Legislative Updates
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Memo
| To: | All Clients |
| From: | Glenn T. Riddell |
| Date: | May 26, 2011 |
| Re: | Client Update |
Very interesting week in the State and in Albany. In what can only be described as a major upset for the Republican Party a Democrat, Kathy Hochul defeated Republican Jane Corwin in the 26th Congressional district. This is the first time anyone can remember a Democrat taking the overwhelmingly Republican seat (it's been over 40 years). Kathy Hochul's victory will resonate not only across the state but the country as well, her defense of Medicare catapulted her to victory.
Governor Cuomo has obtained a three way agreement on a tax cap which will have an extender that will be tied into rent regulations set to sunset on June 15th. Senate Majority Leader Dean Skelos has repeatedly said he is willing to extend the existing statute with no changes, while Governor Andrew Cuomo and Assembly Speaker Sheldon Silver are looking to improve the law for tenants.
Breaking News: E.J. McMahon, the Manhattan Institutes' respected Chief Fiscal analysts called Speaker Sheldon Silver's continued insistence on a sunset expiration date for the historic property tax relief plan a deal breaker. McMahon said he will not support the bill if they put a sunset date in it. This criticism will most likely stall the passage of this legislation.
Negotiations are still taking place in regards to a comprehensive ethics bill, pension reform and marriage equality. There are ten session days left in the 2011 legislative session.
Three – way deal for tax cap:
Senate reluctant partner as Silver shields renters, Cuomo lauds plan. Gov. Cuomo gave new meaning to "cap-and-trade" yesterday as he secured a historic agreement on a sweeping cap on upstate and suburban property taxes linked to the renewal of the city's soon-to-expire rent laws.
The first-ever tax cap would limit property-tax hikes for schools and local government to 2 percent annually, with some limited exceptions, preserving much of a proposal that Cuomo made a focal point of his first five months in office.
Cuomo hailed the legislation -- unexpectedly advanced by Assembly Speaker Sheldon Silver (D-Manhattan), a onetime cap foe -- as an economic breakthrough for a state that has hemorrhaged millions of residents as its property taxes ballooned to the highest in the nation.
"This agreement is a big deal," Cuomo said at a news conference with business groups that for years had pushed for a cap. "When you put the budget together with the property-tax cap in this state, it is going to be a game changer."
The Cuomo-Silver deal would limit annual tax hikes to 2 percent or the rate of inflation, whichever is less. But it would allow some exceptions for residential growth and soaring public pension costs, bringing the average hike next year to just under 3 percent.
The deal reached yesterday would forever link the existence of the tax cap, which affects more conservative upstate and suburban communities, to continued renewal of rent regulations for roughly 1 million apartments in the liberal stronghold of New York City.
"These two are inextricably linked in terms of passage in the next three weeks," Silver said. "The philosophies are the same. Both of these are designed to give people an idea where their costs are going and to keep it affordable for them to continue to live in their homes."
The political play puts pressure on Senate Majority Leader Dean Skelos (R-Nassau) to strike a deal to extend the decades-old "emergency" rent regulations before they expire June 15.
While all agree the tenant protections should survive, Silver wants to bolster the regulations to keep more apartments in the program. Skelos prefers only a simple renewal. Debate will now turn on how long the rent law should last because it would be linked to the cap.
Silver's tax-cap announcement followed by Cuomo's endorsement appeared to catch Skelos off guard.
The Senate chief conspicuously refused to endorse the plan at the news conference, repeatedly saying, "We are going to have a property-tax cap, and we will have rent regulations extended before the end of session."
A source close to Cuomo said Skelos had been refusing to commit to the cap despite his long-held public support.
"Cuomo got tired of waiting for Skelos to say where he stood on a real cap, so he outfoxed him and then boxed him," the source said.
The bill was panned by the AFL-CIO, teachers unions and others dependent on local taxes. It was praised by virtually all business groups.
Opposition to proposed tax cap:
Lt. Gov. Robert Duffy had a message for local mayors who have expressed concerns about having to cope with a 2 percent tax cap in addition to no relief from mandates, the many laws and requirements that the Governor and Legislature foist on localities.
