Legislative Updates

The Riddell Group, LLC 119 Washington Ave., 2nd Flr. Albany, N.Y. 12210 Phone: (518) 434-7400/Fax: 434-0558

Memo

To:	All Clients
From:	Glenn T. Riddell
Date:	8/9/10
Re:	Weekly Client Update

2010-11 Budget – Another Extender Bill Passed

Both the Senate and Assembly passed another emergency extender bill as submitted by the Governor to keep the State operating for another week. The new extender goes from April 18th to April 25th. The extender bill produced heated discussion and debate in both Houses before it passed in both Houses. In the Assembly, the vote was 112 to 29 and in the Senate, the vote was 45 to 16. The bone of contention in both Houses had to do with Governor Paterson suspending all construction contracts that had been awarded and were underway prior to April 1st when the 2009-10 budget year ended. Republicans in both Houses argued that these construction contracts that were underway should have been excluded from the extender bills. Republican senators argued that this cost the State jobs as a result of various firms laying off workers as a result of the contract work being suspended. In fact, in the Senate, an amendment was introduced but ruled out of order that would have excluded construction contracts. However, when the final vote was taken in each House, a number of Republicans voted for the extender that the Governor submitted.

In terms of where 2010-11 budget stands, there appears to be little progress being made. There were complaints by Republicans that they are not being included in three-way negotiations involving Governor Paterson, the Senate Democratic majority and the Assembly Democratic majority. Democrats countered by saying that the Republicans did not offer anything in the way of a plan of action of their own. Republicans have come back with the argument that Democrats have stalled on starting the conference committee process that would provide for an open forum on budget negotiations to resolve differences. As it stands, the $9.2 billion deficit has not been resolved although there has been progress on reducing it nor has there been agreement on the borrowing of $2 billion as proposed by Lt. Governor Ravitch. There are also indications by the State Budget Director that the State could be seriously short of cash by this June and that the State will not be able to pay its bills due to almost $4 billion that is supposed to be paid to local school districts.

As to when conference committees will be named and when they will start and when these differences will be resolved appears, at this point, to be "up in the air". These differences include a proposal to increase $1.00 per pack increase of the tax on cigarettes bringing it to a national high of $3.75 per pack, adding one penny an ounce tax on sugary sodas, a possible tax increase on alcohol that could bump up a bottle of beer by as much as 10%, the hiking of vehicle document fees paid by new car buyers from its current $75.00 limit to as much as $175.00 from some vehicles and lastly, hiking the mortgage recording tax by an extra 20 cents for every $1,000 of the mortgage's value. Hopefully, these differences will be resolved and the process will not drag on an extended period of time as the budget is now twenty-two days late. After Wednesday's Session, both the Senate and Assembly have adjourned with the Senate subject to the call of the Leader or until Monday, whichever comes first and in the Assembly, at the call of the Speaker or Monday, whichever comes first.

DiNapoli: State Coffers Empty in June

The State General Fund may run out of cash in June and will, for the first time in history end the months of May through August with a negative cash balance, State Comptroller Tom DiNapoli said. The State ended its past fiscal year on March 31st with $2.3 billion in its General Fund after Governor Paterson delayed dispersing $2.9 billion, mostly in tax refunds and school aid. Earlier this month, the State Division of the Budget projected a negative balance in the General Fund at the end of May, June, July and August, which DiNapoli described as "unprecedented".

