Longtime NYS Assembly Speaker Sheldon Silver Surrenders to FBI

NYS Assembly Speaker Sheldon Silver has been an Albany fixture for 2+ decades. He was Speaker back when I was working in the legislature. And he's survived and thrived despite multiple scandals. But this is one scandal too far.

New York state assembly speaker surrenders to FBI http://t.co/pHWUMbR2jg

— TIME.com (@TIME) January 22, 2015

The Manhattan Democrat, who is the longest running Speaker in state history, is being charged with corruption over payments from one law firm (he is of counsel with another firm too).

I've been saying for years that the legislature should stop being a part time gig; they pay full time wages ($79,500, plus perks on position). Yet, they allow members to work elsewhere - like law firms, and can serve up conflicts of interest in no time. Eliminate the outside work, and you eliminate a major source of conflicts of interest.

Silver has stood against those reforms for years, in part because he benefited from the status quo arrangement. According to the NYT:

While it is legal for lawmakers to hold outside jobs, investigators said Mr. Silver failed to list the payments from the firm, Goldberg & Iryami, on his annual financial disclosure filings with the state.

In the past, Mr. Silver has been criticized for his outside law practice, a lucrative career that supplements the $121,000 he earns as speaker.

In 2013, Mr. Silver earned at least $650,000 in legal income, including work for the personal injury law firm, Weitz & Luxenberg, according to his most recent financial disclosure filing.

But what he does to earn that income has long been a mystery in Albany, and Mr. Silver has refused to provide details about his work.

He also managed to survive threats to his speakership when there were multiple sexual harassment/sexual assault cases that his office bungled/fumbled/buried. These include the Michael Boxley matter (who was one of his top staffers), investigations into whether other Assembly members engaged in sexual harassment or inappropriate conduct, including Micah Kellner, Vito Lopez, and secret settlements to silence the scandals. Silver admits that he shouldn't have used public money to fund the Lopez settlement.

The Assembly has paid out hundreds of thousands of dollars in settlements over these and other sexual harassment cases involving members and staffers. That doesn't count the boatload of money spent on legal fees.

Silver's actions in those cases should have been grounds for his caucus to send him packing, but he used divide and conquer to split the caucus from picking a replacement.

But he couldn't outrun federal prosecutor Preet Bharara. He's managed to do more to roll up corruption in Albany than Gov. Cuomo's defanged Moreland Commission. And that's just the tip of the iceberg. I suspect there's lots more to come.

The Harassment Scandal That Threatens To Take Down NYS Democratic Leadership

Over the past couple of weeks, a growing scandal in the New York State Assembly has meant that Assemblyman Vito Lopez lost his chairmanship of the powerful Housing Committee over revelations that he harassed multiple women over a period of years. Assembly Speaker Sheldon Silver stripped Lopez of his chairmanship, but then it was revealed that Silver authorized the payment of a $100k settlement to two women over additional harassment claims.

Then, there's word that NYS Attorney General Eric Schneiderman signed off on the settlements, which used taxpayer funds, despite claims that Schneiderman's office had not given Speaker Silver guidance.

Speaker Silver admits that he and his office screwed up the handling of Lopez's case.

We have a couple of interrelated issues: (1) the criminal/civil liabilities of Lopez for carrying out harassment in his office, which included suggesting to female staffers that they ought to wear more revealing clothes or go braless; (2) Speaker Silver's handling of the cases and not making the issues public; (3) AG Schneiderman's handling of the case from his office.

It's an issue that threatens to overshadow the convention this week. Censure isn't enough, and a more thorough house cleaning needs to occur, including the Speaker himself:

Mr. Silver announced on Aug. 24 that he was censuring Mr. Lopez, 71, after a bipartisan Assembly ethics committee found credible evidence that Mr. Lopez had groped, kissed and verbally harassed two female employees. Mr. Lopez was also stripped of his chairmanship of the Assembly’s housing committee.

Over the next few days, reports emerged that Mr. Silver had signed off on a $135,000 secret settlement of claims against Mr. Lopez brought by two other women, and that the previous claims were not referred to the Assembly’s ethics committee. Mr. Lopez subsequently said he would not seek another term as chairman of the Brooklyn Democratic Party but has refused calls to resign his Assembly seat.

“The only time I ever had a conversation with him was about 10 minutes before I issued the letter stripping him of his chairmanship, and then I had a subsequent conversation with him last week and I asked him to resign,” Mr. Silver said. “He obviously didn’t agree with me, but he didn’t say much. He just indicated that he couldn’t — that he wasn’t going to.”

In statements last week, Mr. Silver, the Legislature’s most powerful Democrat, acknowledged mistakes in his handling of the alleged harassment incidents.

“Ultimately, I’m the speaker and I’m responsible, and clearly mistakes were made,” he said on Monday.

Mr. Silver said he first heard about claims made against Mr. Lopez in January. The first two women who brought claims were represented by a team of lawyers that included Gloria Allred, the prominent Los Angeles attorney. They initially sought $1.2 million.

Mr. Silver said his legal staff acted in good faith, explaining that they were trying to avoid costly litigation and to accede to the wishes of the alleged victims.

“What was demanded was tremendously more than what the case was ultimately settled for,” he said, “and the judgment of settling the case was that we will save the state money on potential liabilities here, in addition to the fact that the assemblyman agreed to pay a sum for his own actions.”

