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 – 36 Days Late and Counting

Update on Furlough Proposal

Indications are that Governor David Paterson will move ahead with a plan to put roughly 100,000 unionized State employees on a one-day-a week unpaid furlough starting the week of May 17th and continuing until a 2010-11 budget is passed. "I have decided that I will include the furloughs in next week's emergency appropriation bill," Governor Paterson said Tuesday after addressing members of District Council 37 which represents municipal workers. The Governor said the action which is certain to face a legal challenge from unions, was necessitated by the State's looming cash crisis and the unwillingness of public workers' unions to agree to $250 million in concessions. State workers are irate at the idea that the failure of the Governor and legislative leaders to hammer out a budget – process State workers have no control over – will likely result in a loss of at least one day's pay. The Governor has indicated that the furlough is expected to save the State about $30 million each week while it is in force. The furlough plan's inclusion in next week's budget extender will likely force lawmakers to go along with the plan or risk triggering a shut-down of State government. Since the April 1st budget deadline passed, Governor Paterson has been offering bare-bones appropriation bills which keep the State operating on a week-to-week basis until the full 2010-11 budget is passed. These appropriations can only be approved or disapproved by lawmakers, not altered. If they turn it down, they would be voting to cut off the flow of funds for virtually all State operations.

State legislators admitted yesterday they'd bow to Governor Paterson's push for worker furloughs – rather than shut the government down in protest. Assembly Speaker Sheldon Silver and Senate Democratic Conference Leader, John Sampson, insisted they disagree with Governor Paterson's furlough plan but conceded they're not prepared to shutter government for the first time in State history. Senator Sampson said he hopes the final deal on the budget, which is now 36 days late, can be reached before the furloughs would go into effect on May 17th. Assembly Speaker Silver said the possibility of furloughs doesn't add extra pressure on the Assembly because he believes the courts will rule they are illegal.

Early Retirement Incentive

As an inducement to accept the furlough proposal, the Governor is proposing a bill designed to ease more State workers off the payroll through an early retirement incentive in the coming months. Both measures – the furlough and early retirement – would need legislative approval. In broad terms, the early incentive retirement plan would allow people to retire at age 55 with 25 years of service without being penalized. The standard public employee plan allows full retirements at age 55 with 30 years of service, although police and fire departments typically allow employees to leave after 20 years. The Governor's proposal also has a provision for an extra month's credit for each year worked which would enhance pensions and prompt others to retire. Managers and individual agencies would have to approve the retirements and they would mostly go to positions that can be eliminated. The proposed legislation by the Governor also says targeted positions could be those that other employees can transfer in to avoid layoffs.

Furlough – Still a Plan in Progress

It's 12 days before the start of what will be an unprecedented furlough of some 100,000 State employees and plenty of unanswered questions remain. In fact, the only sure thing at this point may be the lawmakers – especially in the closely divided Senate – are serious stuck on finalizing the 2010-11 budget. With each passing day, it looks more and more likely that Governor David Paterson will push ahead with his plans for a 1-day-a-week furlough, starting May 17th and continuing until the budget is completed. However, Paterson offered a potential out on Wednesday of this week, saying that State employees could avert a furlough by accepting a five-day pay lag or agreement to collect a week's pay when they leave State service rather than now. The idea was roundly rejected by unions who noted the pay of members is already lagged thanks to an earlier budget crisis. Those that would be exempted from the furlough involve jobs that impact public safety or health. That means prison guards, State Troopers on road patrol, and workers in institutions such as those for the disabled who will likely escape furloughs. Also, persons in Management/Confidential positions who have not gotten a pay raise in the last several years will also be exempt from the furlough. The furlough will affect the Executive branch but not the Judicial, which includes the Unified Court system, nor the legislature. In terms of temporary workers, which the State has spent $62 million on over the past two years, will also be exempt.

Governor Paterson's furlough plans renewed criticism by unions and heightened frustration by State workers who have faced a delay of their contractual 4% raises due to the lack of a budget. Governor Paterson has asked major unions to return to the bargaining table and give up the raises due to the State's $9.2 billion budget deficit. So far, the unions have refused.

The Governor "is mistaken on his belief that creating more chaos and crisis is leadership," said Daniel Donohue, President of the Civil Service Employees Association, which along with the Public Employees Federation is one of the two major unions that would be affected by the furlough. PEF has been calling legislative members to urge them to vote against any measure that includes a furlough.

Senate Passes Charter Reform Bill

The Democratic controlled State Senate passed legislation this week to more than double the number of charter schools by raising the State cap from 200 to 460. This vote immediately infuriated teacher-union officials who declared war against the lawmakers who voted for the bill. The measure was approved by a vote of 45 to 15 with New York City Senators voting 17 to 8 in favor of the measure. The legislation pushed by Senate Democratic Conference Leader John Sampson of Brooklyn results in New York City gaining about 115 schools. The legislation must now be approved by the Assembly and, of course, signed by Governor Paterson before the City can compete for up to $700 million in the Federal program called "Race To The Top" funds. Senators who backed the bill said it was important to side with parents and kids, despite union objections. The mood in the State Capitol was very tense before the vote. There was quite a debate in the Senate as objections were raised by the teachers' unions and stated that the bill did not ban for-profit firms from managing charters. Senate President Malcolm Smith (D-Queens) blasted the unions for blitzing Senators with phone calls and threatening to withdraw support or oppose their re-election. Glum teachers-union lobbyists handed Senators memos of opposition from the 2 million member New York State AFL-CIO, AFSCSME and the Civil Service Employees Association. The message was clear: bucking the teachers meant bucking the entire labor movement. A spokesman for Assembly Speaker Sheldon Silver, who has close relations with the teachers' unions, would say only that the bill will get a hearing by the Assembly Education Committee. However, Assembly Speaker Sheldon Silver reacted coolly to increasing the number of charter schools and mocked the State Senate's lightening passage of a pro-charter school bill. "We will take a look at it. It was printed in the middle of Friday night. It passed. The ink was still wet on it, when it dries, we'll be able to read it," Silver said. Other key Assembly Democrats said they will not lift the cap on charter schools without stricter conditions on operations of the publicly funded, privately managed schools, including restricting their ability to share building space with traditional public schools. They also wanted to prevent charters from saturating neighborhoods and banning for-profit firms from running charters which is the key objection of the teachers unions.

