The Nexus of Money & Power in Albany

The Nexus of Money and Power in Albany An Agenda for Reform Blair Horner Special Adviser on Policy and Public Integrity to the New York State Attorney General A Public Policy Paper published by the Hugh L. Carey Center for Government Reform at Wagner College Staten Island, New York

The Hugh L. Carey Center for Government Reform at Wagner College Dr. Seymour P. Lachman Director The Hugh L. Carey Center for Government Reform at Wagner College conducts non-partisan studies proposing ways to change New York’s dysfunctional legislative process. This Public Policy Paper is an edited transcript of the Al and Frances Hochman Memorial Lecture, presented by Blair Horner, Special Adviser on Policy and Public Integrity to the New York State Attorney General, at Wagner College on October 1, 2007. Wagner College One Campus Road Staten Island, New York 10301 Tel: 718-420-4131 seymour.lachman@wagner.edu www.wagner.edu

The Nexus of Money and Power in Albany An Agenda for Reform Welcome Dr. R ichaRd GuaRasci President, Wagner College It is a pleasure today to welcome you to the first Al and Frances Hochman Memorial Lecture, sponsored by the Hugh L. Carey Center for Government Reform at Wagner College. The Carey Center has many purposes, but its core mission is to be a beacon of light for transparency about public practices in government in our democratic society. Few places have been more subjected to more scrutiny in recent years than our state government in Albany, which a number of critics and scholars have characterized as in some ways the most bureaucratized and least democratic among our nation’s 50 states. Whether that is true or not is a matter for discussion; but it is a government system that tends to be determined by policies, programs and personal relationships of just three men: the Governor, the Assembly Speaker and the Senate Majority Leader. It is also a pleasure to introduce Dr. Seymour Lachman. As an educator; as the youngest chair, I believe, New York City’s Board of Education; as a noted professor and administrator of the City University of New York, and as a State Senator who has written a remarkable book about New York State government entitled Three Men in a Room, Dr. Lachman is now a member of Wagner College’s faculty and the director and driving force behind the Hugh L. Carey Center for Government Reform. Introduction Dr. seymouR Lachman Director, Hugh L. Carey Center for Government Reform Though I have just been described as the driving force behind the Carey Center for Government Reform, we are very fortunate at Wagner to have Richard Guarasci as our president, because this and other programs and projects would never have seen the light of day without his vision — and also the vision of Carin Guarasci. We thank you very, i

The Nexus of Money and Power in Albany: An Agenda for Reform very much. We are also immensely grateful for the support Jerome Berg has provided to the Carey Center. Jerry and I have known each other for about twenty years. He was a very distinguished member of the City University of New York board of trustees. And though we’re of different parties, we’re very close friends. When I arrived on campus this afternoon, I happened to see someone strolling around the grounds whom I had not seen for a while. As it turned out, he was walking so that he could recover from driving three and a half hours from Albany; and though we offered to put him up overnight at the Waldorf-Astoria, he insists on driving home this evening to Albany. That casual stroller is Blair Horner, our guest lecturer today. Blair is an extraordinarily gifted man who until recently served as legislative director of NYPIRG, the New York Public Interest Research Group, which is probably the largest group, qualitatively if not quantitatively, advocating reform measures in Albany. NYPIRG has branches around the state, including the State University at Stony Brook and Nassau Community College on Long Island. I hope that next year there will also be a branch at Wagner College. Allow me to give you an example of Blair Horner’s talents and devotion to the public good. Twenty years ago he and The New York Times literally broke up the tobacco lobby in Albany after he dug into files in Minnesota to find out what tobacco industry lobbyists were contributing to legislators’ electoral campaigns to get favorable legislation passed. That is just one of his many accomplishments. Blair recently changed jobs and he now serves as special advisor on policy and public integrity to New York State Attorney General Andrew Cuomo. For the past eight months he has been working on a program called Project Sunlight. He is here not only to describe its purpose but also to get your reactions so that he might improve its final product. I am delighted, Blair, that you are here at Wagner College. Welcome to the most beautiful campus — and the highest point — in the City of New York, and welcome to our home on Staten Island.  ii