Trying to settle the matter makes sense since the costs of litigation could have been far higher, but the failure to refer the matter to the ethics committee was a massive failure on the Speaker's part.

To have the AG lie and obfuscate about his role in signing off on the deal is unforgivable.

This is hardly the first time that Silver has come under fire for botching the handling of harassment or sex abuse in the Assembly; his own staffer was convicted of sexual assault and his office attempted to cover up the details.

For far too long, the state legislature has operated under the Bear Mountain Compact, which is an unwritten rule that what happens in Albany stays in Albany. It created a permissive attitude where legislators can act as they please and ethics and the law were meant for everyone else, but optional for those who enact the law.

Two separate investigations are underway: one by the state’s Joint Commission on Public Ethics (JCOPE) and another by the Staten Island district attorney who is filling in for the recused Brooklyn prosecutor. Among those allegedly harassed is current NYC City Councilwoman Diana Reyna, who was one of Lopez's staffers.

The JCOPE is hamstrung by the fact that Silver gets to appoint some of its members, and they can limit their investigation rather than going after all the malfeasance involved - meaning that Silver could skate by on his own handling of the growing scandal.

The sad thing is that Silver will win reelection handily (and retain his speakership) and so too will Lopez. While Lopez said that he would not seek reelection past this November, he's going to win handily. Far too many constituents ignore massive problems with the candidates they elect - including criminal behavior. For the legislature to clean up its act, voters have to demand changes. Legislators aren't going to do it to themselves.

Silver's called for Lopez to resign, though Lopez has rebuffed the call thus far. Some Democrats are calling for Lopez to resign immediately, including New York Senator Chuck Schumer (who originally hails from Brooklyn). Those calls need to come hard and fast, and the Assembly Democrats ought to be considering a new speaker but Silver's lasted as long as he has as speaker because he's the consummate professional politicial - dividing and conquering potential alternatives to his speaker's position.

The Latest From Zuccotti Park's OWS Protests

So how are the protesters dealing with the lack of generators after the NYPD and FDNY confiscated them as a fire hazard? They've gone and become their own generators - using bikes to power generators:


Local businesses continue suffering from the ongoing security measures put in place after OWS protesters took over Zuccotti Park. One business claims to have laid off a bunch of part time workers because business is down significantly as a result of the security barriers limiting the traffic to his establishment.

Marc Epstein, owner of the Milk Street Cafe at 40 Wall Street, just let 21 employees go.

The reason? The barricades police have set up throughout Wall Street as a consequence of the ongoing demonstration.

In June, he opened the New York branch of the Boston shop, which has a 30 year history. Epstein says he leased the space on Wall Street because it was next to a pedestrian plaza – and his was the only restaurant along that plaza.

“The opening was perfect,” Epstein told CBSNewYork.com. “The food was delicious, the customers were happy, and the line was out the door.”

Customers kept coming back, Epstein said.

“Everything was going in the right direction. Sales continued to grow. We started to build our catering business. Costs were going down. I felt that by October or November we would break even.”

Then the Occupy Wall Street movement launched.

“I came one Monday morning and I found the exit by the 2 or 3 subway station closed. I saw all these barriers – barricades – all up and down my street,” Epstein said. “At first I thought nothing of it, but after a week… it’s been six or seven weeks now.”

The security barriers are meant to thwart protesters from marching into the Wall Street hub area around the NYSE and Federal Hall, but they have also served to thwart tourists and local businesses from carrying out regular business. These measures are in addition to the barriers installed in the wake of 9/11 to protect the stock exchange from potential attack by car/truck bombs.

Note too that the building where the business is located is owned by none other than Donald Trump, so expect Trump to squawk about the situation.

Local politicians continue weighing in over the protests, and Shelly Silver, the Assembly Speaker, has come out against the protests after spending time on the fence. He's been joined by other Democrats, including Rep. Jerrold Nadler, who represent the area of Lower Manhattan. They're demanding the city crack down against the nuisances, particularly those protesters who are defecating and urinating on local streets and the incessant noise coming from the drummer groups along the west side of the park.

While expressing sympathy for Occupy Wall Street protesters and their right to protest, the elected officials wrote to Bloomberg insisting he solve growing concerns.

“Some of the protesters, and others who have opportunistically joined the crowd for unrelated reasons, have created serious qualify-of-life concerns for residents of the immediate area,” the letter states.

The group complained about public urination, nonstop drumming - and erected barricades that make it difficult for local residents to get around.

“It is important that these quality-of-life concerns are addressed in an effective and thoughtful manner by the city so that they do not keep recurring,” the letter states.

Silver, at the Capitol in Albany, told reporters that exercising one’s First Amendment rights “should not include defecating or urinating on sidewalks.

“What we want is a recognition that other people have a constitutional right to enjoy their home, that businesses have a right to do business unimpeded by people who are exercising their First Amendment rights,” he said.

Meanwhile Mayor Mike Bloomberg and former Mayor Ed Koch sparred over the protesters and whether they were focused on the right target. While Bloomberg suggested that the real beef was with Congress and Washington, Koch pointed out the problem with someone stealing a bike going to jail while someone who stole millions got a fine.

Both are serious problems, but the issue of fines is one that Congress has to address - that's not merely something that Wall Street can rectify on its own. It means giving teeth to the penalty structure in place for Wall Street and financial malfeasance.

At the same time, a new poll suggests that the makeup of those protesting isn't quite what people may think.