At the annual Conference of Mayor convention, the former mayor of Rochester, Lieutenant Governor Duffy discussed how he has been in their shoes. He recalled how in 2007 the Legislature and Gov. Eliot Spitzer ordered his city to devote 73 percent of its tax levy to schools, leaving a scant 27 percent for police and fire, parks, roads and the other city functions.
Duffy told the annual Conference of Mayors convention that it was the kind of mandate that constrains the way municipalities and local school systems operate. While much of the talk concerning mandates centers on rules that govern bargaining with public employee unions or services counties must fund -- such as Medicaid -- there are other demands such as Rochester's school allocation, known as Maintenance of Effort.
Throughout the tax cap debate, mayors, school board officials and others have said tax limits will put them in a bind if they have to fund mandates. Many local leaders have argued mandates should be addressed before a cap is imposed. But Duffy repeated Gov. Andrew Cuomo's case that a cap is necessary to create urgency about mandate relief.
"I'm going to look you right in the eye and say the tax cap had to come first," he said. "There has to be a stake in the ground."
Conversely, he argued that achieving mandate relief without a cap removes the motivation to save money. When Duffy was ordered to send almost three-quarters of Rochester's property tax levy to the schools, education officials had less pressure to seek savings. "There was no motivation as long as they had a certain amount of money coming in," he said.
If containing taxes was a matter of reducing a multiplicity of complex mandates without the hammer of a cap, "We'd talk about this for the next four or five years," he said.
Cuomo and legislative leaders said Tuesday they had reached conceptual agreement on a bill that would, with some exceptions, place a 2 percent cap on the amount local governments -- ranging from cities to schools to counties -- can increase the tax levy each year.
Proposed legislation won't affect campaign finance:
Negotiators say ethics package doesn't include enforcement language. A pending ethics bill will do nothing to beef up enforcement of the state's campaign finance laws, according to people involved in negotiating the legislation.
Good-government advocates say New York's campaign finance laws are lax and the state's Board of Elections has done little to crack down against even serial violators like ex-Sen. Pedro Espada Jr. The Bronx Democrat -- now indicted on unrelated federal charges -- repeatedly failed to disclose his donors or expenditures and ignored fines for doing so.
But negotiators working in private to draft legislation that is acceptable to Gov. Andrew Cuomo and legislative leaders have instead focused on forcing legislators to disclose outside income, and the question of who will make up a new enforcement panel.
Individuals and corporations are limited in the amount they can contribute to candidates, who are required to report spending twice a year and in the run-up to primaries and general elections.
In any campaign cycle, the board is responsible for dealing with over 3,100 active candidates. According to Bill Mahoney of the New York Public Interest Research Group, regular attrition combined with a hiring freeze means there are currently just two staffers at the State Board of Elections examining the filings, alongside other responsibilities.
The Board of Elections consists of two Republican and two Democratic commissioners. Because a majority of the board must vote to begin an investigation, partisan deadlocks often lead to inaction. An ethics bill that passed the Legislature in 2010 -- and was vetoed by then-Gov. David Paterson -- would have allowed an investigation to proceed despite a tie vote, and would have appropriated more money for enforcement.
Sen. Daniel Squadron, a Democrat who represents Manhattan and Brooklyn, recently hosted an ethics forum. In that session, he said, "campaign finance reform came up again and again as a fundamental part of ethics reform."
But Assembly Speaker Sheldon Silver, D-Manhattan, said last week that campaign finance was not on the table in the bill, an assertion confirmed by Sen. Andrew Lanza, a Staten Island Republican who chairs his chamber's Ethics Committee. Silver and other Assembly Democrats support public financing of campaigns, which is anathema to many Republicans.
Cuomo wrote in one of his campaign books that the powers of the Board of Election are "limited" and must be expanded. In a statement, his spokesman Josh Vlasto said the governor "is seeking to reform the state's ethics laws and expects to work with the Legislature to ensure that those laws remain both strong and, at the same time, targeted to address the ethical problems at issue."
Governor Cuomo and Mayor Bloomberg work on sweeping pension reforms:
The retirement age for city workers would be jacked up to 65 and new hires would be forced to pay more for their pension plans under sweeping reforms backed by Gov. Cuomo.