The Hugh L. Carey Center for Government Reform • Wagner College The Nexus of Money and Power in Albany An Agenda for Reform Blair Horner Special Adviser on Policy and Public Integrity to the New York State Attorney General It’s amazing that on a beautiful day like today you are all inside this lecture hall because you are all interested in reform. That is great, and I appreciate your all coming here this afternoon. “Could you, I would also like to thank President Guarasci and Senator Lachman for their kind Blair, try to introductory words. Finally, thank you to the Hugh L. Carey Center for inviting me. pull together As you have already heard, I worked with a group called NYPIRG, the New York Public various existing Interest Research Group, from 1979 until March of this year, when I left to work for New York state databases Attorney General Andrew Cuomo because he had a very interesting idea. “Could you, Blair,” into one, easy- he asked, “try to pull together various existing state databases into one, easy-to-use way so that the public can monitor the political activities and policymaking at the State Capitol?” to-use way so Something like this had never been done before. So it intrigued me. It was a way to that the public try to actually accomplish something, as compared to just lobbying to get bills passed. I can monitor would have an opportunity to try to make it happen, and that is what I have been doing the political since March 2007. activities and We call this initiative Project Sunlight, and to explain its aim and how it will work, policymaking let me provide a brief sketch of how Albany works. Then I will describe what the Project at the State Sunlight Web site is going to do and how all this fits in. Capitol?” Unlike New York City, for example, where candidates for public office can receive public money for their election campaigns, candidates for elective office in New York State, as in most of America, rely on private donations to raise money to run for public office. Every state, though, has its own rules. Let me give you a flavor of the rules that drive New York State government. Then I will offer some ideas for what you can do about it. My aim is not to tell you what to do. Rather I am going to try to educate you about how it works and give you some suggestions on where you can go to get more information. Then you’re on your own. The Nexus of Money Four numbers go a long way toward explaining how Albany works: (a) $94,200; (b) $151 million; (c) the numerical concept “unlimited”; and (d) under one percent. 1

The Nexus of Money and Power in Albany: An Agenda for Reform The first number — $94,200 — is the legal annual limit of campaign contributions an individual can write in New York State. You can write a check for $94,200 each and every year to the political party of your choice; the party can then give that money to the candidates of its choice. In addition, an individual can contribute up to a total of $55,000 (combined) to the primary and general election campaigns of a candidate running for statewide office; $15,500 (combined) to the primary and general election campaigns of a candidate running for the State Senate, and $7,600 (combined) to a candidate for the State Assembly. That may not seem like a lot. But in fact it is. Of states that have limits, and there are some that do not, New York State’s legal annual limit is the highest in the country. Compare any of these numbers with the campaign contribution limits for a U.S. Senate or U.S. House of Representatives race, which have combined primary and general election contribution ceilings of $4,200. New York’s number are big numbers. Who writes those checks? We’ll come back to that. The second number is $151 million. Last year $151 million was spent on lobbying in New York State. Under state law someone who expects to spend $5,000, or someone who is paid $5,000 or more to influence the introduction or passage of legislation is considered a lobbyist and must report those activities to the State. The New York State Commission on Lobbying reported that $151 million was spent on lobbying activities in Albany during 2006. Figure 1 provides a list of the top spenders. Not surprisingly, the health care industry is prominent because Figure 1. the State plays a large role in providing Medicare reimbursements to hospitals and doctors. Along with health care providers and real estate developers, public employees and unions dominate spending on lobbying. The third figure is the numerical concept “unlimited.” Let us say that someone wishes to give more than $94,200 in a single year to political campaigns in New York State. The fact is: You can. Just to show that New York’s lawmakers have a sense of humor, they have created something called “housekeeping” accounts. When most people think of housekeeping, they think of someone wielding a vacuum cleaner or changing light bulbs. But in New York a “housekeeping” account is another name for “soft money.” This money cannot be used directly to benefit candidates, but it can be used by political parties to do everything else that doesn’t directly effect candidates, such as pay for office space, staff, computers, voter registration 2

The Hugh L. Carey Center for Government Reform • Wagner College drives. An individual can give as much as he or she wishes to by contributing to such “housekeeping” accounts. Figure 2 provides a list of some of the people that gave over $100,000 or more during the last election cycle in New York. Thus if someone wants to contribute more than $94,200 a year to New York State political activities, it is easy to do so. The only limitation is that the additional money cannot be devoted to specific candidates. The last number: Under one percent. In New York all campaign contribution filings are available online on the World Wide Web. These filings are there Figure 2. for anyone to see. And if you look at the number of individuals who directly wrote a check, that number is less than one percent of New York State’s population. The dominant features of New York’s political environment are big campaign contributions, a lot of money spent on lobbying, and a small number of donors — all in a system that is funded by private donations. Where does the money come from? • Last year, nearly nineteen percent came from corporations and partnerships; • Thirty percent came from PACs, or political action committees. Some examples are labor PACs, business PACs, trade associations of doctors and lawyers; • Half of one percent came from candidates and their families; • Almost seven percent was donated by individuals who gave less than $250; and • Forty-three percent came from individuals who gave more than $250. But the number of people who generated that forty-three percent of the total amount of money donated for political activities represents only one half of one percent of the population of New York State. Figure 3 shows some of the big political action committees. Political action committees allow individuals to pool their money to help a candidate. Each individual who contributes to a PAC must stay within the $94,200 per person annual limit; but there is no aggregate limit on how much a PAC can contribute. The largest PACs in New York State last year were: SIECU/1199, a union that represents hospital workers; trial lawyers; Figure 3. 3