The poll by Fordham's Center for Electoral Politics and Democracy released last week found that the Occupy Wall Street movement is 68% white, 61% male and 28% unemployed. But most of the protestors are college graduates and 22% hold advanced degrees.

It also found that only 25% of the protestors identify with the Democratic Party, while 21% want Rep Ron Paul (R-Texas) to become the Republican Party nominee for president.

The project by Costas Panagopoulos, professor of political science at Fordham and students, surveyed 301 protestors camped out at Zuccotti Park from Oct. 11 to Oct. 14, with a response rate of 78%. Only one other such survey of Occupy Wall Street exists and it polled fewer protestors, Panagopoulos said.

“The group is very liberal and part of the Democratic base,” Panagopoulos said. “But a surprising number don’t plan to vote."

The OWS rabble rousers seem to detest the Tea Party movement, with 75% giving it two thumbs down.

But, like their conservative counterparts, the Zuccotti Park denizens don’t trust Washington to “do what is right” and 97% disapprove of how Congress is handling its job.

More protestors identify with the Socialist Party than the Republican Party, and more than a third identify with no party at all, the survey found.

A surprising percentage support Ron Paul, which suggests quite a significant libertarian streak among protesters, which isn't nearly what Panagopoulos suggests. It isn't surprising that there's a significant liberal presence, but there's a confluence of anti-government sentiment among the protesters that has all kinds of shades - from socialist to libertarian.

The Daily News reported that a group claiming to be affiliated with the OWS protesters that circulated a supposed manifesto codifying various demands of the protesters is a bunch of bunk.

Marriage Equality Act Will Pass In New York; IF It's Ever Brought To a Floor Vote

This is where things stand with the Marriage Equality Act (gay marriage) proposal in New York. Everyone recognizes that if the bill is brought to a floor vote in the State Senate, it would pass - and Gov. Andrew Cuomo would sign it into law, making New York the sixth (and by far the most important) state to do so.

The problem is that it's still mired in procedural actions and haggling over various terms, and it's stuck with other proposals including a property tax cap and mandate relief that the Legislature has yet to address. The Senate Republicans are caught between a rock and hard place:

As soon as today, the New York Senate’s majority party could decide whether to duck out of Albany without voting on same-sex marriage or risk allowing a vote.

If there’s a vote, all it would take is one more Republican to vote yes, and same-sex marriage will become legal — something sure to anger the GOP’s conservative wing and expose Republican senators to primary election challenges next year.

But walking away from the issue without a vote could prove the riskier political strategy as the nation waits to see whether New York becomes the sixth and largest state to sanction same-sex marriage.

Thursday, the Senate adjourned for the night at 11 p.m. without even talking about same-sex marriage. Senators will resume work today, but it remains unclear whether they will vote on the issue. Senate Majority Leader Dean Skelos has not agreed to allow a vote.

The Senate's Republican majority is scheduled to meet behind closed doors at 10 a.m. today then go into open session.

But a backlog of other more ordinary yet important bills for New Yorkers must be dealt with first.

Once those bills are passed, the Senate Republicans could start what would likely be a lengthy debate over the gay marriage bill in a closed-door caucus. They could then send the bill to the floor, or kill it.

No vote would unleash a continual stream of questions and backlash from gay rights advocates, Democrats, and national and local media that could linger through campaigns in 2012, a presidential election year.

Avoiding the vote would fly in the face of a popular governor who has made gay marriage a core agenda item. The Republican senators could count on the same issue waiting for them in Albany next January, when the Legislature re-convenes.

“Whether it’s this year or next year, at some point it’ll go on the floor,” said Sen. John DeFrancisco, R-Syracuse, who opposes same-sex marriage but is open to allowing a vote.

Senators, especially those opposing same-sex marriage, get the conundrum. That explains why they are working to amend legislation they may ultimately vote against.

“I think the best case scenario for us is to have an up or down vote and move on to our core issues, jobs and taxes,” said Sen. Greg Ball, a Republican from Putnam County who has spent days working to insert more religious protections into a bill already passed last week by the Assembly.

If the Republicans, who control the Senate punt this year, it will come back at them with a vengeance next year during a Presidential election season, and their thin majority in the Senate could be at risk. That's why getting this off their plate makes sense as it would let them deal with other pressing issues, including mandate relief.

This should have been included in the "framework" agreement between the Legislature and Gov. Cuomo (aka 3 men in a room - Gov. Cuomo, Senate Majority Leader Dean Skelos, and Speaker Shelly Silver), but it wasn't. That was a mistake on Skelos' part although he has to keep his caucus in line on the other issues.

So, while the legislature could potentially end its session today, it has to deal with several important outstanding bills, including the gay marriage bill and we could be looking at a marathon session once again before the weekend. Either that, or the legislature will be back next week to pass what is still left on the calendar.

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.

Paladino Pops Silver Again; Yet Another Round of Lies and Smears

We get it. GOP/Tea Party candidate for governor Carl Paladino doesn't like Assembly Speaker Sheldon Silver. Silver, a Democrat who has outlasted all of his contemporaries in the dysfunctional Albany political environment, has been a frequent target on this blog for his actions, but he is not a criminal.

He hasn't done anything criminal, so when Paladino routinely smears him time and time again it further indicates that Paladino is removed from reality. This time, he called Silver a criminal. The last time, it was calling Silver Hitler (Silver is an Orthodox Jew).

