A look at the last few years in NYS to go forward.
Embezzling, conspiracy, extortion, mail and wire fraud, bribe solicitation, tax-evasion, intentionally soliciting illegal campaign contributions and judicial extortion payments have all been committed by New York political leaders that includes theft of honest services, bribes and kickbacks, felony and a variety of misdemeanor charges. The results involve expelling leaders from office, hefty fines, and terms of imprisonment.
Most of those in the photo collage (above) did not commit a major crime. It is everyone since 2000. Of the forty-eight state political leaders arrested from 2000 to 2018, fourteen went to prison, less than one per year. It is statistically embarrassing. It is alarming due to the expected “high-bar” of public service but not out of line with bad human behavior in general. Over 18 years, troubles with the law affected fourteen Republicans and thirty-four Democrats and that represents a third of NYS lawmakers (source listing the crimes).
Seriously, How Bad Is It?
To make a comparison I pulled arrest data by state from Table 69 from the FBI’s Uniform Crime Report program (UCR) and culled it down somewhat roughly to executive/professional collar crimes. Annually all arrests in New York State average in the area of 260,000 of which fraud and embezzlement make up about 7,000 arrests per year.
The idea that this is a “few bad apples” issue is wrong. Legislators (including staff) are hagglers in every aspect of their political lives. Those who get out of control and get caught end their careers in political life and much of their personal lives. None of us are saints, nor do we expect our political representative to be candidates for divine recognition. What I (we, people) want is an aggressive public effort in the discovery of wrongdoing whenever there is a hint of it.
The concerns of an ordinary, reasonably thoughtful citizen are focused on the growing number of new ways our leaders are corruptible in today’s political climate. The front of the line has people (corporations) who want a part of the state’s $10-14 billion in capital budget spending or a few more campaign bucks, but today that line extends around the block and back ten years to Citizen’s United vs. FEC (SCOTUS pdf).
The New York State annual operating budget is approaching $180 billion, and it will make yearly capital investments between $11 to $14 billion (2020 Report pdf). New York City’s budget is approaching $100 billion and while it is a “creature of the state” a discussion of corruption and money requires a separate review that connects the metropolitan regions of the nation to the political process embedded in public benefit corporations that cross state boundaries. NYC’s creation of the Independent Budget Office (IBO) has proven itself to be a highly effective provider of fact in this regard. The New York state legislature is considering a similar option.
Well-funded investigation divisions in the local and state offices of the Attorney General, the Election Commission, the Controller and the FBI are institutions that citizens need to believe are doing their job well and with integrity. They cannot confirm the political honesty of all the people who seek to lead, but they can “follow the money,” and that is where a network of community-based and national advocacy groups plays an essential function if unbreaking our democracy is to get some local traction.
The Office of the Attorney General led by Letitia James (D) went from New York City’s Office of Public Advocate with a budget less than $4M budget to the AG’s $230M+ statewide operating budget. Drilling down into the role this office plays in preventing political corruption is on the public’s radar. A detailed look at the AGs responsibilities and resources is ongoing.
The New York State Comptroller is the State’s chief fiscal officer ensures that New York State and local governments use taxpayer money effectively and efficiently. It is the sole trustee of the $207.4 billion New York State Common Retirement Fund. An audit released March 31, 2018, revealed the fund as one of the largest institutional investors in the world. Comptroller Thomas DiNapoli issued an audit to find out if Empire State Development had met its statutory reporting requirements and revealed that between April 2012 and September 2016, 17 programs didn’t undergo mandatory, independent evaluations, and public reports weren’t issued on 12 programs that received more than $500 million in total funding.
The New York State Board of Elections is responsible for the administration and enforcement of all laws relating to elections in New York State and operates with a budget of about $12M. Another $41M is from legislation reauthorizing the BoE obligates expired budget authority through )reapportionment. The role of BoE will also be the subject of a detailed look at NYS through the lens offered by proposed legislative changes in voting practices and campaign financing at the city and state level.
An argument for one other institutional analysis of political behavior (both APAs) or a private professional psychology or psychiatric team. As this review of NYS implies, it is not just the money, it is the power for imbalance that money represents. See the post Control vs. Balance for a look at control balance theory.
Examples Worthy of a Close Look
During policy and budget negotiations, the give and take practices of a healthy democracy are like fencing. Participants will thrust, and reprise, even produce a third intention. Another often used metaphor is if not achieved after three attempts, punt. Give the other side a try if you can get them in the game.
