. The legislature needs to stand up for New Yorkers and oppose S2541.

JUNE 13, 2011

Ellen Melchionni, president, New York Insurance Association

The state now has an opportunity. The creation of the DFS needs to result in streamlined insurance regulation, and must accomplish real and substantial efficiencies. Two specific changes NYIA recommends are targeted financial exams and a more expeditious filing process for approval of rates and forms. A major issue for the DFS is the outrageous level of the assessments levied on domestic insurance companies in the state. By law these assessments are to be used strictly for the operating expenses of the New York State Insurance Department. NYIA does not condone the state’s current illegal practice of using these funds for programs not directly related to insurance. Elisabeth Benjamin, vice president of health initiatives, Community Service Society

Merging the banking and insurance departments isn’t such a bad idea, because you may get some additional expertise in assessing their reserve levels. The consumer complaint bureau will still survive. We have so little time to get prepared for the Affordable Care Act. There [are] 2.6 million uninsured New Yorkers. If we do it right, not all 2.6 million New Yorkers should be calling on Jan. 1, 2014. We should have an efﬁcient way to certify them in 2013. That’s a lot of work, getting a major new government entity up and running and able to take people’s calls and enrolling them all into coverage.

www.nycapitolnews.com

THE CAPITOL

a word from national public finance guarantee Dear Municipal Market Participant: For over 35 years — first as the Municipal Bond Insurance Association and now as National Public Finance Guarantee — we’ve stood by our promise to make good on all claims under the insurance policies we have issued for the bonds we have insured. As one of the largest long-term holders of municipal credit risk, our $475 billion1 insured portfolio represents roughly 17%2 of all municipal bonds outstanding. Our commitment to this market is accompanied by a patient, long-term view. Over the years, we’ve seen cycles of growth and stress in the municipal market — including times like today, where unprecedented operating deficits are forcing municipalities into the very painful, very public process of cutting expenses and balancing budgets. Even in the face of such fiscal pressures, certain conditions exist that speak to the stability of the municipal market: • the strength of the repayment pledge supporting the broad universe of municipal debt issued for our communities’ essential services; • the value of applying rigorous research and disciplined analysis to the vast array of municipal credits that issue debt, as MBIA and National have consistently done for over three decades, and • the strength of National’s balance sheet and claims-paying resources to support its policyholders, stakeholders and the municipal market. We remain committed to the municipal market and look forward to working with you. Sincerely,

William C. Fallon Chief Executive Officer

Built to last. Built to serve.

www.nationalpfg.com For our outlook on selected sectors where we have issued bond insurance, please visit www.nationalpfg.com/sectorstudies 1 2

as of 3/31/2011 according to Federal Reserve estimates

Health Reform, Stat! Bill to create insurance exchange sidesteps state’s public authority problem BY LAURA NAHMIAS

ew York has more than $27 million in federal money to set up a health insurance exchange—but could lose most of that unless it passes a law to run the exchange before the session ends June 20. The state is one of seven that received an “early innovator” grant to help set up its exchange, in hopes of creating a domino effect that would pave the way for other states to create their own. The exchanges are virtual marketplaces where consumers—and in some cases small businesses—can buy insurance. Under the new health-care reforms, every state is required to have one in place by 2014. But with mere days left in the legislative session, the governor’s office, Assembly and Senate still haven’t agreed on a bill. Health industry insiders said Gov. Andrew Cuomo’s program bill is already written, but disagreements with key Republican senators over how to divvy up power to run the program have delayed its introduction.

Last week Senate Health and Insurance Committee chairs Jim Seward and Kemp Hannon issued their own version of a bill that would run the exchange as a public authority but concentrate power over policy decisions in the hands of the Legislature. “The Senate approach is: ‘Let’s leave the policymaking decisions with the policy makers—that is, the Legislature and the governor,’” Seward said. “We wouldn’t give them— the exchange’s governing board—the authority to actually make policy.” The bill would deny the authority the power to make policy and issue bonds— a restriction that reflects lawmakers’ concerns over transparency and accountability for public authorities. “We felt it was important to keep this authority on a short leash,” Seward said. The bill is “bare-bones,” but so are exchange bills being passed in other states, Seward said. It’s enough to comply with federal guidelines, and enough to meet the progress test states must pass to retain their grants.