The latest smear drew rebukes from Ed Koch, Silver, and Cuomo.

Moreover, let's say that Paladino actually wins the election in November over the Democrat Andrew Cuomo.

That means that Paladino has to work with Silver and the Senate Majority Leader. A budget deal would have to be worked out, and that means working with and through Silver.

If you've established a poisonous relationship with Silver, how do you expect that a sane and fiscally responsible budget will be enacted. You can't. It would be wishful thinking to suggest otherwise.

Meanwhile, Paladino's advisers are trying to spin Paladino's lack of a filter (he speaks whatever he thinks without regard to facts or logic), that this is exactly what Albany needs.

At the same time, some of Paladino's claims have come under fire for being outright lies or misrepresentations. That includes one where Paladino claims to have interceded on behalf of the chancellor of Syracuse University during a student takeover in 1970 to secure the chancellor's release. Paladino was a law student at the university at the time, but surviving participants say that Paladino had nothing to do with the incident. One of the student demonstrators (and now a law professor at my alma mater but who began teaching there after I left) disputes Paladino's account:

Paul Finkelman is contradicting published reports on the incident.

The reports say Paladino claims to have helped negotiate the exchange of the Syracuse Police chief for the university's chancellor.

“If it were 1970, I would want to know what Carl Paladino was smoking because this simply did not happen,” said Finkelman. “There was no known negotiation. There was no hostage-taking. The chancellor was not locked in his building. This is other nonsense.”

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.

New York Political Scandals Coming To A Head

It's getting pretty tough to keep track of all the political scandals in New York these days.

There are the multitude of scandals - all involving top Democrats. There is the huge scandal involving Governor Paterson, his former top staffer David Johnson and state troopers which threatens to take down the governor. 911 calls from Johnson's apparent assault have been released, but the key issue is what did Governor Paterson say and do in his phone call to the alleged victim, Sherr-una Booker.

Paterson feels jilted that Assembly Speaker Shelly Silver isn't continuing to back Paterson. Well, no one in their right mind wants to do business with Paterson and his political capital is pretty much gone. Silver is the most powerful man in Albany at the moment, and the one least tainted by scandal. That's bad news for state taxpayers since the state budget is due April 1 and there's little chance that a fiscally prudent budget plan will be negotiated by the leadership in Albany. It also means that Silver is in the driver's seat and Silver has never seen a spending plan that couldn't be improved - by more spending. Silver says that he wants to deal with Lt. Gov. Richard Ravitch on budget issues - almost expecting Paterson to resign or be impeached in the near future, but Paterson is holding on and is freezing Ravitch out of the process for now (lieutenant governors have no real power under state law).

The Paterson scandal is keeping Attorney General Andrew Cuomo busy, and it appears that the investigation into Paterson's wrongdoing is keeping Cuomo's own potential plans to run for governor under wraps until after Cuomo finishes his investigations into both Paterson and Pedro Espada Jr (another Democrat involved in unethical conduct).

There's the ongoing scandal involving Gregory Meeks and Malcolm Smith and the "charity" they ran that never seemed to be able to actually follow the money and hundreds of thousands of dollars never went where it was supposed to.

Then, there's the ongoing mess with US Congressman Charles Rangel, who continues to hold on to the Chairmanship of the House Ways and Means Committee even though Rangel should have been tossed out for violating House rules and that doesn't even begin to scratch the surface with his tax troubles with the IRS and multiple state and local tax authorities. The New York Times again reiterated its call for Rangel to be removed from the chairmanship.

In what must be the most hilarious juxtaposition of corruption and cronyism, Rangel, Malcolm Smith, Charles Barron, and several other key African-American Democrats including Al Sharpton tried to rally support for David Paterson. It was a who's who of people who should be tossed from office and those who should never be allowed near elected office again. Sadly, H. Carl McCall was among those at that confab and he dirtied his own reputation with his presence.

UPDATE:
Paterson spoke at a conference this morning and said that he wont resign and that he's not going to delegate budget authority to Ravitch. He says that he's going to govern for the next 306 days. Right - this from a guy who apparently likes the trappings of being governor than actually governing.

Scandals Could Take Down NY Governor David Paterson

Leave it to the accidental New York Governor David Paterson to make a bad situation worse.

A top aide to Gov. Paterson abruptly quit Thursday over the mushrooming scandal involving the governor and State Police.

As she resigned, Public Safety Deputy Secretary Denise O'Donnell ripped the handling of a domestic violence allegation against Paterson aide David Johnson.

Paterson aides admit the governor spoke to Johnson's accuser a day before she was to appear in court earlier this month - and a member of the governor's police detail also met with the woman.

"These actions are unacceptable regardless of their intent," O'Donnell said in a statement.

"It is particularly distressing that this could happen in an administration that prides itself on its record of combating domestic violence."

O'Donnell charged that State Police Superintendent Harry Corbitt informed her in January that a senior administration staff member had been involved months earlier in a domestic incident.

That Paterson contacted the accuser a day before she was to appear in court appears to be a serious ethical breach, and could expose Paterson to charges of attempting to influence the outcome of a criminal case involving one of his advisers. Paterson is an officer of the court in addition to being governor, so he could have violated the New York Legal Ethics Guidelines by engaging in such contact with the accuser.

Mind you, no one knows what was said, but it's the appearance of inappropriateness that demands a full investigation into what is going on in the Governor's office. I'm sure that Attorney General Andrew Cuomo will take to this issue with gusto given that he's the presumptive frontrunner for the governor's office.