Bloomberg has agreed to modify a proposal for new hires he put out in February to conform with the Governor's so-called Tier 6 plan. Until now, there was some question as to whether the Albany reforms would extend to the city's powerful municipal unions - the Tier 5 changes in 2009 exempted city workers.
The Governor wants the Legislature to agree to set a retirement age of 65 for new hires, end early retirement and take overtime out of the pension calculation to prevent what's known as "padding" or "spiking." He also wants union workers to contribute twice as much to their retirement.
The city, along with other municipalities, has long complained that funding pensions for retirees is a crushing taxpayer burden that can't be sustained as is. While changing the system for future hires won't address the current issue, proponents say it's crucial in the long term.
In 2009, the Legislature, under then-Gov. David Paterson, enacted a Tier 5 reform that exempted city workers. That plan was to save $38 billion over 30 years. Cuomo says his plan would save $93 billion over the same span.
"The mayor has made it clear that the governor assured him the city would be included in the reform bill," said Bloomberg spokesman Marc La Vorgna.
He "has been working with the governor on reining in pension costs, and looks forward to continuing to do so," La Vorgna said.
Bloomberg's February proposal, seen by some in the labor community as more aggressive than the governor's program, enraged union leaders such as Harry Nespoli of the Municipal Labor Committee.
"The mayor just set back labor relations 40 years," Nespoli said at the time. "We're fed up with this. [He's] going to have a battle. We're not just going to roll over."
The push for wine sales is on again:
The lines are well-formed, but once again, some state legislators are pushing a bill that would legalize the sale of wine in grocery stores. At a roundtable convened Monday by the measure's legislative sponsors -- Sen. Tom O'Mara, R-Big Flats, and
Assemblyman Joe Morelle, D-Rochester -- the vice chairman of Wegmans supermarkets argued with an East Greenbush liquor store owner about the bill. Representatives from the Business Council and Farm Bureau have endorsed the legislation, which they argued would stimulate growth among New York's wineries.
Paul Speranza, vice chair of Rochester-based Wegmans, said it would create over 250 "meaningful" jobs if his stores could sell wine.
"For years, the opposition has refused to come to the table," he charged. "Why is it fair that one group is not hurt and all of these other groups are hurt? Citizens of this state are treated equally, or should be treated equally."
The bill (A.7659/S.5338) would generate quick cash for the state by charging licensing fees for stores that hope to sell wine -- as much as $350 million, Morelle estimated. Speranza cited a grocer-funded study saying 6,000 jobs would be created if the wine sales were legalized, but it's unclear how that might be offset by potential job losses at liquor stores.
"The majority of liquor stores will be severely hurt by this," said Beth Leonelli-Endres, owner of Vineyards Wine & Spirit on Routes 9 and 20. "The wine is what pays my rent ... liquor is there for customer convenience."
She is affiliated with a coalition of liquor-store owners that has for years blocked the legislation, arguing its members have located and developed their businesses based on an economic model that lets them sell only wine and liquor but makes them are the sole place consumers can buy the products. To change the law now would result in the closure of small businesses, Leonelli-Endres argued.
Proposed Legislation could boost fees for mal practice attorneys:
A package of bills moving through Albany could mean big paydays for medical-malpractice attorneys -- proving the case for greater ethics disclosure among the state's elected officials, good-government advocates say.
The legislation, backed by lawmakers who moonlight as attorneys, would include increasing lawyers' fees on malpractice cases and extending the cutoff date for filing suit.
One such bill, which could pass a key Assembly committee as soon as today, would block defendant hospitals from conducting informal interviews with doctors who treat malpractice claimants.
Hospital officials contend the bill sponsored by Assemblyman Rory Lancman (D-Queens) and Sen. John DeFrancisco (R-Syracuse) -- both practicing trial lawyers -- would make it harder for hospitals to defend themselves and would increase the state's $1.6 billion malpractice-insurance bill by $80 million.
The legislation moves ahead as Gov. Cuomo attempts to control malpractice-insurance costs and require legislators to detail their outside income and clients. The bill passed the Senate's Judiciary Committee last week and is due before the Assembly Codes Committee today.