The Nexus of Money and Power in Albany: An Agenda for Reform teachers; the Greater New York Hospital Association; the New York Association of Realtors, and the Empire Dental PAC. Again, many of the same associations that are the biggest lobbying groups also sponsor PACs. Health care, public employees and lawyers dominate the system. In addition to soft money, there are other loopholes as well. In New York you can create limited liability corporations, known as LLCs, and you can create multiple such corporations — and through them you can give as much as you wish. LLC donations have jumped dramatically in the last few years, and this has led to the emergence of a practice called “bundling.” “Bundlers” — oftentimes lobbyists — pool campaign contributions and then deliver those contributions to candidates, and such activity does not have to be reported under New York State law. A New York Times story looked at some of the big LLCs in New York (Figure 4). As you can see, between 1999 and 2006, one individual gave nearly $1,000,000 through fifteen LLCs. Thus New York’s high limit on individual contributions, plus its many loopholes, means that if you’re smart you can give as much as your bank account can handle under New York campaign finance law. Figure 5 is a diagram that looks like an Egyptian hieroglyphic. It shows all of the different ways an individual can funnel money to a candidate running for governor. One important note: This diagram Figure 4. describes the 2006 election cycle. Campaign contribution limits are regularly adjusted for inflation. In 2006 the limit was $84,400; this year, with the adjustment for inflation, the Figure 5. limit is now $94,200. The Nexus of Power A great deal of money was spent during the last election. And when you start to look at the number of close electoral races, the influence of money on the political system becomes apparent. There were very few competitive races, in terms of the number of races where close amounts of money were spent. In 2006, there were twenty state races in which the ratio of campaign spending between the winner and the loser was less than two to one. The way New York’s political system currently works, large amounts of money typically to incumbent candidates. This makes it very difficult for a challenger to win an election. In New York Republicans have controlled the State Senate and Democrats have controlled the Assembly for over thirty years. It is the longest period of time in the United States when neither house of a state government controlled by opposing political parties has 4

The Hugh L. Carey Center for Government Reform • Wagner College changed hands. Moreover, the majorities in each house of the State Legislature have more or less stayed the same size, although recently it has gotten a little tighter for the Republicans in the Senate. Campaign finance is a powerful, but not the sole, factor. In New York State, legislators draw the boundaries of all legislative districts. In the State Senate, its Republican majority draws district lines for the Senate, and in the Assembly, Democrats draw lines for Assembly districts. The result is that very few legislative districts have party enrollments that are close. Of sixty-two Figure 6. seats in the State Senate, only eleven Senate districts have major party enrollments that differ by as much as thirteen thousand registered party voters. For the Assembly’s one hundred fifty seats, only fourteen districts have major party enrollments that differ by as much as five thousand registered party voters. This is no accident. Only twenty-five districts have close enrollments. In 2006, of a total of two hundred twelve State Senate and Assembly districts, only twenty had competitive elections. Electoral races in fifty-two other districts were uncontested, and races in another one hundred forty were non-competitive (Figure 6). Again, this is no coincidence. Republicans in the Senate and Democrats in the Assembly draw legislative district lines to ensure that as few districts as possible are truly competitive; then the party that currently holds the district tries to pour as much money as possible into those few competitive races so that it can keep control of the district with an election victory. An Agenda for Reform I don’t know how this strikes you. I assume it is not a shock if you’ve been paying much attention to how politics works in New York State. But it is sobering to see how the system works. That is why reformers, including my boss, Attorney General Andrew Cuomo, support a variety of reforms designed to make the system work better. In New York, for example, disclosure requirements for campaign contributors are minimal in comparison to the rest of the country. Moreover, we have weak enforcement. Both can be improved. In addition other kinds of reforms, such as public financing and independent redistricting commissions, can be implemented to make the system more competitive. The Attorney General, in his role as a statewide elected official, has some clout. But in the legislative process, the key players are legislators in the State Senate and Assembly, and the Governor. It is hard for the Attorney General to drive policy changes. So when 5