Despite all the turmoil on the Second Floor in Albany,while the NY Times reports that he will weigh his options, the Daily News reports Paterson intends to continue his run for election as governor. He's fighting a losing battle as each week reveals yet more scandal, ethical lapses, and other problems, and that's not even beginning to scratch the surface of the fiscal problems facing the state and that which have not been adequately addressed by the governor.

Longtime Long Island Congressman and fellow Democrat Rep. Steve Israel called on Paterson to suspend his reelection campaign.

“I think it’s become apparent that he should not seek election and should announce it soon,” Rep. Steve Israel told The Associated Press. “And sometimes friends have to speak unpleasant truths.”

Israel, said he reminded the governor that there is “life after Albany.” Israel declined to say what Paterson’s response was or share other details of the call. Paterson spokesman Peter Kauffmann declined to comment.

Assembly Speaker Sheldon Silver called the allegations "horrific."

"The allegation that individuals who have sworn to protect the public and uphold the law were utilized to deter a victim of domestic violence from seeking an order of protection is deeply disturbing," Silver said. "I believe that this is an extremely serious matter that warrants an immediate investigation."

Silver continued: "That investigation must address at whose direction and with whose knowledge members of the Governor’s security detail were acting when they contacted the victim, and whether or not any other government officials participated in or had knowledge of any effort to dissuade her from pressing charges or pursuing an order of protection."

Silver should know. He did much the same thing for one of his advisers, Michael Boxley. Boxley, a legal adviser to Silver, was accused or raping two women while working in the Speaker's office, and Silver allowed a culture of sexual harassment to persevere and failed to properly investigate the matter. Silver and the Assembly leadership agreed to pay $500,000 to settle a lawsuit in the matter.

NYS Politicians Need Crash Course In Basic Math

The NY Post reports that New York Governor David Paterson is going to withhold $1 billion in payments because the state is out of money.

New York Gov. David Paterson today ordered that 10 percent of state aid payments to schools and local governments be delayed, accusing legislators of being irresponsible and asleep on the job.

The Democrat blamed the need to delay payments on the Legislature's failure to cut spending to schools and health care, which are protected by Albany's most powerful special interests. As a result, he said the state is projected to fall $1 billion short of the sum needed to pay bills due Tuesday.

For New Yorkers, the delays could mean restrictions on social services for the poor and working poor provided through counties and cities, reduced programs at schools, threats of layoffs at schools, and potentially higher local property taxes if schools and municipalities have to borrow to cover the shortfall.

Governor David Paterson is holding back 10 percent of school aid because the state is short by about $1 billion on bills it has to pay Tuesday.

Paterson told reporters Sunday from Manhattan that "many legislators, not all of them" made an irresponsible choice by failing to address the full deficit earlier this month. "The question is, who is going to wake up and face reality and who is going to continue sleeping on the job?" Paterson said.

"I can't say this enough: The state has run out of money. We are $1 billion short," he said.

New York City will apparently lose $85 million in the process, if the legislature and municipalities don't sue to block Paterson's actions.

Legislators accused the governor of overstepping his boundaries.

"Case law says the Legislature is the branch of government with the power to enact and amend the budget," said Sen. Eric Schneiderman (D-Manhattan). "He may have difficulty working with the Legislature, but it is his constitutional obligation to do so."

Added Senate Democratic majority spokesman Austin Shafran: "New Yorkers don't want political rancor or self indulgent theatrics. They want their leaders to work together to get things done."

Education groups have said they have already prepared lawsuits to file should their funding be withheld.

Well, here's where the remedial math comes into play. Paterson said that the state was facing a $3.2 billion deficit. The legislature claimed to close $2.7 billion in a budget hole. That left $500 million, not $1 billion in debt to close.

In other words, either the deficit is $500 million more than Paterson was warning about just days ago and New York's fiscal situation is even worse than he was claiming or he's exaggerating the fiscal situation in yet another ploy to get the legislature to cut spending by some amount between $500 million and $1 billion.

The state's elected officials can't even figure out what the fiscal situation is, let alone how to close the budget gap. Paterson is right that spending has to be cut in a big way, but this is something that should have been addressed when putting together the FY 2009-2010 budget, not now. Paterson and the rest of the Albany Democrats knew, or should have known, that the state was facing a fiscal disaster because of declining revenues, yet they grew the budget by 5% - increasing taxes and fees by billions to make it happen no less.

Now, tax revenues are down, including the recently enacted payroll tax (which means the MTA will have to cut service and raise fares). And lawsuits are the likely outcome of all this. Yet, every day brings the state closer to fiscal ruin because of overspending. That's the fault of everyone involved in the budget process; primarily the Democrats running the show in the Assembly (say hello Shelly Silver) and in the Senate (say hello Malcolm Smith).  This disaster is on their heads - along with Paterson.

The Rebuilding of Ground Zero, Part 72

Mayor Mike Bloomberg came out and gave a blistering attack against the Port Authority for bungling the rebuilding efforts and standing in the way of Larry Silverstein rebuilding office space on the site. Moreover, he criticized the bistate agency because it was falling behind on deadlines to rebuild the 9/11 memorial, museum, 1WTC, and the transit hub.

Meanwhile, Silverstein announced that he's going to arbitration to compel the Port Authority to carry out its obligations.