Comptroller: State Overpays for Medicaid

The State Medicaid program overpaid hospitals $150 million according to audits released this past Monday by the State Comptroller's office. State Comptroller Thomas DiNapoli blamed the payments on "pervasive problems" with the State Department of Health's billing system and policies. In one case, the State paid an Ohio hospital $1.5 million for a bone marrow transplant that should have cost $117,000 the audit said. The Comptroller estimates that Medicaid overpaid out-of-state hospitals $21 million dating back to 2002 because the DOH was using out-of-date reimbursement information. State regulations require Medicaid to pay the lowest possible reimbursement rate on claims filed by out-of-state hospitals on behalf of New York Medicaid patients. The lowest payment is chosen from the hospital's usual rate, the Medicare rate, the rate charged by the Medicaid program in the hospital's own State and the N.Y.S. Medicaid rate. Auditors found that before November, 2009, New York was using the rate charged by the hospital's home State, but in many cases, those rates were old and inaccurate. "It's outrageous that out-of-state hospitals can cash in on New York's Medicaid recipients because New York is relying on outdated information", DiNapoli said. The DOH told auditors that as of November, 2009, out-of-state hospitals will be charged the New York Medicaid rate but DiNapoli recommended that DOH use the lowest rate possible and require prior approval for non-emergency services.

Senate/Assembly Reject Re-Districting Reform

State Democratic legislative leaders refused Wednesday to back a proposal to end what critics call gerrymandering of election districts that protects majority power at the heart of Albany's dysfunction. Democratic leaders of the Assembly and Senate said they would improve the current process in which the majorities redraw election district lines in their own house, but would not give up the power to an independent, non-partisan commission. Overhauling the long-maligned redistricting process now controlled by Senate and Assembly Majority Leaders, would threaten the considerable perks and power of the majorities over resources, legislation and State spending. A gerrymandered district can insure an incumbent has a voter enrollment advantage. Senate Democratic leader John Sampson was one of the first speakers at this Wednesday's "Albany on the Record", a public forum held by the New York Public Interest Research Group and other civil organizations. He said he knew they wanted him to promise he would support an independent redistricting commission. But he said he couldn't. Assembly Democratic Speaker Sheldon Silver committed to change the process to make races more competitive but not by creating an independent commission to do a redistricting which happens every ten years. In a rare window on the internal process, Governor Paterson, for 20 years a Senator, said at the forum that districts are redrawn not just for politics, but also for punishment. He urged his fellow Democrats to embrace an independent, apolitical process to redraw districts.

State Ethics Bill Mirrors Federal Law

Manhattan District Attorney Cyrus Vance stood beside State Senator Eric Schneiderman and a group of Senators to unveil yet another piece of legislation to beef up New York's ethics laws. The bill would require public officials to bide by a "duty of faithful public service" – a broad and hopefully less onerous standard for prosecutors to enforce – as well as tightening laws against bribing a public official. The new language is similar to the Federal "honest services" language which led to the conviction last year of former Senate Majority Leader Joe Bruno (R-Brunswick). But the new language is more narrowly construed than the Federal statute which is under constitutional challenge before the U.S. Supreme Court. Legislators feel that this bill is a necessary tool to add to prosecutor's war chest as legislators say "bad apples" have fueled an overall perception of corruption. Senator Schneiderman, a candidate for Attorney General, said the new law will not affect or deter investigations by Federal officials or the Office of Attorney General. The bill would not expand resources afforded by local District Attorneys as their authority expands, and it is unclear how zealously District Attorneys might use the newly afforded powers.

Politics – New York

Attorney General's Race Heats Up

Assembly Speaker Sheldon Silver, considered the most powerful Democrat in State government, said he supports Assemblymember Richard Brodsky of Westchester County to be the State's next Attorney General. Silver said Brodsky knows how to solve problems and build coalitions. "I'm proud of the way Richard has taken on difficult and controversial matters, and changed the outcomes. We can elect Statewide leaders who know how to build coalitions and fix problems" Silver said.

The Democratic Rural Conference this past week backed former State Insurance Department Superintendent, Eric Dinallo, in a straw poll for the Post over Nassau County District Attorney Kathleen Rice, former prosecutor Sean Coffey, Assemblymember Brodsky and State Senator Eric Schneiderman. Senate Democratic Leader John Sampson has endorsed Senator Eric Schneiderman. Kathleen Rice may be getting closer to receiving the endorsement from the Brooklyn and Queens County parties. Newspaper articles suggest that Attorney General Andrew Cuomo may be quietly supporting her candidacy. With the Democratic Convention only two weeks away, that will determine how many candidates get on the ballot for Attorney General. Republicans have not settled on a candidate.