The Aqueduct Casino Bidding Process: A Scathing Indictment of NY Graft and Political Folly

A new report by the state inspector general has found widespread problems with the process by which the Aqueduct racetrack was set out to bid for turning it into a hotel and casino complex and how several key Democrats engaged in unethical behavior in order to secure a bid for AEG.

Suffice it to say, none of the top Democrats in Albany come off looking good in this. That includes Governor David Paterson, top Senate Democrats John Sampson and Malcolm Smith, and Assembly Speaker Sheldon Silver:

The report says that the bidder, a consortium called the Aqueduct Entertainment Group, marshaled funds at the behest of the state’s Democratic Senate Campaign Committee, casting “a taint on the motives behind the Senate leadership’s support of” Aqueduct Entertainment. The investigation included interviews with senators and other state officials, as well as internal e-mail among Aqueduct Entertainment members and lobbyists.

Citing possible violations of laws governing public officials by John L. Sampson, the Senate Democratic leader from Brooklyn; Malcolm A. Smith, the Senate president from Queens; and Angelo Aponte, the appointed Senate secretary, the inspector general’s office said it was referring its findings to federal and state prosecutors and the Legislative Ethics Committee.

“At each turn, our state leaders abdicated their public duty, failed to impose ethical restraints and focused on political gain at a cost of millions to New Yorkers,” Inspector General Joseph Fisch said in a statement. “Shamefully, the public’s best interest was a matter of militant indifference to them.”

The report — following a classic outline of state business distorted by lobbyists, politics and money — emerges in the final weeks of an election season in which candidates across New York State have vowed to clean up Albany.

Besides the Senate leaders, the report faults close aides to Gov. David A. Paterson for not keeping him apprised of concerns about Aqueduct Entertainment, blames the governor himself for relinquishing control of the process and criticizes the Assembly speaker, Sheldon Silver, for Sphinx-like silence despite his own knowledge of Aqueduct Entertainment’s problems.

Mr. Paterson, along with leaders of the Senate and the Assembly, selected Aqueduct Entertainment in January to operate 4,500 electronic slot machines at Aqueduct, a franchise worth tens of millions of dollars a year to the operator and an estimated $1.5 million a day in tax revenue for the state’s depleted coffers.

The franchise was ultimately revoked by Gov. Paterson over outcry over the problems with the AEG bid and the new contract was ultimately won by Genting New York, a subsidiary of the Malaysian casino consortium.

This wont be the last we hear of this as the matter has been referred to federal investigators look into criminal and ethical malfeasance by those named in the report. Most egregious is the finding that Senate officials leaked confidential information to AEG’s lobbyists, and got campaign contributions in return. Also named in the investigation is Buffalo Democrat State Sen. Antoine M. Thompson, who allegedly received $8,600 for his lobbying efforts on behalf of AEG for pushing the AEG bid.

Where Are Budget Cuts In New York?

Last year, the state increased spending by more than 8% (or $10+ billion) over the prior year, despite a serious recession and a stupendous drop in revenues from Wall Street, which is a major revenue source for New York. That irresponsible budget was $131.9 billion.

So, what did the New York legislature do when facing an even more dire fiscal picture?

They've promoted a $135.7 billion budget. So, they've increased spending by $3.8 billion.

That includes the elimination of the sales tax exemption on clothes under $110, tobacco and cigarette tax hikes, and other miscellaneous tax hikes.

For all the talk of spending cuts, no one can seriously represent that the state cut spending when its budget is again larger than the prior year. The budget included pension sweeteners, which undermine any kind of pension reform carried out earlier this year by introducing a new tier of pensioners for newer employees. Those pension costs will explode in coming years.

This is the shell game that the state repeatedly plays with voters, and it must end because the state simply can't afford these massive budgets in any form.

The budget produced by Speaker Silver and Majority Leader Sampson is grossly irresponsible and must be vetoed down to Gov. Paterson's proposals - even though that budget is still irresponsible and spends billions more than the state should objectively expect to take in revenues in the coming year. Spending should have been held to last year's budget and it should not count on federal funds being forthcoming.

Albany's Legislative "Leaders" Leading Way With Scam Job On Taxpayers

Media outlets around New York are catching on to the absolute disaster of a budget that this year's "process" has created. Budget extenders have enabled the state to limp along for three months since an annual budget was to be in place April 1.