The Nexus of Money and Power in Albany: An Agenda for Reform Attorney General Cuomo came into office, he wanted to develop something that would enhance the debate for change and would not require legislation. That is the origin of Project Sunlight. Roughly a year ago the Attorney General proposed to improve the public access to information so that New Yorkers would be more informed about what is going on. His theory was that if the public becomes more engaged in the way Albany operates, the public can exert pressure for change. The idea is to get nineteen million sets of eyeballs focused on the State Capitol and to start a civic dialogue about what kind of democracy we want to have in New York State. That’s where I came in. The Attorney General’s proposal was to link databases in a way that will provide the public with ready access to information, and to put that information together in a way that can empower the public to monitor activities of state government. These are the kinds of things you could not do ten years ago. But you can now, thanks to the Internet. These databases are all maintained in electronic form or can be easily transferred to electronic form. My job has been to work with State agencies to try to get them to give us their data, and then to work with a technology staff to develop a Web-based system so that people can use the data in ways that enhance their understanding of state government. Governor Spitzer agreed and proposed funding, which the State Legislature approved in April. We received the first round of data from state agencies at the end of May, and our Web site is now coming down the home stretch. We still have a few snafus to work out, such as sufficient bandwidth to handle the traffic we anticipate. Here are a few examples of the current version of the Web site. It may change. We want to create a civic dialogue about how we might enhance the site by the end of the calendar year, and then put up a revised version of it before the election next year, which is when people will really want to use it. Here is what it currently looks like. Figure 7 (left) shows the opening page. On the left you see a panel with a variety of search options. Our assumption is that there are two types of users. The first are knowledgeable about State government — journalists, academics, wonks — and they will probably want to use the “Search all databases” option. That option enables users to Figure 7. type in keywords — a 6

The Hugh L. Carey Center for Government Reform • Wagner College name, an address, whatever — and search all the databases at the same time. The second type of users are people who are interested in State government but don’t really know what they’re looking for and don’t really know about these databases. So on the left of the opening screen is a video with a voiceover narration that explains how the site works and can be done with it. We have also designed predetermined paths through the system for novice users. If you want to search by a legislative bill number, by lawmaker, lobbyist, or member item (which is a way lawmakers appropriate money to spend in their districts), or search for a keyword in a bill, you will be able to do that and then go down a path that we have organized. For example, if someone wants to browse by lawmaker, which I think is the way most people would start, you will be able to get that information. Then, on predetermined paths you can finds all the bills a legislator has introduced. You will also be able to look at what member items legislators have sponsored, and you will be able to search all of those “Knowledge member items at the same time. You will also be able to link to the lawmaker’s official will forever Web site. If you go to the lobbyist Web site, you will be able to connect the lobbyist with govern bill numbers. And if you do a search using the name of a state elected official, you will be ignorance; able to look at all the campaign contributions to that official. and people Also, we’ve designed other videos so that if you don’t remember this presentation, who mean to and you think to yourself, “Now, what is it about lobbying again? When does somebody be their own have to register?” the Project Sunlight Web site will have a video to explain those kinds of issues as well — a list of videos to make it simpler for people to figure out the basics of governors must how state government works. arm themselves As you can also see, there is also a button on the right to provide user feedback. We want with the feedback from everyone to make further development of this Web site an organic process in power which response to the public’s requests for information — such as additional databases, something knowledge that we have up there that doesn’t really work, how do we make it better, and so on. gives.” James Madison, one of our nation’s founders, wrote, “Knowledge will forever govern – James ignorance; and people who mean to be their own governors must arm themselves with Madison the power which knowledge gives.” If you want to have a government in which citizens are the governors, then citizens have to know what is going on. But without easy access to information it is hard to make an informed decision about for whom to vote. That is why Project Sunlight is so intriguing to me. That’s why I wanted to leave what I was doing and to make it happen. This has never been done before. If we succeed in getting this to work and get it out and people like it and it gets better, I think it’s a prototype for the kinds things that government should be doing in the twenty-first century: How do you use databases to educate the public so they can make their own decisions? How can you make a decision on your own personal point of view on stem cell research unless you have access to information about it? How can you figure out what should be proper health care policy unless you have access to the vast amounts of information that the government collects right now on hospitals? What I have presented is a prototype of Project Sunlight. To do this properly, to drive the debate, to make New York government more open, easier to use, and to fire up the electorate to pay more attention to what’s going on in the state government is what Project Sunlight is all about.  7

The Nexus of Money and Power in Albany: An Agenda for Reform The Hugh L. Carey Center for Government Reform at Wagner College Dr. Seymour P. Lachman Director Adam Simms Senior Research Fellow Senior Policy Analyst Joshua Spivak Research Fellow Susan Rosenberg Administrator The Hugh L. Carey Center for Government Reform at Wagner College conducts non-partisan studies proposing ways to change New York’s dysfunctional legislative process. Wagner College One Campus Road Staten Island, New York 10301 Tel: 718-420-4131 seymour.lachman@wagner.edu www.wagner.edu

The Nexus of Money & Power in Albany

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