“We kept this authority on a very short leash.” But health advocates remain concerned about the lack of a program bill. “If we miss that deadline, we potentially miss a year’s worth of funding,” said William Van Slyke, a spokesperson for the Healthcare Association of New York State. “We’re certainly eager and anxious to see the proposal from the administration. The clock’s ticking here.” Either the state health department, a new public authority or a nonprofit will ultimately have control over the insurance exchange. And while most healthcare stakeholders seem to agree that a public authority would be the most agreeable entity to run the insurance marketplace, providers say they have

no firm sense of whether the governor’s bill will match their ideas. Early in the process, Cuomo was said to have favored an exchange run by his health department commissioner, Nirav Shah—an approach consistent with his close-knit and tightly controlled managerial style. A spokesperson for Cuomo’s office denied that the governor favored placing Shah in control. However, Cuomo has been engaging in the “highly unusual” practice of sharing his draft bill with the Legislature, said Assembly Health Committee chair Richard Gottfried. “I’m happy they’re doing it, but, you know, it’s not the way the previous seven governors that I’ve served with usually work,” Gottfried said. Despite delays, New York has so far avoided some of the partisan snags plaguing other early-innovator states, said Kathleen Shure, senior vice president of managed care and insurance expansion for the Greater New York Hospital Association. The issue is simply that the state is embroiled in more pressing legislative fights. “I think it’s just caught up in everything that’s going on with the end of the session. There’s just a lot of competing priorities,” Shure said. However, she added, “time’s getting short.” lnahmias@nycapitolnews.com

To Have and to Hold Those who buy their first home with a low down payment have the benefit of financing with private mortgage insurance (PrivateMI). For them, PrivateMI premiums are affordable, predictable, cancelable, and tax deductible.

Thanks to PrivateMI, homebuyers can continue to enjoy the stability of predictable monthly payments that are tax deductible when filing tax returns. Visit www.privatemi.com, for more information.

JUNE 13, 2011

www.nycapitolnews.com

THE CAPITOL

Fender Bender Advocates rev up for “no-fault” auto insurance reform, but passage this year seems doubtful BY JEFF JACOBSON

hile some New York legislators are fighting to pass no-fault auto insurance reform— an issue that has united Democrats, Republicans and law enforcement officials—a key Assembly Democrat has thrown cold water on the likelihood of the bill passing before the end of session. The bill, which is still in committee, is designed to prevent automobile insurance fraud. Advocates say organized criminals stage fake car accidents to charge insurance companies for treating phony injuries to participants, known as “runners.” Under New York law, insurance companies cover medical fees resulting from car accidents of up to $50,000 regardless of which party is at fault, which is why the policies are known as “no-fault” auto insurance. When scammers take a cut, the insurance company pays, then passes the cost along to drivers.

“My concern is if this bill doesn’t get passed,” said Rafe Lieber, executive director of New Yorkers Stand Against Insurance Fraud and a former State Senate staffer, “this fraud is going to just explode worse than it is already.” But Lieber said nofault auto insurance reform did not appear to be part of Albany’s end-of-session negotiating blitz. Insurance companies and their advocates working to build pressure for reform blame the delay on opposition from politically powerful trial lawyers, who often file car-crash cases. “I think it would take a great deal of compromise and work to get it in a form that could pass both houses,” said Joseph Morelle, chair of the Assembly Insurance Committee. “So right now it’s a starting point for discussion.” The reform bill would impose tougher penalties on fraudsters, modify a “30-day rule” to allow insurers more time to investigate claims, decertify medical providers

