Last week the New York State Commission on Legislative, Judicial, & Executive Compensation held a public hearing to accept comments on whether to increase the current compensation for the Legislature and the governor. The compensation levels recommended by the Commission will take effect unless changed by the Legislature and the governor. Since June 2015, the Commission consists of seven appointed members – three chosen by the Governor, one by the Senate Majority Leader, one by the Assembly Speaker, and two by the Chief Judge of the state’s highest court, one of whom serves as chair of the Commission.
The Commission is considering pay raises to the highest paid governor and state lawmakers in the nation. New York State legislators have a $142,000 salary, the highest in the country, and due to an ongoing legal challenge, the Commission may place no limits on outside income. New York’s Governor is also the highest paid in the U.S.
The current limits were set as part of an end-of-the-year and after-election decision in 2022, when the governor and the legislative leaders cobbled together a deal to raise their pay. That agreement also added one twist to satisfy an angry public: limits on how much income lawmakers could make from outside sources.
The rationale for the outside income limits was the principle that elected officials cannot “serve two masters.” They must be accountable to only one: the public that they serve.
The idea that “moonlighting” by elected officials should be limited is not unheard of. For example, the Congress has long had outside income limits. The Congressional system was an outgrowth of the Watergate scandal and has a proven track record of being effective in removing outside conflicts.
When the Congress adopted its system, it observed that:
“. . . substantial outside income creates at least the appearance of impropriety and thereby undermines public confidence in the integrity of government officials.”
In addition, the Congress bans income from any source for which the Congressmember has a “fiduciary” relationship. Being a “fiduciary” means putting the interests of your client ahead of your own. When you’re an elected official whose constituents’ interests are paramount, how do you do that when you have a legal duty to put your paying clients first? Can lawmakers serve two bosses? The clear answer is no.
The same potential conflicts that Congress addressed exist in Albany and the recent convictions of elected officials underscore how lucrative it can be for lawmakers to inappropriately use the powers of their public office for private gain. Beyond that, legislators routinely consider proposals that may have an impact on their outside business interests. A bright-line standard is therefore necessary.
Current law limits a Congressmember’s outside income to $31,800 above the applicable Congressional compensation rate.Notably, unlike the Congressional restrictions, the current New York State outside income limit does not ban income from activities in which the lawmaker has a fiduciary relationship with a client. As a result, New York’s stalled outside income restrictions are far weaker than the Congressional version and should be made stronger by the
Pay Commission – assuming that the courts ultimately allow the income ban to be in effect.
The outside income issue is not one for the Legislative branch alone.
New York’s statewide elected officials are paid at the highest rate in the nation, are full-time, and should not be allowed to do outside work. Yet, New Yorkers have seen that happen. The controversy surrounding former Governor Cuomo’s $5 million book deal underscores the need for meaningful restrictions on the outside income of the full-time, statewide elected officials (Governor, Attorney General and Comptroller).
Reviews by both the Assembly Judiciary Committee and the state ethics watchdog at the time, the Joint Commission On Public Ethics, alleged that the former governor pushed the staff of the ethics agency to approve the multi-million-dollar book deal and further alleged that the former governor used government resources in writing the book. Nothing of the sort should have been approved.
As the Pay Commission deliberates, it should recommend that any publishing contracts and other requests for outside income by members of the executive branch be subject to pre-approval by the full state ethics body – not staff – with the full text and conditions of approvals released to the public and prohibited if the publisher is doing business with the state.
New Yorkers know that providing reasonable compensation for public service is an important factor in making government work. Combating public cynicism, distrust and growing voter anger is as important a goal as identifying appropriate, defensible compensation levels.
That was the thinking when the governor and state lawmakers agreed to the current pay raises – making a clear linkage to restrictions on outside income. Until the legal challenge is concluded, the Commission should oppose pay increases for state legislators or statewide officials.
New Yorkers deserve elected officials whose only responsibility while in office is the public that they serve. Those elected to office cannot and should not serve two masters.