The legislature refuses to enact Governor Paterson's budget, which he's broken down into parts of the extenders that have passed to date. They've balked at some of his demands, so they've gone and put together their own budget.

This budget, however isn't so much a budget as a bunch of proposals that are wishful thinking and pixie dust. It isn't a budget and it certainly doesn't pass the sniff test of being anywhere near being fiscally responsible or prudent.

It would result in a disaster even bigger than the current $9 billion deficit. The Daily News editorializes:

Paterson presented the Legislature with a reasonable plan for resolving the crisis. But his fellow Democrats, led by Assembly Speaker Sheldon Silver and Senate Democratic Conference chief John Sampson responded by adding lots of spending while subtracting revenue.

The numbers don't balance. Not even close. Again, this is a scam - a con job born of political desperation.

Lawmakers are simply saying no to Paterson's recommended cuts to school aid, tuition assistance and homeless shelters, and adding back hundreds of millions of dollars the state can't afford.

And because the liquor store lobby squawked about Paterson's plan to let grocery stores sell wine - a no-brainer that would benefit consumers while raising much-needed cash - they just say no to that, too, digging the state's fiscal hole even deeper.

And because public sector unions loathe the concept of imposing a limit on local property tax hikes, Silver and Sampson have thrown out Paterson's tax cap.

And because the Legislature loves to extend its reach through every aspect of state government, Silver and Sampson reject Paterson's attempt to reform the finances of the state and city universities to give students a general idea as to future tuition costs.

Keep in mind that even the governor's plan was shakily balanced - counting, for instance, on more than $1 billion in Medicaid money that Congress hasn't approved.

Paterson has tried to compel the Legislature to act responsibly by stuffing long-term spending cuts and tax hikes into emergency spending bills necessary to keep the state running. In effect, he forced lawmaking to choose between taking political lumps or shutting the state down.

Paterson's proposals were actually more responsible than the Legislature's proposals, but they still didn't take into account sagging revenues and required tax hikes and elimination of sales tax exemptions. Paterson sought to hide the tax hikes among his budget. Paterson wanted to give SUNY flexibility in setting tuition (reducing the state burden on subsidizing the state schools), but the legislature refused to address that in session.

The Democrats in the Legislature aren't even going through with the tax hikes - and they're hiking spending too with money that isn't even certain of being available.

Last's year's stimulus package was primarily a way for states to avoid the day of reckoning by shoveling money to them by the boatload. States like CA, NY, and NJ (among others) were able to carry on as if they were rolling in the wine and roses. This year there is no federal bailout for them - so they're confronting massive deficits that are even larger than they ought to have been had they started curbing spending last year to deal with massive shortfalls in revenues. New Jersey seems to have figured this out and their state budget due to pass by Thursday will confront the changed fiscal landscape and begin to put in place the necessary budgetary changes to get spending under control.

New York's situation is particularly egregious because they used the federal funds to prop up a budget that increased spending by 5% last year. Now, they don't have the state revenues to cover a budget that size, don't have the federal monies, and they can't raise broad based taxes because taxpayers are in a foul mood.

With the Legislature rebuffing Paterson's latest extender and refusing to curb spending in any significant and meaningful way because the politicos don't want to offend the unions, taxpayers are going to be left holding the bag for years to come because the only other alternative is deficit spending that adds to an already abysmal fiscal picture. As the state's budget deficits soar and revenues tank, the bond ratings will drop, adding to the costs of doing business. That means that more money will need to go to paying interest on debt already accumulated and deprives existing programs of desperately needed funds (for those programs that are truly deserving of funding).

UPDATE:
The State Senate passed a budget, and like clockwork the Governor said he would veto all the additional spending - all 6,900 member items. That'll take a couple of hours for Paterson to initial each and every item, but the Senate also said that they passed a balanced budget even though they don't know how big it is.

Senate Minority Leader Dean Skelos panned the budget bills just adopted along part lines in the Senate, especially seizing on Sen. Carl Kruger’s admission on the floor that the budget will be balanced, but he’s not sure how big it ill be.

“Obviously the Senate Democrat majority has abandoned its commitment to the voters of the state in terms of real property tax relief, the fact that they have run away from their commitment on a real property tax cap, so right now what you have is a budget where they can’t even define what they’re spending and match revenue with spending,” Skelos, R-Long Island, said.