Stay Tuned For Our Upcoming Issue Spotlights

call for changes. The NYPD, meanwhile, has released surveillance videos from what it says are notorious examples of scammers faking injuries in car crashes. In one tape a Bronx driver narrowly avoids a spectacular tractor-trailer crash, but police say he later claimed he was hit and billed $21,184 in medical costs. Another tape (at left) shows nine alleged scammers backing three cars into each other— twice—before later seeking $39,000 worth of medical treatment, police say. The NYPD says this surveillance video shows a New York State Trial Lawstaged car crash. yers Association president who commit fraud and combat excessive Nicholas Timko flatly denies his members are profiting from fraud, saying auto medical charges. Insurers say organized criminal activ- fraud cases rarely go to court and thus ity costs drivers hundreds of dollars a have limited payouts. “They’re overblowing the problem of year in extra premiums, or $250 million a year across the state. Bronx drivers pay fraud,” Timko said. “No-fault is probably premiums 185 percent above the state one of the smallest parts of the premium you pay, and it is usually 10 percent or less of your overall premium. So even if no-fault fraud is 10 percent of that, 10 percent of 10 percent is 1 percent of your overall premium.” He blames high car-insurance rates in average, they say, while Brooklyn premiNew York City on its high population denums top state averages by 272 percent. Groups advocating for insurance sity: “It’s a big city, because there are a lot reform have worked with the city’s district of people…driving cars on busy roads.” jjacobson@nycapitolnews.com attorneys to publicize the problem and

“They’re overblowing the problem of fraud.”

Professional insurance agents of new ew York state inc.

Professional Insurance Agents of New York State Inc. represents insurance agents throughout New York state; in every city, every town Sections feature insight and observations from key and every village, we are your neighbors providing valuable property/casualty government officials, leading voices from across the industry insurance coverage to the homes, businesses and automobiles of the citizens of ns feature insight and observations from key government officials, leading voices and influential and informative editorial coverage. rom across the industry, and influential and informative editorial coverage. the Empire State. PIANY members employ more than 20,000 insurance professionals, providing insurance for more than 2,000,000 households and 750,000 businesses, governmental units and other organizations.

Phone: (800) 424-4244 • Fax: (888) 225-6935 • www.Pia.org

BuTLEr ASSoCiATES

The Capitol

City Hall June 20: Energy

City Hall

The Capitol June 27: Organized Labor

For advertising opportunities, call 646-422-1623. For advertising opportunities, call 646-422-1623

THE CAPITOL

www.nycapitolnews.com

Media Relations Integrated Marketing Grassroots Campaigns

We know how to make news for our clients, because we know how news is made. The 2010 o'Dwyers annual ranking of independent national public relations firms named Butler Associates one of the top 5 Public Affairs Pr practices in New York.

Butler Associates LLC.

204 East 23rd Street, New York, NY 10010

www.ButlerAssociates.com • info@ButlerAssociates.com

Contact: Tom Butler - (212) 685-4600

JUNE 13, 2011

POLITICS

•

POLICY

•

PERSONALITIES

Look who’s reading The Capitol...

The way to reach elected officials.

www.capitalnews.com

For advertising information, please contact your account executive at (212) 284-9735 or advertising@manhattanmedia.com

BACK & F O R T H

Good Cop/Bad Cop

Ben Lawsky takes over Cuomo’s new financial services department

o head the new Department of Financial Services, Gov. Andrew Cuomo tapped one of his closest advisors, Ben Lawsky, his chief of staff and a prosecutor who worked on Cuomo’s mortgage securities fraud cases during his term as attorney general. Lawsky, a New York native, will continue his position as Cuomo’s chief of staff until the new agency becomes operational in October. He spoke with The Capitol about lessons New York learned during the financial crisis, why he’s not the scourge of Wall Street, and spy novels. What follows is an edited transcript. THE CAPITOL: Do you see this job as a natural outgrowth of the work of both former Attorneys General Cuomo and Eliot Spitzer—known for their dogged pursuit of financial crimes? Ben Lawsky: I can tell you that during Cuomo’s tenure, as we lived through the financial crisis, one of the by-products was the then AG began thinking a lot about problems with regulation—two of them in particular. One is that the regulatory agencies were so Balkanized that you had, sometimes, certain types of financial products or financial entities that were falling [through] the cracks and not being appropriately regulated. So you had the creation, for example, of a credit-default swap. The SEC didn’t think they regulated it, because it’s not a security; the insurance department didn’t regulate it, because it’s not insurance, the FTC in Washington didn’t regulate it, because it wasn’t a commodity. Smart lawyers and financial wizards were designing these products, actually intentionally sometimes, to avoid regulatory scrutiny. That got the governor thinking a lot about, well, if we took our banking department, and we took our insurance department, and we combined them into a single overarching financial services regulator, it would then be much harder for products and certain entities to fall into these regulatory gaps.