The most severe forms of corruption occur in the reverse of the authorized/allocated condition where funds are authorized in the sense that they will meet a need or support a project on which there is consensus, but the actors who seek the funds use a strategic means to secure the allocation. Understanding this fact is the best way to find the line in the sand that matters, it helps to separate political banter and partisanship from what is factually determined by standing authorizations and measured allocations to which the actors can be held accountable.
Since 2010 concerns regarding the economic recovery of Western New York were agreed to politically and based in Syracuse, Rochester, and Buffalo and the surrounding counties. With “we have to do something” well established, a good analysis offered by the Citizen’s Budget Commission (CBC) finds the current NYS Budget in the areas of growth, and reductions by program reasonable but points out that steps to improve transparency and accountability continues to make outcomes obscure, see (10 Billion Reasons).
The following examples illustrate corruption as an agent of change at the state level. The dangers of attacking public institutional efforts to implement reforms are critical and should not be part of political dialogue unless it is an independent evaluation of excesses and errors. The bills the legislature state Senate has offered solutions that would prevent the condition in which New Yorkers find themselves. It is your busted, “post-trauma” and catastrophic resolution policy ending in the prosecution of criminal intent. That is not good enough here are two stepping across the line questions.
When a Corporation Controls a Market
The Cor Construction Company is a mid-sized, upstate development corporation that got greedy for a guarantee. Despite the bid-fixing controversy Cor still boasts of 50 employees and many large development projects and like a business remains interested in drawing on the NYS investment in their sector of the economy and in sections of the state that need more jobs and economic development. Just outside of Syracuse, Cor built an attractive building for $15 million in state funding. The project also resulted in the discovery of significant crimes, bid fixing, and bribery by company executives involving the participation of a top aide in the governor’s office and many others.
As the dust of litigants continues to settle, the state gave the building to a nonprofit corporation created by Onondaga County for one dollar. With about $2M in additional seed funds, the project became the Greater Syracuse Soundstage (GSS). Not exactly Kaufman Studios, but it remains a capital investment that is not forgotten, it is in local hands, and the pressure to get a return on that investment the investment continues. With more local control it is likely to be successful but slow. Will the forgetful citizen of the state follow-up on this public investment? Will the GSS succeed, create jobs, become an important new institution. Who wants to follow that one, if it is you leave a reply?
When a Corporation Walks Away
The $90 million used to build the factory for the Soraa LED lighting company resulted in them leaving the deal with no penalty even though its developer was implicated in the bid fixing, bribery and wire fraud by the agent in charge of the project. Meanwhile, NYS added up to $15 million more so NexGen Power Systems, a semiconductor company, would retrofit and lease the plant, outside Syracuse. Lesson learned: in the new deal NexGen will repay $2.5 million if the company failed to create ten jobs in 2018 – it did. Another $2.5 million will be due if it fails to employ 30 people by the end of 2019. Another $2 million will be due if it fails to have 58 employees in 2020. Known as “clawbacks”, the company agrees to 290 jobs by 2024 measured in annual increments increases requiring $2M payments each of the next four years. As in the case of criminal prosecution, the practice of assuring accountability or the lack of it stands with those who hold the clocks and triggers of fact. Will these targets be met or penalties assigned, who will follow that one, if it is you leave a reply?
In these two examples, and the slow appeals process only leaves names to follow to learn if punishment is a real deterrent – these are Alain Kaloyeros, Stephen Aiello and Joseph Gerardi, (Cor) and Louis Ciminelli, (LPCiminielli) and Joseph Percoco. All of whom are appealing prison terms. Also watch for Fort Schuyler Management Corp., a corporation created by SUNY Polytechnic Institute which oversaw the corruption-tainted projects regarding all the above. It may be the reforms proposed will not occur unless the law provides its proof as a deterrent. at
When a Corporation Gets it Right
The Western part of NYS is economically depressed. Increased public spending demand falls on the shoulders of its local development agencies, and the state. In New York it is the Empire State Development Corporation (ESD) and its ten regional economic development councils. The state’s human capital investment arm is the State University of New York (SUNY) and City University of New York (CUNY) system. It also works with several community-based nonprofits partners which are asked to play a role or develop initiatives. The two examples above were obvious screw-ups that need follow-up, but to sustain trust the CEO of Empire State Development will point to the positives Howard Zemsky — Regeneron Pharmaceuticals, (3,000 jobs) for $31 million in grants and tax incentives. He will also tell you private-sector jobs continue to grow in number in NYS and he’ll give EDC credit. Should we? If you want to follow that one, leave a reply.