He was asked if members of his conference might provide votes to override a gubernatorial veto. Gov. David Paterson has threatened to veto additional education funding if lawmakers do not take up a contingency plan to deal with the possibility of stalled Medicaid assistance from Washington.

“We have to see the total budget, and we have not seen whether it’s in balance, not in balance–quite honestly if you listen to Senator Kruger when he says they don’t know what they’re spending,” Skelos said. “I think this is an outrageous budget process from the beginning. I don’t believe the budget is in balance and if the issue of veto overrides does come up, that’s something I’ll discuss with the Republican conference.”

Smoke and Mirrors Hallmark of Albany Budget Process

New York faces a $9 billion deficit. So how can anyone rightfully expect that any cuts proposed by Gov. David Paterson (D) can be "restored" if there's no money to pay for them? Yet, that's exactly what the State Senate and State Assembly came up with.

Speaker Shelly Silver and Senate Majority Leader John Sampson restored hundreds of millions of dollars of cuts. How?


They don't say.

Don't you think that New York taxpayers have a right to know? Moreover, don't New Yorkers deserve to have a budget balanced without gimmicks and one-shots, which were all part of the reason that budgets grew to the point where they are no longer sustainable without a circus tent of tricks?

The latest budget extender isn't any better than the prior extenders, and the costs are simply unsupportable. New York must live within the existing revenues, instead of spending far more than revenues allow. 

Another Reason Why New York Is Toast

New York is bankrupt - politically and fiscally. The state can't make its payments and a shutdown is possible as early as Monday if a budget extender isn't passed or a full year budget is adopted.

Part of the problem is that the state doesn't have the requisite payment for the already grossly underfunded state pension.

What have state leaders including Democrats Gov. Paterson, Speaker Shelly Silver, and Senate Majority Leader John Sampson agreed to do?

They've agreed to have the state pension fund loan itself the $6 billion it needs to meet its obligations.

Gov. David A. Paterson and legislative leaders have tentatively agreed to allow the state and municipalities to borrow nearly $6 billion to help them make their required annual payments to the state pension fund.

And, in classic budgetary sleight-of-hand, they will borrow the money to make the payments to the pension fund — from the same pension fund.

Yes, read that again. The pension is paying itself the shortfall and calling it a balance. Where's Comptroller Tom DiNapoli to call them out on this and demand an actual payment rather than an accounting trick that doesn't actually provide funding for the pension funds?

New York has to cut spending sharply and make its actual pension payment obligations without the use of accounting gimmicks such as the one they're using in this instance. That's how the state got into the mess it is in.

This is yet another reason that New York is in such dire fiscal shape.

Last One Out Turn Off The Lights

New York Governor David Paterson blustered yesterday that the failure to pass an extender on the budget would mean a shutdown of state services and that it would lead to anarchy and chaos.

He also took time out from this nonsensical raving to also blame New York Republicans for the state of affairs. Gov. Paterson's disassociation from reality continues considering that Republicans do not control any aspect of the state government - the State Senate, Assembly and the Governor's office are all in the hands of Democrats - Shelly Silver in the Assembly (and the strongest guy in the room), John Sampson in the Senate, and Paterson.

Who does he think he's kidding?

Those three men are in the position to stop this roller coaster of insanity, but all will go ahead with the status quo because Silver and Sampson don't want to jeopardize their political positions within their respective caucuses. They remain in power because they get consensus and don't take any unnecessary risks - that would include making tough decisions to cut spending that would affect some members' districts harder than others.

But the real issue is that the state is essentially bankrupt and can't pay its bills to the point where there is little choice but to engage in mass layoffs. The Governor had proposed a sensible furlough that would have enabled state workers to stay on the payroll, but the courts ruled that this somehow broke the law even though it was a political question and the emergency situation with the budget is such that there's no money to pay for any of the state services, let alone essential state services.

So, what would happen if the state shuts down? For most people, they wont see any change. State parks and beaches would be shuttered, state offices like the DMV would close, unemployment offices would close, and payments would be delayed to hospitals and other businesses that have contracts with the state.

However, it wouldn't mean anarchy and chaos. It would mean more of the same situation that has been facing the state for years on end.

