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Originally Published: April 3, 2013

Responds To federal complaint against Senator Malcolm Smith and City Councilmember Dan Halloran with proposals for campaign finance reform, new power for State Attorney General and nonpartisan elections.

Historic Good Government Group Provides Facts and Background Information on Reforms Made to City Council Discretionary Funding Process to Ensure Proper Vetting of Funding.

Citizens Union, like all New Yorkers, is stunned, but sadly, not surprised by the arrests yesterday of State Senator Malcolm Smith and City Councilmember Dan Halloran among others for wire fraud and bribery in an apparent scheme to advance the mayoral candidacy of Senator Smith by enabling him to run in the Republican party primary. At last count, 20 state legislators since 1999 have been ousted from office because of criminal or ethical issues. Malcolm Smith and Vito Lopez could make it 22.

Senator Robert F. Kennedy once said that “politics should be the honorable profession.” But we see the opposite in today’s New York. Despite continual convictions of their colleagues for public corruption, too many elected officials in New York State and City seem to be in denial about the consequences of corruption. They stunningly fail to acknowledge this reality: acts of corruption will not go unnoticed or unpunished. Indeed, Citizens Union’s own reports in 2011 and 2009 on turnover in state government reveal the persistence of ethical transgressions in driving elected officials out of state government. Twenty state legislators have now been ousted from office because of ethical or criminal issues since 1999, and we presume that number will likely grow with the arrests made on Tuesday.

Citizens Union agrees with the sentiments expressed by United States Attorney Preet Bharara, who has called for a more systemic city and state government response to public corruption, but we add – “ENOUGH ALREADY“. The pursuit of money in our political system and the rising corruption driven by self-interest must end.

The integrity of the government in New York State and City cannot rely exclusively on the fine work of Mr. Bharara and his office. While the state enacted meaningful ethics reform in 2011, too often both state and city ethics bodies are failing to identify and pursue major acts of corruption hampered by self-imposed limits placed on the low level of vetting before the public. Federal law enforcement officials have continually filled the void.

But state and city officials can change our laws to stop the tide of corruption:

  1. Pass comprehensive state campaign finance reform that includes improved public financing, creates a strong and effective enforcement mechanism, closes loopholes, lowers contribution limits, and ends the pay to play culture.
  2. End Tammany Hall-style political party bossism in New York City and partisan elections once and for all by opening up all our elections to all New Yorkers. Implement a top-two primary election system open to all eligible voters, regardless of party status, so that every registered voter can participate in the election that is often the most determinative of who is elected to office in New York. The top two candidates would then move onto the general election in which all eligible voters would again vote.
  3. Give the state Attorney General the power to initiate and pursue allegations of public corruption and election law violations, including campaign finance laws, and ethics laws. This can be accomplished by either the Governor assigning such authority through executive action or legislative passage of a new law granting this new and needed power.
  4. Fully fund the enforcement and oversight function of the state and local boards of election.
  5. Demand that county district attorneys exercise their authority to pursue referrals by boards of election related to election and campaign finance law violations. Many informed New Yorkers believe DAs are not aggressive enough in this arena because of the need to win the support of political party leaders for election or re-election.
  6. Revamp state and local boards of election and change our laws so that commissioners and staff are selected based on merit, and not by party chairs and patronage, which creates the transactional environment conducive to corruption.

City Council Member Item Reform

As background information, Citizens Union includes a summary of discretionary funding reforms that have been put in place since 2006 to safeguard public dollars and ensure that they are used properly. See also Citizen Union’s May 2012 comprehensive report, Creating a More Equitable and Objective Discretionary Funding Process in New York City. We believe many of the reforms that have been put in place would have likely prevented Councilmember Dan Halloran’s ability to do what he promised, but they would not have prevented an arrogant councilmember from boasting on his ability to deliver.

Background Information on the Discretionary Funding Process

Recent Reforms

Beginning in 2006, Citizens Union worked with the City Council to enact reforms to the City Council’s discretionary funding process that put in place important safeguards to ensure that funds are properly used and that only legitimate organizations receive funding.

First, organizations receiving funding must be pre-cleared, which involves organizations meeting criteria specified by the Procurement Policy Board, registration with the Attorney General’s Office of Charities, and undergoing a business integrity check. This pre-clearance is conducted under the supervision of the Mayor’s Office of Contract Services (MOCS). For more information, see the Council’s press release from May 2008 regarding this reform.

Conflicts of interest protections were also put in place as part of the May 2008 reforms. Specifically, organizations must provide signed conflicts statements and qualification forms which require organizations to attest to a conflicts statement punishable under penalty of perjury. Funding requests will not be processed without a completed organization qualification form. Councilmembers must also sign conflicts statements. The Council or Finance Committee will only vote on discretionary or initiative-based funding requests if qualification forms and conflict statements are complete.

The City Council has also developed an online application process for organizations seeking discretionary funds. Organizations can select whether they wish to be funded by an individual member, borough delegation, through the Speaker’s List, or through the borough presidents. After applications are processed, hearings have been held by borough delegations, for example, asking applicants for more information about the proposed projects or programs.

All discretionary funding contracts are managed by the relevant city agencies following approval by the Council during the budget process.

Further reforms were adopted in 2010 that limit the ability of Councilmembers to improperly influence funding, and for the vetting of organizations receiving discretionary funds including:

  • Limits on the hiring of consultants were put in place through requirements that each contract is subject to approval by the Council and relevant city agency and the use of the consultant must be within the scope of the services to be provided;
  • Council Members cannot sublet office space to any person or organization other than another elected official;
  • Funding via fiscal conduits was limited to no more than $10,000 or less than $1,000, as well as vetting of conduits and limits on number of organizations receiving funding through these means;
  • New non-profits that were created in 2009 or 2010 were limited to $15,000 in total cumulative funding and an individual maximum of $7,500 per council member; and
  • Organizations must provide information regarding prior funding sources.
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