talking [about] problems that exploded in 2008; started in 2001, 2002, 2003. So if this regulator had existed in the year 2000—yes, by 2008 I think there may have been a better chance of heading off some of the real troubling practices. At the same time, it’s hard in hindsight to predict. The mortgage boom was watched carefully by a lot of very smart regulators, including the Fed and Alan Greenspan, and they could have done something about it and didn’t. And lots of other regulators could have done something and didn’t. TC: When you first took a job with Cuomo, some financial industry people said, “Thank God! He’s one of the scariest people on Wall Street! He’ll be out of our hair!” Are you really that scary?

BL: Yeah. And if you Google it, you’ll see that. There is no real federal regulation of insurance; it’s all done at the state level. Obviously, New York is such a hub of finance and insurance. There are several very important insurance regulators in the country: Illinois, California, New York, Texas, and probably Wisconsin, for strange reasons. Banking is different. Most of the biggest banks are nationally chartered. There are two banking systems, federal and state; if you’re a federal bank, you almost have to have a national charter, because otherwise you’d be dealing with 50 different regulators. On the banking side, the state is incredibly powerful in relation to mortgage foreclosures, mortgage servicers, dealing with foreclosure issues, protecting consumers. Again, though, it’s dealing with a lot of big banks—but often not [as] the direct regulator of the biggest banks. With the merger, there are new powers to deal with products, unique products that might otherwise fall into regulatory gaps—

BL: I don’t think that’s true! You know, The New York Times called me…what was the word…the guy on Cuomo’s staff with “the soft touch.” You can look it up! They did! This job is not a pure prosecutor job. That’s something that I take very seriously. This is first and foremost a regulator, and a regulator is not the same as a prosecutor. A regulator has to make sure the industries are healthy. It doesn’t mean you don’t enforce when there is fraud, but it’s a different mind-set, and I’m well aware of that. I think I’m known for some of the larger Wall Street cases, so it’s easy to flag me as a scourge of Wall Street. I think if you talk to people on the street, you’ll find I’m not a dogmatic guy, I’m not a knee-jerk guy. The best decisions one often makes as either a prosecutor or regulator are those you don’t bring. We call it digging dry holes. You investigate something and you know there’s not enough here to prosecute, and that is one of the most important decisions. The cases [where] you say, “I think something wrong happened here but I can’t prove it,” and you let these guys go on their way.

TC: Like the credit-default swaps?

TC: How do you assuage industry fears that the bigger agency might stifle growth?

BL: Well, now those are being regulated by the CFTC. The nice thing about the way we wrote the statute is—it’s always hard to predict what the next problematic thing is, so we put it the following way: If there are products or entities in the future that aren’t exclusively regulated by the feds, or do not have a substantial regulator on the state level, then this new entity regulates their financial products and services.

TC: You’ve been with the governor for so long now, it seems almost as though the position was created with you in mind. Is that the case?

TC: How do you enforce that? Can you subpoena? Levy fines?

BL: No, it wasn’t like that at all. I was very involved in a lot of the white collar and Wall Street investigations we did, but we had to pass the bill to create the department. There was uncertainty whether it would even go anywhere.

BL: The enforcement is the same; you can levy fines, you can subpoena. The way we scaled it back was the breadth of what you can reach is narrower, but—let’s say it’s a securities fraud: That’s under the Martin Act. The attorney general has Martin Act powers; this agency does not.

TC: During budget negotiations, there was a struggle over what powers the office could have, and references to the Martin Act were scaled back in response to concerns from the financial industry and law enforcement. Can you tell me what powers you will still have?

TC: So when you come across shady practices, what agency do you refer them to?

BL: Goal number one is to make sure the insurance and banking industries thrive in New York—that is priority number one. I believe you can promote a healthy environment where companies compete, and at the same time protect consumers. And you can also prevent systemic risk; prevent it before it becomes dangerous to the economy writ large. TC: Ever watch Spitzer on CNN? BL: I’m never home in time to catch Spitzer’s show. I work pretty late, as you can imagine. I like to jog, though, usually in Hudson River Park, along the river. I spend a lot of time playing with my kids. TC: Read anything good recently?

