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 State Budget – Update – 111 Days and Counting

As previously indicated to you, both the Senate and Assembly have adjourned and in the Senate they are at the call of the President Pro Tem and in the Assembly, at the call of the Speaker. There is no scheduled Session this week and indications are that it could be the same for next week. While the Assembly did pass the Revenue bill, which includes over $1 billion in taxes, the Senate left town without doing it which means that they will have to come back and resolve the matter. Also, there is the issue of the Article VII bill which implements the education, labor and family assistance budget which the Governor has not signed. As it stands now, the Governor's proposed budget is at $135.7 billion and until the matter of the Revenue bill and the Article VII bill are resolved, the budget is not complete.

Governor Paterson Moves To Call Special Session

Governor David Paterson escalated his feud with State lawmakers this morning and set the stage for another yet-to-be-scheduled Special Session on the budget according to reports from the State Capitol. When Governor Paterson called the Legislature back to Albany in June to deal with the budget, lawmakers entered the Assembly and Senate chambers but took no action and quickly gaveled out. "It is clear to me that this legislature would rather play parliamentary games than finish a budget that is 15 weeks late due to their inaction – I cannot and will not allow politics to triumph over leadership in the most critical of times for our State," Governor Paterson said in a prepared statement. However, Governor Paterson did not specify a date on which he would call the Legislature back into Special Session. A spokesman for the Senate Majority scoffed at Governor Paterson's latest move and revealed that Senate Democratic Leader John Sampson and Assembly Speaker Sheldon Silver are meeting in Manhattan today to discuss the budget. According to Senate spokesman Austin Shafran, "the Senate and Assembly are meeting themselves because the Governor says he refuses to negotiate. If he changes his position, the Senate would be happy to meet with him anywhere, anytime, to discuss closing down the budget. The legislative leaders are working to resolve outstanding budget issues and the Senate hopes to see engagement by the Chief Executive in some form other than a press release."

Comptroller Tom DiNapoli Issues Critical Report on State Budget

State Government ended the quarter in deficit for only the 2nd time in modern history last month and could go broke again before the Summer is over, State Comptroller Thomas DiNapoli warned yesterday. The State's General Fund ended in June more than $87 million short despite improved tax collections, DiNapoli said in his monthly Cash Report. The Comptroller traced the gap to the Legislature's failure to pass a complete budget and Governor Paterson's decision to carry $2.9 billion in delayed payments into this fiscal year. The Comptroller was also very critical of the budget for a number of reasons, indicating that the proposals contained in it are based on "risky" or overly optimistic projections which are made up of more than half or $4.8 billion of the Legislature's efforts to close an estimated $9.2 billion budget gap this year. The Comptroller also noted that the budget raises spending by more than 4.2%, more than twice the rate of inflation. There are a number of other proposals contained in the budget that the Comptroller takes issue with. There is the $1.1 billion in Federal Medicaid money that leaders in the US Senate have repeatedly tried and failed to push through. The budget plan could unravel if Congress does not reverse its decision to eliminate the $1.1 billion Federal Medicaid payment, DiNapoli said. Another hole could open if the State again fails to collect a $300 million licensing fee from a planned casino at Aqueduct Racetrack in Queens. Then too, the budget passed by lawmakers two weeks ago also includes $500 million in workforce savings – double the amount proposed by Governor Paterson – even though public-employee unions have so far resisted any concessions. The budget also counts on $440 million in cigarette taxes that Indian retailers absolutely owe the State but have refused to pay for decades. The last time officials made a real attempt to collect this money, Indian tribe members threw burning tires on the New York State Thruway near Buffalo – and the State backed down.

Whether or not the Comptroller is correct in his questioning of the proposals – only time will tell.

Governor Signs Controversial Bill

Governor Paterson signed legislation last Friday eliminating the data base of information about people stopped and released by the police, saying it was "not a policy for a Democracy". As a result, the NYPD can no longer maintain its controversial stop-and-frisk database of innocent New Yorkers, a blow to city leaders who say it was vital to combating crime. NYC Police Commissioner Ray Kelly made no statement about the signing but earlier in the week predicted that killers and other criminals would remain free longer if the Governor signed the bill, which he did. While still calling the law a victory for criminals, some at the NYPD said street cops and detectives see the loss of the database as an obstacle they can overcome.

Governor's Legal Bill - $700,000

Indications are that Governor Paterson has spent approximately $700,000 in campaign funds to pay his lawyers to fend off a pair of official probes by the Attorney General's office. The legal fees went to Theodore Wells of Paul, Weiss, Rifkind, Wharton and Garrison, a top lawyer for white collar clients. Indications are that the Governor is dealing with three separate probes by law enforcement agencies. In one, Governor Paterson is accused of trying to intervene in the case of senior staffer David Johnson after Johnson allegedly assaulted his girlfriend. In a second ethics case, Governor Paterson is accused of improperly soliciting $6,000 worth of free World Series tickets from the Yankees and then lying about it under oath to investigators. Finally, Federal and State investigators also are probing the awarding of a casino contract at Aqueduct to a consortium that included politically connected friends of Governor Paterson.

Politics New York

Democratic Gubernatorial candidate Andy Cuomo reported raising a whopping $9.2 million over the last six months while spending only $1.7 million. The massive fundraising effort left Attorney General Cuomo with a record $23.6 million in cash on hand, nearly beating the previous July high of $23.4 million that former Governor George Pataki had in July of 2002. Cuomo already had $16 million in his war chest at the start of the year. The Attorney General downplayed his campaign cash indicating that, "it's enough money to run an effective campaign". The show of fundraising strength came the same date as a new Siena College poll shows Cuomo continuing to trounce the two Republicans vying to face him. Meanwhile, GOP gubernatorial designee Rick Lazio reported having a shockingly low campaign kitty of just $688,822 – which is almost $23 million less than the war chest of his Democratic foe. Lazio reported raising just $1.5 million in the last six months while spending heavily on political consultants and travel across the State. In addition, Lazio faces a likely Primary from upstate businessman Carl Paladino who has promised to spend up to $10 million of his own money on the race for Governor.