Attorney General Cuomo – Files State Civil Law Suit Against Senator Pedro Espada

Attorney General Andrew Cuomo sued Senate Majority Leader Pedro Espada, Jr. (D-Bronx) on Tuesday for allegedly stealing more than $14 million over a five year period from his publicly-supported not-for-profit healthcare organization known as The Southview Healthcare Network located in the Bronx. AG Cuomo alleges Espada took advantage of his powerful position to plunder millions of dollars in charitable assets for himself, his family, his friends, and his political operation. The lawsuit names Espada and 18 current and former officers and directors of the Comprehensive Community Development Corporation, and its related Southview Healthcare Network, seeking to knock out Espada and Chief Financial Officer Kenneth Brennan from the organization as well as replacing the Board of Directors. The $14 million included an unconditionally guaranteed severance package worth an estimated $9 million which was put into the contract, signed in 2005 the suit alleges and if put into effect would bankrupt Southview. Espada's annual compensation which reached $460,000 in 2007 and his hundreds of thousands of dollars in personal spending for meals, travel, vacations and campaign costs came from the Southview organization which, at the time, still owed hundreds of thousands of dollars in payroll taxes the lawsuit claims. In addition, the lawsuit claims that the funds misused by Espada included $50,000 to set up a Bronx apartment for himself in his Senate district plus a Mercedes Benz vehicle and includes $12 million received by 12 family members in the past 5 years from Southview. Pedro G. Espada, the Senator's son, who was briefly employed by the Senate received over $776,000 since 2005 from Southview. Attorney General Cuomo said he expects criminal charges will follow against the controversial lawmaker stemming from ongoing investigations into Espada's heavy-dash handed control of the community organization which he formed to provide healthcare to poor people. Senator Espada responded in a late afternoon press conference that the charges were all lies and called Attorney General Cuomo a political opportunist more interested in advancing his gubernatorial interests than protecting New Yorkers. He denied all the accusations and indicated that they won't hold up in court. Espada's attorney Susan Necheles said "there are a lot of erroneous allegations here".

Update – Feds, State Unite in Espada Raid

State and Federal investigators raided the offices of the Southview Healthcare Network, the non-profit run by Senate Majority Leader Pedro Espada, Jr., as a criminal investigation against him intensifies. FBI and IRS agents and investigators from the Office of Attorney General Andrew Cuomo entered the Bronx property just before 7:00 am Wednesday and carted away payroll and campaign materials. The action occurred one day after a State civil lawsuit claimed Espada looted millions of dollars from the operation, which received public funds. Cuomo said his office and Federal investigators are working together in an "optimum" way to conduct criminal probes against Espada. "In my opinion, this is a clear case in which he just didn't follow the law", Cuomo said during a news conference outside his Manhattan office. An Espada spokesman could not be reached for comment about the raids, but the Senator on Tuesday said Cuomo's claims were "falsehoods" and attacked his investigation as politically motivated. Cuomo rebuffed the charge. "I see it as a factual lawsuit, and I think it's a very powerful lawsuit and I think the facts speak for themselves," he said. As investigations continued there were calls for Espada to step down. Senator Martin Golden (R-Brooklyn) said he would be calling on Democrats to strip Espada of his leadership post and would introduce a resolution asking for that. Also, Senator Eric Schneiderman (D-Manhattan/Bronx) as well as Senator Craig Johnson, (D-Long Island) were also asking for Espada to step down.

Governor's High Speed Rail Director Resigns

Ann Purdue, Governor Paterson's High-Speed Rail Director announced her resignation in the wake of clashes with the administration over a sudden policy shift that has "poisoned critical talks with CSX, the railroad that owns much of New York's passenger tracks, a Department of Transportation insider has said. "She is leaving because of the lies that Governor Paterson and his Deputy for Transportation and Infrastructure, Timothy Gilchrist, have told CSX", the source said. The abrupt departure of Purdue cast doubt on the State's efforts to spend $151 million in Federal stimulus money to speed Amtrak service between New York City and Buffalo, Albany and Montreal. Her resignation came just days after U.S. Transportation Secretary Ray LaHood joined Acting State Transportation Commissioner, Stanley Gee in Rochester to boast that a high-speed rail project would save upstate's moribund economy. Purdue, who earned $125,000 per year, could not be reached for comment. A DOT spokesperson confirmed that she is leaving April 30th but when asked, could not explain why she has decided to leave. Relations between State officials and CSX were running smoothly as recently as the Fall when the State inked an agreement not to push passenger trains faster than 90 mph on tracks shared by freight. Talks unraveled in February after administration officials – over the objections of Ms. Purdue – suddenly demanded train speeds of 110 mph sources said. The DOT insider said the speed issue has "poisoned the relationship between CSX and the State. There's been virtually no movement on anything since."