BL: The banking and insurance departments, if you look at them today, right before they’re merged, they both have regulatory and investigatory powers—all of those stay in the combined agency. The New York insurance superintendent is probably the most significant insurance regulator in the world. TC: Whoa.

THE CAPITOL

BL: Sometimes it makes sense to send them to federal prosecutors, sometimes to the attorney general, sometimes to the local district attorney. Sometimes you end up shopping it to all three to see who is most interested. TC: The financial services industry began to change back in 1999, with the passage of the Financial Services Modernization Act, which allowed banks and insurance companies to merge. If that had happened sooner—? BL: I think it would have helped. You know, you’re

www.nycapitolnews.com

BL: I’m a voracious reader. I’m always reading two books at one time. I just finished a book by Bill Ackman called Confidence Game. He was a really well-known hedge fund guy who took on MBIA, and really impacted the insurance department. [Former state Insurance Superintendent Eric] Dinallo’s all over the book as well. I also read a lot of spy novels, Stieg Larsson’s The Girl Who Played With Fire. Now I’m reading A Spy by Nature. TC: You don’t read while you jog, do you? BL: No. But I do, sadly, sometimes jog with my BlackBerry. JUNE 13, 2011

Published: May 26, 2011

Reject the Tax Cap

A cap in New York property taxes would devastate schools and is no substitute for leadership. Gov. Andrew Cuomo and the New York State Legislature have already adopted a state budget that drastically cuts funds to schools and local communities — cuts that were far deeper than needed to balance the budget because of Mr. Cuomo’s indefensible refusal to extend a tax surcharge on New York’s wealthiest residents. Now they want to adopt a cheap political tool — a 2 percent property tax cap — that would only further devastate communities around the state that can least afford it. Mr. Cuomo calls the proposal “a game changer.” He’s right. In the same way that Proposition 13 has ravaged California, a New York property tax cap would do huge damage to already struggling schools and the state’s long-term economic competitiveness. California’s education system was once the envy of the nation. Education Week now ranks it 46th for achievement in grades K-12, below Alabama and South Carolina. New York schools currently rank 8th. For how much longer? Not surprising, the Albany politicians and business leaders championing the tax cap don’t like to talk about California. Instead, they point to Massachusetts, which capped property taxes at 2.5 percent in 1980. It wasn’t a happy tale there, either. Communities starved of needed revenues were forced to lay off teachers, police officers and firefighters and to shut libraries and senior centers. Massachusetts schools suffered so badly that the Legislature had to pump in more and more state financing, especially to the poorer school districts. Mr. Cuomo and other backers insist that communities will still have a choice. The cap could be overridden by a vote of 60 percent of residents in the tax district. (Whatever happened to a simple democratic majority?) Wealthier taxpayers may well vote that way, especially to maintain good schools. It is far less likely to happen in the poorer districts. When New York’s politicians go on about how New York fails to draw businesses because of high taxes, even they must know that’s ridiculous. Taxes generally rank behind education, infrastructure and other criteria when businesses decide to relocate and invest. Employees and bosses want to know about the schools. Business owners want to know if there is an educated work force. No public services? Who wants to move or work there? Let’s be clear: A tax cap is nothing more than a political crutch for politicians who don’t have the courage to argue the case for more taxes or for spending cuts. Mr. Cuomo, the Legislature and local politicians have to make the tough decisions to raise revenue and wrestle down personnel costs, streamline services and rationalize costly state mandates. Property taxes in New York are undeniably high. But a tax cap is not the answer. It is an invitation to disaster.

Richard C. Iannuzzi, President Andrew Pallotta, Executive Vice President Maria Neira, Vice President Kathleen M. Donahue, Vice President Lee Cutler, Secretary-Treasurer

Representing more than 600,000 professionals in education and health care.

www.nysut.org 800 Troy-Schenectady Road, Latham, NY 12110-2455

518-213-6000

800-342-9810 n Affiliated with AFT / NEA / AFL-CIO