"It is very much a concern -- it's one of the reasons why I think we need to have much better disclosure laws," said Susan Lerner of Common Cause-NY. "You have to know whether a legislator is serving the public interest and not their own personal interest with bills that touch on their particular occupation."
Legislators who moonlight as attorneys have long provided a flashpoint in the state Capitol's ethics debate.
Senate Majority Leader Dean Skelos (R-Nassau) and Assembly Speaker Sheldon Silver (D-Manhattan) -- a frequent foe of tort reform -- both report lucrative side jobs with powerful law firms, but don't under current law have to disclose any clients or what they make.
Lancman and DeFrancisco insist their bill poses no conflict because they wouldn't gain personally from its passage. Both say they would support only disclosing clients with direct business before the state.
"I don't think this kind of legislation indicates that you need to know that I represent Mrs. McGillicuddy in her slip-and-fall case," Lancman said. "The issue of ethics has to do with conflict. There's not conflict there."
Benjamin Lawsky unanimously confirmed as Superintendent of the Department of Financial Services:
Governor Andrew M. Cuomo today announced that the State Senate unanimously confirmed Benjamin M. Lawsky as the Superintendent of the Department of Financial Services (DFS).
Mr. Lawsky is currently the Governor's Chief of Staff. He previously served as the Deputy Counselor and Special Assistant throughout the administration of then-Attorney General Cuomo.
Prior to that, Mr. Lawsky spent more than five years as an Assistant United States Attorney in the Southern District of New York, where he prosecuted securities fraud, organized crime, and terrorism cases. Previous to that, Mr. Lawsky served as Chief Counsel to Senator Charles Schumer on the Senate Judiciary Committee and as a Trial Attorney in the Civil Division of the Department of Justice.
Governor Cuomo created the Department of Financial Services (DFS) by merging the New York State Banking Department and the New York State Department of Insurance as part of the 2011-12 Budget. The DFS is designed to better regulate modern financial services organizations. By combining the Banking and Insurance Departments into a unified financial regulator, the new Department of Financial Services will be a more efficient, modern, and comprehensive regulator of the financial sector.
Democrat seizes House seat in 26th District with outcome carrying national impact:
Kathleen Courtney Hochul, the Erie County clerk and longtime Democratic figure who defied political experts who had given her little chance of success, ground out a stunning and surprisingly comfortable victory Tuesday in the special election for the House seat in the predominantly Republican 26th Congressional District.
Hochul defeated Republican Jane L. Corwin, a Clarence assemblywoman, 47 percent to 43 percent, with 97 percent of election districts reporting, while the Tea Party's Jack Davis mustered only 9 percent in his fourth try for the seat. Ian L. Murphy of the Green Party recorded 1 percent, while overall turnout was about 25 percent.
The results marked a stunning defeat for the GOP in a contest that garnered intense national attention as the first competitive race following the Republican takeover of the House in last November's elections. And as a jubilant Hochul took the stage at her headquarters at the UAW Hall in Amherst at about 10:30 p.m., she reminded supporters about the core of her campaign — controversial proposals by the GOP to revamp Medicare.
"We had the issues on our side," Hochul said. "We can balance the budget the right way and not on the backs of our seniors.
"It's the future seniors they went after," she added. "They didn't like that, did they?"
And her victory was duly noted in statements by President Obama and Vice President Biden.
"I want to extend my congratulations to Congresswoman-elect Kathy Hochul for her victory in New York's 26th Congressional District. Kathy and I both believe that we need to create jobs, grow our economy and reduce the deficit in order to out-compete other nations and win the future," the president said.
"Kathy has shown, through her victory and throughout her career, that she will fight for the families and businesses in Western New York, and I look forward to working with her when she gets to Washington."
Biden called to congratulate Hochul, the vice president's office said, adding that he and Hochul would meet for a discussion soon.
All of us at The Riddell Group would like to wish you and your family an enjoyable and safe Memorial Day weekend. Please take the time to remember those who made the ultimate sacrifice for the freedoms we enjoy. We also ask that you remember the men and women who serve in combat around the world.
Glenn, Stephanie, Michael, Tracy