Testimony on Elected Official Compensation

Good Morning, Chair Felder, members of the Government Operations Committee, and other members of the City Council. My name is Dick Dadey, and I am the executive director of Citizens Union of the City of New York, an independent, non-partisan, civic organization of New Yorkers who promote good government and advance political reform in our city and state. For more than a century, Citizens Union has served as a watchdog for the public interest and an advocate for the common good.

I wish to commend the City Council, its Speaker, Christine Quinn, and you as Government Operations Committee Chair, for the decision to follow through on your commitment last year to hold a public hearing to address the issues raised by last year’s consideration of salary increases for our city elected and the report submitted by the Advisory Commission for the Review of Compensation Levels of Elected Officials, the recommendations from which Citizens Union supported.

Citizens Union provided testimony on this subject last year at both hearings in June and November. Since then, significant pay raises were enacted for the Mayor, Comptroller, Public Advocate, Council Members, Borough Presidents, and District Attorneys in line with the commission’s recommendations.

My testimony today will focus on three major outstanding issues from the Commission’s report and our testimony of last year:

1. Banning stipends or “lulus” for all but core leadership positions.
2. Ensuring that future Councils do not raise their own salaries while serving in their current term and only increase salaries for those elected officials who are elected or re-elected for the next term in office.
3. Whether the job of member of the City Council should be officially defined as a full time position and if not, to what extent should members be allowed to earn outside income.

At the outset, let me restate Citizens Union’s view that it believes strongly that given the population size of the city of New York, the demanding responsibilities placed upon most of our elected officials to manage a complex operation like the City of New York, which has the fourth largest governmental budget in the United States, and the myriad of constituent services these elected officials are called upon to provide, the compensation of the offices of the city’s elected officials needs to be reasonable enough in order to attract individuals to public life who are talented, committed, and well qualified to carry out their jobs as successfully as they can.

We further believe that members of the city council should be compensated well enough so that if they choose to enter public life, their annual salary is sufficient to live a modestly appropriate and fulfilling lifestyle, and in many cases enough to support and raise a family in the city.

We believe that the compensation of members of the city council in particular – and the requirements or restrictions affecting the earning of outside income – should be structured so as not to serve as a deterrent to anyone who desires or seeks public office.

I. Abolish Stipends for Most All Leadership Positions and Chairs

Citizens Union has long criticized the awarding of “lulus” as unnecessary extra compensation and urges the Council to drop the outdated practice of distributing stipends or “lulus” for committee chairs and most of its leadership positions.

Stipends are no longer provided in many state legislatures or city legislative bodies, and should not retain a place in the New York City Council. The fact that forty-six members of the City Council earn an extra stipend in addition to their base salary – that on average is an additional $10,000 of income on top of a $112,500 salary – shows the duplicity of the claim that members are earning extra money for their extra committee or leadership work. That 90% of all council members receive a stipend for “additional” work beyond that of serving as legislative representatives shows the fallacy that belies the claim. In reality, it is a way for the Speaker to exert influence over individual members, and reward those who either are loyal or need incentives to become faithful, by providing them with greater responsibilities or loftier titles that come with additional income. Conversely, not providing or taking away a stipend is another way which the Speaker may use to seek fealty to his or her leadership and actions. Members would be more likely to act in their own interests, as well as their constituents, in making decisions instead of worrying about how their actions might affect their added income or status as a chair.

Members of Congress do not receive additional stipends even if they are chairs of major committees like Ways and Means or International Relations, yet the Speaker of the U.S. House of Representatives and the Majority Leader of the U.S. Senate are still able to work and bring their colleagues together in support of common positions on issues by the powers available to them as leaders without the need to use money perks to reward followers or punish adversaries. The Council should aspire to such a level of operation.

Every member of the City Council should receive the same salary regardless of their additional responsibilities since 90% of them already do the extra work to which they are assigned.

Citizens Union urges the City Council to amend its rules to ban almost all stipends but for the top three or four leadership positions and that the next time a Quadrennial Commission is convened to review the compensation of the council, it take into consideration the loss of this stipend income when recommending the next salary increase. CU would support a higher across the board future increase if almost all stipends were eliminated.

II. End the Practice of Having a Sitting City Council Increase its Own Salaries

Though the process of dealing with elected officials’ salaries was first established nearly twenty years ago with the intent to schedule the work of the Quadrennial Commission on Elected Official Compensation as far away as possible from city elections, Citizens Union believes that currently serving council members should not be placed n the position of voting themselves a raise, and that the structure of the system that puts them in that position needs to be changed.

We suggest that the timing of the Quadrennial Commission be changed so that in the future it is required to meet in the last year of the four-year term of city elected officials so that any recommendation for salary increases are prospective and would take effect upon the start of the next four-year term. This new arrangement would ensure that future City Councils are not put in the awkward position of voting to increase their salaries while holding office in their current term. We urge the City Council seek a change in the New York City Administrative Code that would accomplish this goal. We recommend that the Administrative Code be changed so that the next Commission would be required to meet in 2009 to determine salaries for officials elected to serve beginning January 1, 2010, and every four years thereafter.

III. Full-time vs. Part-time Designation

The issue of whether the position of member of the city council be changed to that of a full time city employee and with it establishing restrictions on outside earned income is a nettlesome one for which we have no easy answer, but some ideas and a few suggestions.