Last week, the Hochul Administration issued an edict that state agencies develop plans for a no-growth state budget for the next fiscal year. That order is typical: State agencies’ proposed budgets have been more or less frozen for years. Yet, the announcement by the Division of the Budget – the agency responsible for developing the governor’s executive budget – is an often overlooked first step in Albany’s annual budget “dance.”
The development of the governor’s budget plan goes on for months, with agencies’ budgets subject to review by the Division of the Budget, hearings on the plan, and then presentation to the Legislature in mid-January. The budget is supposed to be finalized by April 1st. The current state spending plan budgeted nearly $240 billion.
The budget fight over next year’s plan will likely be intense. The budget forecast for the next three years predicts a cumulative three-year budget gap of $13.9 billion, with projected deficits of $2.3 billion next year, $4.3 billion the year after, and ballooning to $7.3 billion the year after that. Of course, these are all projections and are a relatively small percentage of the nearly one-quarter trillion-dollar state budget.
But the challenges will not end by addressing the potential revenue shortfalls.
Next year’s budget will face a myriad of other challenges. One is how will the state deal with the governor’s “pause” of New York City’s congestion pricing plan? The plan – which sets tolls for driving into parts of New York City – was supposed to go into effect at the end of June. The governor – citing concerns over costs – derailed the plan. She is expected to propose reducing the size of the congestion pricing tolls, but that will result in shortfalls in revenues that will have to be addressed in the state budget.
Another big item is education funding. Every year, how the state provides financial assistance to local school districts is a key component of the state’s final budget plan. The state’s assistance is allocated to districts based on a formula, known as Foundation Aid.
The current budget includes a measure calling for the Rockefeller Institute of Government, a public policy think tank housed at the State University of New York, to assess the state’s Foundation Aid education funding formula and discuss potential modifications to how the formula works. Any proposed changes to the existing system will undoubtedly cause a ruckus in this year’s budget debate.
Another issue will be how the state funds higher education.
Last year’s budget made significant changes to the state’s Tuition Assistance Program (TAP) and made college financial assistance available to many more students. TAP is New York’s largest need-based college financial aid grant program. The aid is based on income – the less you make, the more aid you are eligible for. TAP is available to students in the State University of New York (SUNY), the City University of New York (CUNY), and the independent sector. Aid is available for students attending full-time, part-time and in non-degree programs.
In the current year’s budget agreement, for the first time in decades the state increased the income eligibility to $125,000 and increased the size of the minimum award from $500 to $1,000 – essentially updating those amounts to cover the loss in purchasing power due to inflation.
Unfortunately, the budget did not do enough to reverse the erosion of state assistance that has contributed to the decline of too many New York colleges and programs. Despite the improvements to TAP, the state budget does not include an increase in the amount of the maximum award for the neediest students. The maximum TAP award still does not cover the full tuition costs of students attending SUNY and CUNY.
The budget contained, essentially, flatline funding for SUNY and CUNY. Moreover, despite a growing financial crisis in the independent sector of higher education, the budget made a major cut in funding to the program providing state assistance to independent colleges and universities (Bundy Aid).
The failures in that budget plan will be a big debate in the budget for the upcoming fiscal year. Not only are New York’s colleges and universities important to educating the future civic and community leaders of tomorrow, they are important economic engines today. Cuts to higher education, for both the public and independent sectors, harm the state’s economic vitality. For example, CUNY graduates stay to work in New York at higher rates and studies have shown that for every $1 invested in SUNY, the economy reaps $8 in benefits. College should be affordable for all, providing access to one of the greatest economic equalizers for those who seek it.
Of course, the necessary increases in the TAP program run headlong into the constraints of the budget shortfalls, as well as the likely spending hikes needed for mass transit for New York City, changes in education funding, and the rest of the state agencies’ spending. Yet, even with those pressures, investing in higher education – both in terms of affordability for students as well as assistance for the institutions themselves – will result in heightened economic activity and a more educated citizenry.
How the governor views the importance of those goals and balances funding priorities will soon be made clear in her January budget plan. At that point the budget dance will be front-and-center.