OTB – Will Apparently Keep Running

OTB is back on track. After vowing to shut down by the end of business this past Monday, the OTB Corporation announced a last minute plan that will rescind the pink slips given to 1300 employees and keep betting parlors open for another year. Officials said the agency will be sitting down with the N.Y. Racing Association and other creditors to come up with a long-term plan suitable to the U.S. Bankruptcy Court, the industry and lastly and importantly, State government. The bankrupt OTB will also initiate several moves to help cut costs and boost revenue. Chairman Meyer (Sandy Frucher) said the agency will defer payment to creditors, put betting terminals in bars and cut more than half its staff within the next year. They will also cut by two-thirds the number of betting parlors it operates and push legislation to give workers an early retirement incentive. The sudden turn around triggered frustration among some who took part in negotiations involving the Legislature and Governor Paterson over the State's racing industry. "They cried poverty one week and the next week they say they can keep their doors opened for another year?" said a spokesman for the State's Senate Democratic majority. He continued "this demonstrates an overwhelming need for an honest and clear accounting of OTB's finances and operations before any more tax dollars are spent". The New York Racing Association (NYRA) is one of OTB's largest creditors and has threatened to cancel the Belmont Stakes, the third leg of the fabled Triple Crown, because of its financial woes. A NYRA spokesman had no comment on the OTB planned extension. Governor Paterson yesterday said OTB should do "whatever is legal and feasible" to stay opened. Assemblymember Gary Pretlow (D) Westchester, Chairman of the Racing and Wagering Committee said that he suspected OTB wouldn't follow through on its threat and "with this extended time announcement, I think they can now look at some real cost cutting measures to make OTB a financially viable operation," he said.

Governor Paterson – Renews Push for Wine in Grocery Stores

Governor David Paterson's proposal to allow the sale of wine in grocery stores might not be dead, according to a letter sent to all of the State's approximately 2,800 liquor stores promoting a plan for transferable "medallions" that store owners could sell or use to expand their business. Under the plan, existing liquor store owners would each get two medallions, which during the next three years, would be required to sell wine. Store owners could sell the medallions or use them to open another store. One of the selling points of this plan is that a medallion system would give liquor stores a three year period to essentially plan for the advent of supermarket sales during which they could expand or cash in on the medallions. The medallions could conceivably be worth a lot of money. At the same time that the above letter went out, a major State workers union, the Civil Service Employee Association is robo-calling members in selected Senate districts urging support of Governor Paterson's proposal. Both sides say it could generate hundreds of millions of dollars in new license fees and sales receipts.

Budget Woes – Diminished Planned Earth Day Festivities

Earth Day celebrations planned by the State for Wednesday, April 21st, are being downsized, with programs designed to educate people about bike commuting, green buildings and carbon footprints falling prey to an unusually sharp budget ax. Office of General Services Commissioner John Egan explained that the budget crisis forced him to put a hold on much of Wednesday's planned activities at the Empire State Plaza. Among the cancelled events: a tree planting ceremony using recycled compost, workshops on environmental education and home energy audits. Initially, Wednesday's events were going to educate people about the wealth of ways to save energy and reduce carbon pollution. A number of State agencies from the Dormitory Authority to the Capital District Transit Authority were to have participated in the Earth Day but due to costs to staff time involved and coordinating the various agencies, were deemed to be too high and as such, events were cancelled or have been cut back. However, not all of the Earth Day events are being cancelled as the Department of Environmental Conservation will be collecting unused pharmaceuticals for disposal and will gather unwanted sneakers, cell phones and bottle corks for recycling. Also proceeding is a demonstration of the mulch created by composting recycled food scraps and other wastes from Empire Plaza's cafeterias. Looking ahead, Commissioner Egan said OGS once again hoped to continue its summer series of concerts on the plaza, which relies on private support.