The state has failed to pass an on-time budget year after year for decades. Combined with massive increases in state spending that repeatedly fail to match revenues anticipated, the budget deficits have grown to the point where they overwhelm the budget. Debt payments take up an increasing percentage of state spending, meaning less money can actually be devoted to programs that actually work and instead goes to mortgaging the future of the state.

Comptroller Tom DiNapoli thinks the shutdown would be disastrous, but he's not in a position to do anything about it.

Some groups continue to think that the only way to solve the budget mess is to raise taxes even more.

Espada's First Moves? Tax Hikes

The New York Times and other media outlets consider the five week delay to have cost the state and the city tens of millions of dollars in the form of lost revenues from tax hikes.

Newly installed Senate Majority Leader Pedro Espada Jr. saw to it that those tax hikes were passed today.

The senators stayed until about 2 a.m. Friday to pass bills that were largely noncontroversial but often critical to balancing the budgets of cities and counties across the state. They concluded by passing a sales tax increase for New York City after a vigorous debate, increasing the tax by one-half of a percentage point, to 8.875 percent.

Senator Pedro Espada Jr.’s defection on June 8 threw the Senate into turmoil and hobbled the state government, making the body a national laughingstock as the feuding factions shouted and gaveled over each other in simultaneous legislative sessions. It led Gov. David A. Paterson to take the extraordinary step this week of appointing a lieutenant governor, Richard Ravitch, to clarify the state’s line of succession, though it is far from clear that the governor had the authority to do so. Republicans are challenging the appointment.

On Friday, a state judge in Nassau County adjourned a hearing on the legitimacy of Mr. Ravitch’s appointment until the middle of next week. However, a restraining order put in place in the early hours of Thursday morning has since been rescinded, leading the governor’s legal team to declare Friday that at least for the moment, Mr. Ravitch is the state’s lieutenant governor.

The Senate stalemate had prompted anger from voters and local officials, and denunciation from newspapers across the state.

“To all 19.5 million people in the state of New York, we apologize,” Senator John L. Sampson, a Brooklyn Democrat, said at a news conference. “Sometimes you have a dysfunctional family, dysfunctional family members, but at the end of the day, we understand that we are all one family and we are all home now. Home to stay.”

Espada used the GOP to get what he really wanted. Espada couldn't care the cost, but he saw to it that Malcolm Smith was booted from the leadership role and replaced by himself. John Sampson takes over as leader of the Democratic caucus, and Smith becomes President of the Senate, which is a largely ceremonial role.

Also, keep in mind who will be paying for all this. New York City consumers will be hit with a tax hike (this was a home rule measure that required legislative approval before enactment). The five week delay meant that the City couldn't obtain those additional revenues to balance its budget, but it also was a temporary reprieve from the additional tax.

Some Senate Democrats warned that the sales tax would hit the poor hard, but some deferred to Bloomberg because of the need to balance the budget.

Developing: Espada Flips Back To Democrats; GOP Loses Senate Control

This is a developing situation, but State Senator Pedro Espada has flipped back to the Democrats, giving them the numbers to control the State Senate.

Espada, whose defection to the Republicans was the main reason for Gov. Paterson's controversial action yesterday "naming" Richard Ravitch as lieutenant governor, revealed his startling plans to The Post.

The defection would bring a quick end to the Senate's current 31-31 vote stalemate, in which Espada has repeatedly joined with the 30 Republican members in opposition to the Democrats.

"I'm going to tell (Republican leader Sen.) Dean Skelos that I have a handshake agreement with (Democratic leader Sen.) John Sampson to become the majority leader,'' Espada revealed.

Espada, who had been designated as the Senate president by a bare majority vote during the June 8 "coup'' in which he and Sen. Hiram Monserrate (D-Queens) joined 30 Democrats to oust Democratic Majority Leader and Senate President Malcolm Smith of Queens, said that Smith would retain his "president'' title under the arrangement until the end of the year.

Smith would then be replaced by Democratic Sen. John Sampson of Brooklyn, who ousted Smith as the top Democratic leader in the wake of the "coup.''

Espada said, "Unfortunately, Dean rejected an opportunity to reach a compromise under which Republicans would have had equal access to all the resources of the Senate.''