Mr. Silverstein said in a statement that the authority’s inability to complete the transit hub, a vehicle security center and other projects at the World Trade Center site had undermined his company’s ability to build three office towers along Church Street, a claim that was immediately disputed by the Port Authority of New York and New Jersey.

Mr. Silverstein has insisted in recent months that the authority finance two of the towers because he is unable to obtain real estate loans and corporate tenants for the project. Reluctant to invest in speculative office space, the agency has asked Mr. Silverstein to risk his own money before it agrees to put up additional funds.

Mayor Michael R. Bloomberg, and separately, Gov. David A. Paterson, have tried to resolve the impasse with no success.

“Today’s action is designed to provide a complementary — and expedited — route to resolving this impasse,” the developer’s statement said. “One way or another, we must resolve, once and for all, the disputes that have arisen as a result of the Port Authority’s continued and admitted delays.”

The Port Authority is clearly at fault for the delays, and would lose at arbitration, which makes its position all the more curious.

The Port Authority, which managed to rebuild the PATH temporary station (twice), now appears to be dragging its feet and doesn't feel the slightest bit of urgency in completing work necessary to prepare the site for Silverstein to build the office towers as per their contractual obligations.

Then, there's the whole issue of financing. This is a project of national importance, and yet no one appears willing or able to contact the Obama Administration to inquire about obtaining the necessary financing to get the projects built.

Assembly Speaker Shelly Silver also finds the Port Authority at fault for dragging its feet and not doing enough to make sure that the site is rebuilt. While he calls on Silverstein to increase his financial commitment to the site, the real issue is obtaining financing, and no one seems willing to tackle that issue in any serious manner.

Instead, we're going to be left with a hole in the ground that will stand as a monument to the failure of the politicians to rebuild; one that dishonors all those who were murdered on 9/11 because of the lack of political will to see the reconstruction through to completion.

UPDATE:
The Port Authority released its updates on Ground Zero construction, and they claim they met 19 of 20 construction milestones. Curiously, one of the milestones includes jumping one of the two tower cranes on 1WTC 68 feet. But, if you look carefully, the steel forming the tower hasn't grown in size during the quarter. Some progress was made on the North core of 1WTC, but it's still lagging behind.

The Rebuilding of Ground Zero, Part 70

Has there been a thaw in the cold war between Silverstein Properties and the Port Authority? Silverstein had demanded arbitration to get the Port Authority to meet its obligations to prepare the site and insure that the preconditions to building the office towers on the site were in place.

Now comes word that the Port Authority will be in a position to offer Silverstein the financing he needs to fully build the office towers if he's able to raise $625 million. It's not going to solve the mess completely, but it does indicate that some progress has been made to get development rolling.

For the first time, the authority, which owns the site, agreed to guarantee financing for both of Mr. Silverstein’s office towers, which are to be built along Church Street, at an estimated cost of $4.2 billion, according to a letter on Monday from the Port Authority to the Bloomberg administration and the office of Assembly Speaker Sheldon Silver.

But up to $1.2 billion in financing for the second tower would come only after Mr. Silverstein raised $625 million from investors or lenders, according to the proposal.

The letter, from Christopher O. Ward, the authority’s executive director, was sent to City Hall on the same day that Mr. Silverstein sought to start an arbitration process, angrily claiming that the Port Authority had violated the development agreement at ground zero.

A spokesman for Mr. Silverstein declined to comment on Thursday. He does not view the proposal as a credible offer, according to an official who spoke with him

“I don’t believe it moves the ball forward,” said Mr. Silver, whose district includes Lower Manhattan. “I don’t believe it gets us closer to a deal.”

Mr. Silver, a consistent supporter of Mr. Silverstein, and Mayor Bloomberg organized a summit meeting in May in a so-far unsuccessful effort to broker a resolution.

Andrew Brent, a spokesman for Deputy Mayor Robert C. Lieber, who leads the city’s negotiating team, declined to comment on the proposal, citing an agreement among the parties not to negotiate in public. But two officials who had been briefed on the new proposal said that it was a step in the right direction, although they noted what they called some serious flaws.

One flaw, one of the officials said, is that the financial structure would make it nearly impossible for Mr. Silverstein to raise $625 million in the credit markets, where there is little money available for real estate projects.

It's the credit crunch that has been a recent stumbling block, and it's in this arena that the state's US Senators, Gillinbrand and Schumer, should be pushing President Obama to provide Silverstein with the access to credit needed to rebuild at Ground Zero.

Considering the thousands of jobs at stake and that this is truly a shovel-ready project, it would appear to be a no-brainer, but this is the Obama Administration we're talking about. They'd be in a position to rescue the development at Ground Zero, but are incapable or unwilling to do so.

Continued delays can and would put the completion of the 9/11 Memorial in doubt in time for the 10th anniversary commemoration.

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.

The Rebuilding of Ground Zero, Part 66

The situation at Ground Zero is rapidly deteriorating because of the political machinations of the Port Authority and the bi-state control of the Authority between New Jersey and New York. The Port Authority is ponying up billions to assist New Jersey in the construction of the Trans Hudson Express (THE) tunnel, which was originally meant to upgrade service for NJ Transit and Amtrak, but now appears to be a NJ Transit only tunnel.

Meanwhile, Ground Zero construction is lagging and the Port Authority is stonewalling on modifying a deal with Larry Silverstein to provide him with credit lines so that he can proceed with building office towers at the complex.