In a related story, Governor Paterson made his third consecutive appearance Tuesday at the Annual Earth Day lobby day in a not entirely successful effort to smooth ruffled feathers in the environmental community. Governor Paterson offered reassurances that his proposed steep budget cuts to parks and environmental programs were necessary because of the budget crisis. "I recognize the frustration and outrage that you feel", the Governor told a crowd of several hundred environmental advocates during a meeting at Westminster Presbyterian Church on State Street. Over the past few months, the Governor angered many environmental advocate groups with his actions, including a $90 million raid on the State's new Climate Change Program. In addition his budget plan includes closing dozens of parks across the State, freezing State land purchases and slashing more than 130 jobs at the Department of Environmental Conservation, State Office of Parks, Recreation and Historic Preservation and the Adirondack Park Agency. "These are not public policy decisions, these are cuts that are not in excess of the sacrifices that we are asking others to make," Paterson said.

Politics - New York

Comptroller DiNapoli Gains Momentum

The momentum keeps building for New York State Comptroller Tom DiNapoli on his way to a big victory in November. He earned four important endorsements in just this past week, uncovered a shocking case of fraud in the Department of Correctional Services and gained national press coverage on his stand for justice, fairness and financial propriety relating to the recent mine tragedy in West Virginia. Comptroller DiNapoli was proud to receive the endorsement of the Bronx County Democratic Committee. Bronx Chairman Carl Heastie called Tom "a true servant and advocate for the people," which are kind words from such an important ally in local and state government. Assemblymember Jeffrey Dinowitz and Councilwoman Annabell Palma also offered their support on the occasion. This endorsement came just after similar announcements from the Hamilton County Democratic Committee, the New York State Court Officers Association and the New York State Supreme Court Officers Association in just this past week.

Attorney General Andrew Cuomo – When Will He Announce?

The worst kept secret in State politics could finally be revealed next week: Attorney General Andrew Cuomo is running for Governor. A source close to Cuomo said he is likely targeting next Wednesday, April 28th, before a night time fundraiser, to make it official, although others warned nothing formal has been set. The idea is to get in the race before the State Democratic Rural Caucus, which is set to begin April 30th. Initially, he was reportedly going to make the announcement at the Black, Hispanic & Puerto Rican Caucus in February. Then he targeted late last month as a date and then there were rumblings that he was going to make his intentions known last week. It appears now that the true deadline could be the end of May since the Dems hold their State nominating convention. Cuomo has been stalling on his entry for months and as such, a growing number of Democrats want Cuomo to formally announce his election plans now rather than continuing to delay. All of the polls that have been run by Siena College show that a majority of voters want him to run and that he is the right man to "clean up the mess in Albany". Like all recent polls, the Siena survey finds Cuomo stomping all three of the potential Republican candidates for Governor by at least 35 points.

Senator Breslin Unveils Re-election Bid

State Senator Neil Breslin launched his 7th re-election campaign Wednesday night saying he is confident voters will distinguish between lawmakers who have brought scorn on the Legislature and those, like himself, working to improve New Yorkers' lives. "This won't be easy. There's a lot of discontent across this State and across this country and a lot of it is justified," Breslin told a large crowd of supporters at the Crossgates Restaurant on Washington Avenue Extension. Breslin, 67, of the Town of Bethlehem in Albany County already has two announced Democratic opponents and County Republicans are also planning to run a candidate against Breslin in the 47th Senate District which covers all of Albany County.

Former Bronx Borough President Carrion – Lt. Governor?

Indications are that former Bronx Borough President Aldolfo Carrion is bored working for the Obama Administration and is angling to return to New York politics – as Andrew Cuomo's Lt. Governor. Sources close to Carrion confirm he's been reaching out to Democratic operatives and former staffers to gauge interest in his potential comeback. So far, the only spot Carrion has expressed interest in is as a running mate with Cuomo, the presumptive Democratic Gubernatorial nominee. Sources say a win could set Carrion up to run for Mayor of New York City in 2013. Here is the catch: Carrion wants to be asked to run, sources said, not the other way around. So far, there has been no response from the Cuomo camp.