The ESD is a business. Of its $77M in annual operating budget (pdf) for 2020, just $9M is from NYS program specific budget appropriations, and some federal funding. The ESD runs on commercial receipts, its assets, fees and bond financing. As the NYS Controller recently observed, it may be a small agency, but its reach and economic power is considerable. Corruption can occur in an honest way, through stupid eagerness aimed at capturing fast moving capital. If the Great Recession of 2008 or the ridiculous excess of Wells Fargo and others is not a signal to this, then the world is going blind.
What Will NYS Legislators Do?
Three bills (S6613B, S3354, S3984A) to address this question are supported (see descriptions below plus a snowball). They have passed the Senate, still await the Assembly and are not codified (Article VII) as law. Briefly they: 1) create a “database of deals” on economic development, 2) establishes a unified economic development budget, and 3) reforms procurement by restoring the State Comptroller’s oversight of contracts made by SUNY and CUNY, and the state’s Office of General Services to heighten the quality of monitoring.
A unified economic development budget on the costs of all economic development programs is essential; the use of metrics for comparability across all programs would confirm benefits from private sector participation. All these steps can lead to program design improvements and the efficiency of public tax and capital expenditures.
The Senate is calling its passage ethical reforms historic. The three to pay attention to is because they do not carry the force of law yet and there is a lot more left to do. Voting reforms, and an independent redistricting agency ready to go following the 2020 census and so on.
The number of those who have strong interest in ethical reforms in the NYS legislature need to grow their numbers are few. A strategy toward “exponential” participation is needed. The question is direct. When will you know if and how any of the following reasonable ideas become law and have access to the final content? Take one step, leave a reply to subscribe.
Developing a Searchable Subsidy Database S6613B
Sponsored by Senator Croci, requires the creation of a searchable state subsidy and economic development benefits database that would benefit New Yorkers and policymakers by helping monitor the use of taxpayer money used to grow our state’s economy and create jobs. The database would include the name and location of the participant; the period of received economic development benefits; the type of benefit received; the total number of employees at all sites of a project. The number of jobs a participant is obligated to retain and create during the project is in the contract. The number of economic development benefits received for the current reporting year; and a statement of compliance indicating if any other state agency has reduced, canceled or recaptured economic development benefits from a participant.
New York State Procurement Integrity Act S3984A
Sponsored by Senator John DeFrancisco (R-C-I, Syracuse), prevents self-dealing in the government procurement process by enhancing the integrity, transparency, and accountability of the state’s procurement process. Historically, the Office of the State Comptroller (OSC) has performed this essential oversight function, but in recent years OSC’s ability to do so has been eroded by executive and legislative action. The bill, called the New York State Procurement Integrity Act, would:
- restore the state Comptroller’s independent oversight (eliminated in 2011 and 2012) of SUNY, CUNY, and OGS centralized contracts;
- expand the Comptroller’s oversight of the procurement process to include contracts over $1 million awarded by the SUNY Research Foundation; and
- prohibit state contracting through state-affiliated not-for-profit (NFP) entities unless explicitly authorized in law;
Making Economic Data Available to Help Measure Effectiveness S3354
Sponsored Senator Liz Krueger (D, Manhattan), directs the state Division of the Budget (DOB) to prepare an annual Unified Economic Development budget that outlines the aggregate amounts of state investments in economic development projects statewide, the benefactors of these investments, and the number of jobs created or retained by businesses as a result of this development assistance. The legislation also standardizes the types of information that state entities and recipients of development assistance must report to DOB.
Lastly, there is this little snowball:
Creating an Independent Budget OfficeS2325,
Sponsored by Senator Joseph Griffo (R-C-I, Rome), Creates the New York State Independent Budget Office to provide objective, non-partisan analyses of state revenues, expenditures, and management practices to members of the Legislature for any legislation with fiscal impact or at the request of a leader or a committee. Accurate, up-to-date information is a key ingredient for prudent, timely budgetary and policy decisions. At least 23 other states including California, Texas, Florida, Connecticut and Vermont have already established non-partisan budget offices to assist their legislatures.
Oddly interesting that the New York City Independent Budget Office is not mentioned in the Senate’s description. It is a very valuable independent tool.
Help to find out what it will take to get these measures passed and signed by the Governor. One more time — leave a reply.