It was never about doing what was right. It was about Espada playing politics and pushing his weight around. He wanted to play kingmaker because Malcolm Smith hurt his feelings over not supporting some of Espada's pork projects.

State taxpayers suffer as a result.

This is the clown circus in action.

NYS State Senate Remains In Chaos; Monserrate Flips Again

Hiram Monserrate has gone back to the Democrats, and the chaotic situation on the Third Floor remains just that - chaotic.

"I'm coming home," the Queens Democrat told the Daily News in an exclusive interview on Sunday.

Monserrate stunned the state's political establishment and paralyzed the Legislature a week ago when he rebelled against his own party and voted with fellow Democrat Sen. Pedro Espada Jr. of the Bronx to hand control of the Senate to the Republican minority.

The mercurial Monserrate is set to announce at a morning press conference on Monday that he is returning to the Democratic caucus - without Espada.

His decision creates an astonishing 31-31 deadlock in the Senate and further muddles the question of which party controls that body.

"I said I wouldn't return to the caucus without a leadership change among the Democrats, and that has happened," Monserrate told The News.

Monserrate met with Al Sharpton and New York Daily News Report Juan Gonzales at the Georgia Peach Diner on Queens Boulevard to break the news. The diner has great food, and I've eaten there on occasion, so we know that they ate well.

Monserrate is a piece of work, whose assault of his girlfriend remains in the news as details of her injuries notes that the wounds went all the way to the bone. She needed more than 20 stitches to close the wounds.

It also comes as little surprise that current Democrat leader Malcolm Smith is out, and John Sampson is in as conference leader. Smith has been disastrous as leader, and the situation has meant that the strongest politician in Albany right now is Democrat Sheldon Silver, who is the Assembly Speaker. He's the only one of the troika (Senate Majority Leader, Governor David Paterson, and Speaker) who seems to know what he's doing, even though Silver's out to enlarge his power at the expense of the rest of the state.

Megalomanical Monserrate Controlling NYS State Senate

If you think the clown circus in Albany is crazy, you haven't seen anything yet. The guy who now appears to be holding the keys to power is none other than the indicted New York State Senator Hiram Monserrate. He was indicted for assaulting his girlfriend, and his fellow Democrats covered for him while they were in power, and now that he's "switched" allegiances, they're looking to get him. Better late than never.

Meanwhile, Monserrate walked out of the State Senate session yesterday, leaving the Republicans without a quorum to conduct the state's business, which means that Monserrate is holding the key to who controls the Senate and who gets to lead the State Senate.

It can't get any crazier than that, although the possibility that some of the Democrats might switch sides to join with the Republicans may make Monserrate's actions moot. Still, there's also the possibility that the Democrats might toss current leader Malcolm Smith on the chopping block and insert someone else in the leadership. Among those suggested for that role is John Sampson. The fact that the leadership couldn't see this coming tells you just how screwed up and incompetent they were. Throw in a heaping portion of political axe grinding, and you've got a mess:

Under Smith's leadership, Democrats, who held a bare one-vote majority, gloated as they fired nearly 200 employees of the Senate Republicans, many of whom had considerable knowledge and skill.

Smith's Democrats, who had promised to "reform" the Senate by equalizing resources for the majority and minority parties, treated the Republicans worse than the GOP had treated them.

The Democrats cut the Republicans' central staff allotment by some $4 million below the Democrats' former level and gleefully booted GOP senators from offices they had occupied for decades.

If the Republicans needed any final proof that the Democrats were determined to grind them into political dust, they got it yesterday morning when, after two months' delay, they were finally provided with a list of the pork-barrel "member items" they would be receiving this year.

The "split" turned out to be hugely lopsided: $76.7 million in projects for the 32 Democrats and only $8.2 million for the 30 Republicans.

Another key factor was the outrage of Rochester billionaire and newly minted Florida resident Thomas Golisano, a three-time candidate for governor and strong advocate of reduced taxes who spent some $5 million last fall helping the Democrats capture the Senate.

Golisano contended Smith and the Democrats betrayed him by backing a record-high, tax-and-spend state budget in April.

With new Democratic leadership, Monserrate and Espada might come back into the fold, but the problem is that those two continue to have ethical and criminal questions that need a full investigation.

And through it all, the state's business continues to be ignored, particularly the state budget that remains an absolute disaster and is fiscally irresponsible.