In other words, the Port Authority is not prioritizing Ground Zero appropriately. It's something I've been saying for some time as there is a genuine lack of urgency on the part of the Port Authority to build out Ground Zero. Yesterday, we learned that the Port Authority wants to go ahead and build stumps of office towers, dooming the site to decades of construction going forward, rather than building out the towers fully.

We also finally heard from Assembly Speaker Shelly Silver, who wants to throw a monkey wrench in the Port Authority plans - all of them. He notes that if the Port Authority doesn't come to terms with Silverstein and get the Ground Zero construction moving, he's going to stymie other Port Authority construction projects, including the THE tunnel. Where was Silver for seven years? He was largely absent from the discussions, and the lack of leadership among New York politicians on the matter - from US Senators on down to New York City officials is part of the reason that the situation has persisted for as long as it has.

Now, the Port Authority is looking to turn part of the planned 5WTC into a residential tower and hotel. Bear in mind that there was a Marriott hotel (former the Vista International) at Ground Zero, which was along West Street and was destroyed by the collapsing towers. The Port Authority is trying to downsize the amount of office space at Ground Zero because of what it perceives to be a loss of interest in office space.

I think it's a serious mistake as construction isn't just meant for today's conditions, but for those a decade and more from now. Silverstein says that he remains committed to fully rebuilding Ground Zero's office space. He's the only optimist in the whole bunch, as Mayor Bloomberg and others have repeatedly claimed and proposed cutting back office space to build residential or other space.

Meanwhile, there is finally some good to come out of the fatal fire at the former Deutshce Bank building as new building regulations are set to make deconstruction safer.

UPDATE:
As I was leaving the PATH station at Ground Zero, there was an awful stench that reminded me of scorched metal and instantly brought back memories of the smell that hung over Lower Manhattan for months following the 9/11 attacks. As I reached street level, I arrived just in time to see emergency personnel carrying out what appeared to be a worker on a stretcher to a waiting ambulance, which may have been heading to St. Vincent's hospital for treatment. I haven't seen any reports on the incident, but I suspect that accident and the smell were related.

UPDATE:
Effective May 18, 2008 and running for the next 18 months, PATH service between Hoboken and World Trade Center will see service disruptions as construction of the permanent terminal ramps up. One of the two tracks servicing Hoboken will be out of service in addition to the 5th track that was taken out of service several weeks ago.

UPDATE:
About time. We're finally learning that Fiterman Hall will be demolished by late fall. The demolition will mean that the PATH entrance and access to 7WTC will be impaired by the construction work done at the adjacent Fiterman Hall.

It's still years away from being rebuilt, but the Dormitory Authority is finally moving ahead.

UPDATE:
It turns out that I wasn't seeing things this morning. A construction worker was injured at Ground Zero; an ironworker fell 20 feet while on a break from erecting steel for the 9/11 Memorial. His injuries weren't life threatening.

His injuries are not thought to be life-threatening, according to a spokesman for the Port Authority, which oversees construction of the underground museum and street-level memorial plaza.

Around 8:15 a.m. Guido Castro, of Cornell Crane and Steel, fell about 20 feet, from the third to the second floor. The worker was taken to St. Vincent’s Hospital for treatment, but by the afternoon the hospital had yet to determine his condition.

“He was on his break, and it looks like he just slipped off the edge of the deck,” said the spokesman, Steve Coleman. According to Coleman, Castro was wearing a safety harness at the time, but it was not tethered to the structure.

The Rebuilding of Ground Zero, Part 65

This is especially troubling and disconcerting news, even though there had been rumblings that the Port Authority would go in this direction.

The Port Authority is now seriously considering building what can only be politely called stumps of two of the office towers that were set to grace the Eastern side of Ground Zero. These two towers, which were to be designed by world famous architects Richard Rogers and Sir Norman Foster, are apparently on the chopping block in more ways than one. The excuse is that they don't want to build out 10 million square feet of office space, and are instead proffering an option that builds 5 million square feet (the original WTC complex contained 10 million sf when it was destroyed by Islamic terrorists on 9/11).

Bludgeoned by recession and a war with developer Larry Silverstein, the Port Authority is proposing halving the office space it will build at Ground Zero - from 10 million square feet to 5 million, sources familiar with the plan say.

The sources say the agency's new vision for the site calls for scrapping one tower that would have been taller than the Empire State Building and nixing two others that would have dwarfed the nearby Woolworth Building.

In place of two Silverstein behemoths, each designed by a British lord and soaring 79 stories, the PA would erect a pair of short, squat buildings no taller than four or five floors - coined "stumps" - that could be used for retail shops, according to the proposal.

The vastly scaled-back site plan was disclosed to The News hours before Assembly Speaker Sheldon Silver on Friday branded budget-busting delays and cost overruns at the 16-acre site an "embarrassment to our city, our state and our nation."

For a change, I actually agree with Silver. It is an embarrassment. Of course, Silver deserves some of the blame for that, by refusing to push the Port Authority and the State to get construction moving years earlier than it eventually did. Silver has been an obstructionist on major city projects for years, including the Hudson Yards project (which would have resulted in major office building development on the West Side), and various other projects unless he benefited politically.

Now, Mayor Bloomberg is holding a summit on the Ground Zero rebuilding, including all the major players.

