ALBANY UPDATE - By Thomas Faist

January 11, 2010

Governor David Paterson delivered his second State of the State Message entitled "A Time to Rebuild" to a Joint Session of the Legislature and Judiciary on Wednesday, January 6, marking the ceremonial start of the 2010 Regular Legislative Session.

It was a solemn, forceful delivery that began without any introductions or niceties, hardly punctuated by applause at any juncture. The speech was about 30-minutes in duration, flawlessly delivered entirely from memory by the vision-impaired Governor. Paterson laid out a bleak year for the Empire State due to the continuing economic recession and its negative effects upon state revenues. The Governor lambasted the Legislature and Special Interest groups for not making the tough choices that would benefit all New Yorkers, stating:

"This is the winter of reckoning for New York. Cultures of addiction to spending, power or approval have doomed empires, and they now threaten the Empire State."

Paterson then cited some lofty goals for 2010:

FISCAL REFORMS
- Real and lasting cuts to the State's bureaucracy by consolidating state agencies
- Replace outside IT consultants with state employees
- Lt. Gov. Richard Ravitch appointed to develop a 4-Year Fiscal Recovery Plan
- State Spending Cap and real property tax circuit breaker
- Limit State Operating Funds growth to average rate of inflation for 3 prior years

ETHICS REFORMS - The Reform Albany Act
Governor Paterson asserts: "The corrosive effects of outside influence and inside decay have bred cynicism and scorn from the people of New York. Special interests expect others to shoulder the burdens that they are unwilling to bear, and expect special treatment with no regard for the welfare of others."

This is in the wake of a number of high profile, criminal corruption convictions in the last few years, which saw the downfall of former Senate Majority Leader Joseph Bruno, former State Comptroller Alan Hevesi, and a score of other state legislators and executive branch officials.

The Reform Albany Act would:
- Replace the Commission on Public Integrity with a single, independent State Government Ethics Commission - merit selected by a 10-member designating panel modeled upon the Commission on Judicial Nomination
- The new Ethics Commission would oversee all branches of state government, including financial disclosure, lobbying, campaign finance and open meetings
- Require state officers, including legislators, to disclose all outside business & consulting activities
- Require state officers & lobbyists to disclose all business links between such state officers and lobbyists, vendors & contractors
- Require state officers to disclose all outside consulting, professional or legal fees and clients, with case-by-case exceptions to be issued by the Commission
- Enhanced lobbyist reporting on grants, loans & public funds disbursements and appearances before state agencies & public authorities
- Expand prohibition on lobbyists' contingent retainers, success fees or bonus payments
- Establish "pay-to-play" ban on placement agents for State & NYC Comptrollers
- Empower Attorney General to enforce enhanced civil & criminal penalties, upon referral by the Commission

CAMPAIGN FINANCE REFORM
- Ban corporate campaign contributions, including LLCs & LLPs
- Reduce maximum campaign contributions to $1,000.00
- Restrict lobbyists' campaign contributions to $250.00
- Phase-in public financing of campaigns by 2014 with a four-for-one (4:1) match
- Impose limits on contributions to campaign "housekeeping accounts"

POLITICAL TERM LIMITS
- Limit State Senate & Assembly to six two-year terms
- Limit Statewide Officers to two, four-year terms

STATE COMPTROLLER SOLE TRUSTEE OF STATE PENSION
- Replace the State Comptroller as sole trustee of the Common Retirement Fund with a 5-member Employee Retirement System Board of Trustees

It is unclear if the Reform Albany Act will find any traction in the State Legislature, which is reportedly close to agreeing on a less sweeping ethics reform package of its own.
One area sure to be controversial is the disclosure of legal clients by attorney members of the Legislature, which Attorney General Andrew Cuomo has indicated may be problematical as a violation of legal confidentiality requirements.

This would directly impact Assembly Speaker Sheldon Silver (D-Manhattan), who is "Of Counsel" to the personal injury law firm Weitz & Luxenburg, as well as Senate Democratic Conference Leader John Sampson (D-Brooklyn), who was recently designated "Of Counsel" to Belluck & Fox, an asbestos litigation firm.

Both of these law firms have partners that serve on the Board of the NYS Trial Lawyers Association.