That members of the Council on average earn over $120,000 annually is rightfully seen as a well-paid salary for almost anyone who works full-time in the city. Though the position is technically not classified as full-time, and therefore not subject to the restrictions on the earning of outside income faced by other full time city employees, including those who are elected, many council members still give full attention to their responsibilities and work more than full-time at their legislative jobs, with their council salaries being their only earned income. A small minority of members, however, hold jobs that earn them a considerable amount of additional income, almost all of whom are lawyers.

Those who are lawyers earning an outside income make a strong argument that with a term in office of not more than eight years, it would pose a hardship to leave a successful law practice in order to comply with the restrictive obligations of city rules governing full time city employees and the limits that are placed upon them in the earning of other income, only to have to reopen a closed practice that has been shut for eight years. Lawyers, however, are in demand, and restarting one’s legal livelihood would not be all that difficult so as to prevent one from resuming a lucrative practice.

The bigger concern we have though is if, and how, a sitting council member’s law practice, or other employment, may be enhanced by virtue of their holding elected office. Though the conflicts of interest law prohibits anyone from participating in a practice or enterprise that does business with the city, we are concerned that law firms in particular may secure business by virtue of the council member’s standing as an elected official. Current lawyer-client privilege protections allow lawyers not to disclose their clients, but the names of lawyers representing clients are a matter of public record when their cases and outcomes are required to be publicly reported, such as in estate settlements, real estate transactions, divorce proceedings, other matters of litigation, and the like.

Citizens Union would have less empathy for those members supporting the continued ability of council members to draw a full-time salary as an elected official and earn other income if the limits in office were extended from eight to twelve for example. The fact that almost all council members are restricted to serving only eight years does make us more open to placing fewer restrictions on the ability to earn outside income.

It could be argued that giving up one’s other earned income is one of the “sacrifices” one must make for the joy and pleasure of serving as a public official, and for the benefits one incurs and accrues as such.

Citizens Union is however open to the idea of placing some reasonable restriction on the amount of outside income given the well-paid salaries council members currently earn, but the question then becomes how high a limit should be established so as not to prevent or restrict those in the legal profession for example, or others, from earning additional income from an established practice or business. We also don’t want to set so low a limit on outside earned income as to dissuade otherwise interested and capable people from running for city council, who may not want to lose the ability to earn other income, or have financial obligations that require more of them than the city can pay them.

As the Council and we wrestle with this issue of whether any restrictions should be placed on the earning of other outside income, we think there are concrete steps that would provide greater disclosure and give greater confidence to the citizens of New York that council members who do earn other income are not capitalizing inappropriately on their situation as elected officials.

Therefore, we recommend the following as a first and good faith step in addressing the issues of part time vs. full time and the earning of outside income:

1. A different financial disclosure form should be developed specifically for members of the city council since they are the only city employees who currently face no restrictions on outside earned income. Such a separate disclosure form would require greater detailed reporting of information about the source and amount of compensation, and time spent working outside of the council.
2. Council members should report how many hours they spent each month, or on average during the reporting year, working at their other jobs. Additionally, the income reporting ranges should be tightened and shortened to a smaller size so as to better know the range of outside income earned. They are currently too broad and varied to be of much value.
3. Lawyers should be required to disclose the number of clients they serve and the areas of practice in which they are engaged or have represented clients. And where their names and activities are already matters of public record because of the nature of their legal work, it also should be required to reporting in the financial disclosure statements.

From this information, the public would know how much time is spent in other employment and in what manner, and whether any of it might possibly be in conflict, or in competition, with their duties as a member of the council.

Members of the City Council serve an increasingly important role in ensuring the proper functioning of government and the delivery of services not only to their own constituents, but all New Yorkers. In 2004, nearly 80% of Council Members did not earn any outside income – a sign that their jobs require a great deal of attention in order to be performed successfully and effectively. The work of Council Members is clearly full-time, and the ability to earn outside income must be examined along the lines we are proposing with an eye towards preventing conflicts of interest and requiring greater accountability while ensuring that the City Council is composed of the highest quality and best talented citizens.

IV. Conclusion

In summary, Citizens Union believes and recommends the following:

1. Ban stipends for all but a few of the top leadership positions and factor this “lost” amount into the deliberations next time when council salaries are set so they are the same for almost all of the members. This would lead to greater needed independence of individual council members since their salary would not depend upon their relationship with the Speaker.
2. Amend the administrative code to require the Quadrennial Commission on Elected Official Compensation meet and recommend, and the Mayor and Council subsequently approve, in the last year of the four year city election cycle the salary amounts of the elected officials who take office at the start of the following term. This would end the practice of current council members voting themselves a raise while holding their elected office.
3. Consider some reasonable but not too low restrictions on the earning of outside income for members of the city council given how significant their current salaries are. Such an amount should be high enough so as not to deter well qualified and talented officials from seeking office and allow lawyers and others to maintain active practices or other employment that would otherwise suffer if such income was severely restricted.
4. A separate financial disclosure form should be developed for and required from city council members since they are the only city employees who are technically still part time and are allowed to earn outside income. Such a different form would require the greater disclosure of how much time is spent on outside employment and in what ways and on behalf of whom where appropriate.

Chair Felder and other members of the City Council, Citizens Union thanks you for holding this important hearing and for making it possible for us to express our views.