Expect Larry Silverstein to be thrown under the bus, despite the fact that he's the only one to have built anything of permanence on the remains of Ground Zero. His 7WTC is a stark reminder of the failings of the LMDC, City, State, and Port Authority. Yet, all too many people are looking to blame Silverstein for the impasse, even though the Port Authority still hasn't turned over the site for 3 and 4 WTC to Silverstein to build and the former Deutsche Bank building wont be demolished until 2010 delaying the ability to access the site and construct the vehicle security center that will service the entire site.

Also, with all the trillions thrown around by the Obama Administration, no one can seem to find the money to make sure that the construction at Ground Zero can proceed without worrying about the money woes? Silverstein's construction efforts are hampered by the inability to secure credit. He's been trying to get the Port Authority to provide the credit, which hasn't been forthcoming.

If the Administration (and the state and city) want to make sure that Ground Zero doesn't remain a perpetual construction site, make the loan commitments to Silverstein and get out of the way so that he can rebuild.

NYS Pension Pay To Play Investigation Expands To Include NYC Comptroller's Office

New York City Comptroller William Thompson called for an investigation of his own office into dealings with Quadrangle and placement agents, but NYS Attorney General Andrew Cuomo looks like he's going to expand that investigation even further.

Scrutiny in recent days has focused on deals between the city pension funds, overseen by Mr. Thompson, and the Quadrangle Group, a private equity firm whose deals are one of the focuses of parallel corruption inquiries by Mr. Cuomo’s office and the Securities and Exchange Commission.

Mr. Thompson, the leading Democratic challenger to Mayor Michael R. Bloomberg in this fall’s election, called for the investigation of his own office and its transactions with Quadrangle to clear the air, though Mr. Cuomo suggested in his own statement that he was undertaking a broader review. (Also see The New York Post.)

Quadrangle was founded by Steve Rattner, who is now serving as President Obama's car czar. Quadrangle hired Hank Morris to serve as a placement agent, and Quadrangle is under investigation as to whether it failed to disclose the hiring of Morris to various pension funds around the nation, including New York City and New York State.

That's on top of an ongoing SEC probe:

The development is the latest in a widening investigation by Cuomo's office and the Securities and Exchange Commission. At the center of the two-year probe are millions of dollars in payments made by private-equity firms and hedge funds to middlemen known as placement agents who helped the firms win investments from New York state's pension fund. The firms include District-based Carlyle Group and New York-based Quandrangle, co-founded in 2000 by Steven Rattner, who stepped away from the company in February to lead Obama's auto industry task force.

The scandal prompted New York State Comptroller Thomas P. DiNapoli on Wednesday to declare a ban on the use of placement agents by investment firms that do business with the state pension fund. DiNapoli also announced his own review of pension fund investments in firms under investigation by Cuomo and the SEC.

Paying fees to placement agents is a common industry practice and is not illegal -- unless it was a kickback to win business. While the former chief investment officer for New York's state pension fund, David Loglisci, and two politically connected placement agents, Hank Morris and Ray Harding, have been charged on multiple felony counts, none of the investment firms or their executives have been charged with any wrongdoing.
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Placement agents are paid fees for performing work such as arranging meeting with potential investors and preparing marketing materials for them, and coaching investment managers on how to pitch their funds. Authorities allege that Morris did nothing of the sort and conspired with Loglisci to sell access to the $122 billion he managed.

Firms that did not play along allegedly suffered, according to a source familiar with the case. A Dallas-based private equity firm, Pharos Capital, has told investigators that it was approached about the need to pay a middleman after it was already far along in discussions about a potential investment. Pharos was then told by Loglisci that that person, a friend and hedge fund manager, Barrack Wissman, needed to be hired. Sensing something was not right, Pharos declined, the source said, and ended up losing the potential investment. Wissman last week pleaded guilty to a felony charge.

For the moment, it appears that Cuomo is looking to get concessions from various investment managers instead of seeking prosecutions in a rather difficult set of circumstances.

UPDATE:
The Daily News reports that Assembly Speaker Shelly Silver was busy trying to shepherd several equity funds in seeking business with the NYS pension fund. In fact, Silver sat in on meetings between the Comptroller's office and these private equity firms. It smacks of impropriety, although Silver's flack claims no wrongdoing:

Silver twice arranged sitdowns with the controller, who has sole control over pension investments, the Daily News has learned.

One of the most powerful men in Albany, Silver a few years ago accompanied investor Shlomo Kalish of Jerusalem Global Ventures to meet with then-Controller Alan Hevesi to discuss a possible deal.

More recently, Silver and Richter met with Controller Thomas DiNapoli. Richter, the hero of the 1994 Stanley Cup team, is a partner with Environmental Capital Partners.

The pension fund ultimately took a pass on both deals.

But the involvement of Silver - whose spokesman Dan Weiller confirmed the meetings - has raised serious questions among government watchdog groups.

"At a minimum, it's an appearance of impropriety," said Susan Lerner, of Common Cause-New York. "It's very inappropriate because it looks as if the speaker is using his office as the most powerful elected official in the Assembly to try and influence the controller, an independent elected official," Lerner added.

"It has a tacit stamp of approval from the speaker when he's sitting there during the meeting, and that's extremely troubling," Lerner said.

Weiller said the speaker has no financial connection to Kalish, Richter or their firms, and that there had been no deals for him to receive any fees. He said Silver met Kalish, who could not be reached for comment, during a trip to Tel Aviv with the American Israel Friendship League.