ECONOMIC DEVELOPMENT & JOB CREATION
- Replace the Empire Zones Program with the Excelsior Jobs Program, a "New Economy" program targeting incentives on high tech and clean energy growth jobs
- R&D tax credits to support innovation
- Enhanced investment tax credits to support capital investment
- New jobs incentive payroll tax credits for new manufacturing, high tech, biotech, clean tech, & finance jobs
- Establish a $25 million New Technology Seed Fund for entrepreneurial venture capital
- Revive the New York Insurance Exchange to bring large property or reinsurance risks back to New York
- Create the Manufacturing Legacy Program to re-purpose underutilized industrial facilities
- Make Upstate New York the preferred "back office" for corporate America
- Create a $25 million Small Business Revolving Loan Fund
- Expand minority & women-owned business enterprise (MWBE) requirements

CLEAN & GREEN ENERGY
- NYS Energy Research & Development Agency (NYSERDA) will incentivize clean energy technologies and achieve carbon emission reductions
- Adopt additional minimum energy efficiency standards
- Improve commercial & residential net metering programs
- Enhance energy efficiency programs, solar energy, wind power, biofuels & geothermal systems
- Prepare a Climate Action Plan to achieve an 80% reduction in greenhouse gas emissions by 2050
- Develop clean energy incubators
- Utilize "smart growth" principles in zoning and land control
- Develop new energy efficiency selection criteria in the Power for Jobs Program

NO NEW TAXES?
A very noticeable omission in Governor Paterson's State of the State Message was any pledge NOT to raise taxes, fees, assessments or other "revenue enhancers" in 2010.

REACTIONS TO GOVERNOR'S REMARKS
Attorney General Andrew Cuomo (D) stated that the Governor's Message "hit the right themes" but that enacting reforms is much harder than proposing them. (Cuomo is widely expected to mount a primary challenge to Paterson for the Democratic Party nomination for Governor later this year.)

State Comptroller Thomas DiNapoli (D) said that the speech was "different" but that he is committed to working with the Governor to get the State through these dire fiscal times.
Assembly Speaker Sheldon Silver (D-Manhattan) said that many of the topic touched upon in the Governor's Message were first proposed by the Assembly, especially those related to ethics and campaign finance reforms. Silver said that while state spending must be controlled, the Assembly would foster job creation, children's education, access to healthcare, affordable housing, safe streets & bridges, functional mass transit, a healthy environment, and integrity in government.

Senate Majority Conference Leader John Sampson (D-Brooklyn) agreed with the Governor in reining-in out of control state spending by consolidating state agencies and placing taxpayers' priorities above all else. But Sampson also said that the Senate will create jobs, pass property tax relief and ethics reform measures, while protecting women's, workers' and tenants' rights, reforming IDAs and reversing HMO deregulation.

Senate Minority Leader Dean Skelos (R-Rockville Centre) opined that the Governor had largely sounded Republican themes in his speech, notably those calling for a spending cap, real property tax relief, term limits for state officers and legislators, and job creation. But Skelos said that the Governor has promised fiscal restraint in the past, but has yet to deliver on this promise, asserting that New Yorkers can no longer afford a "tax and spend" approach to government. Skelos pointed out that another area to reduce state spending is by attacking Medicaid fraud and waste. He also said that the GOP supports establishing public initiative and referendum, for citizens to place issues directly on the ballot.

Assembly Minority Leader Brian Kolb (R-Canandaigua) stated that 2010 needs to be the "Year of Reform," especially fiscal reforms like no new taxes, state spending cap and real property tax cuts, and more private sector jobs. Kolb also called for governmental reforms at a Constitutional Convention, term limits for legislators and leaders, ethics reform and public initiative and referendum. Kolb pledged that his Conference would work with the Governor in a bi-partisan manner to find real solutions for the real problems confronting New York.

SENATE CHANGES
Senate Majority Conference Leader John Sampson (D-Brooklyn), announced that in the spirit of bi-partisanship, he has appointed Senator George Maziarz (R-Newfane) as Chair of the Senate Energy & Telecommunications Committee, and Senator Thomas Morahan (R-New City) as Chair of the Senate Mental Health and Hygiene Committee.

Both Maziarz and Morahan had held these Committee Chairs when the GOP was in the Senate Majority. (There is some precedent for appointing Senate Minority Members as Committee Chairs, when former Senate Majority Leader Joseph Bruno (R-Rensselaer) appointed Senator Carl Kruger (D-Brooklyn) as Chair of the Senate Social Services Committee.)

Senator Sampson and his Majority Democrats heralded this as putting partisanship aside and renewing their commitment to putting the people of New York first. Maziarz and Morahan thanked Sampson for the opportunity to resume their respective Chairs, and said that they will strive to work with their Senate colleagues across the aisle, while remaining committed Republicans.

Senator Sampson also appointed Senator Shirley Huntley (D-Queens) as Chair of the Senate Cities Committee and Deputy Majority Leader for Federal/State Relations, Senator Velmanette Montgomery (D-Brooklyn) as Chair of the Children & Families Committee, and Senator Daniel Squadron (D-Brooklyn) as Chair of the Social Services Committee.

In another show of bi-partisanship at the local level, former Senate Finance Committee Deputy Secretary Larry Soule has left the Senate Democrats to become the Westchester County Budget Director in the cabinet being assembled by the newly installed Republican Westchester County Executive Robert Astorino.