FLAWED BUDGET AND ETHICS DEALS

The big news last week was the passage of the new state budget.  As has happened all-too-often, the budget was the product of horse trading and negotiations conducted in secret.  That’s right, despite the fact that it’s your money, Governor Cuomo and state lawmakers agreed to a $142 billion state budget and approved it in a way that meant that New Yorkers only found out the details after the fact.

And when deals get done in secret, too often rank and file lawmakers don’t have time to understand the consequences of their own budgetary decisions.

Such is the case with the ethics agreement.  The governor and legislative leaders cut a deal on changes to the state’s ethics laws and then jammed it into the education budget with only hours for public review.  As a result, despite the self-congratulatory news releases and spin, the closer one inspects the ethics deal, the weaker it gets.

In fact, the new ethics law is more loophole than law.

Let’s start from the beginning.  In February, after the arrest of long serving Assembly Speaker Sheldon Silver – and after pulling the plug on a commission he set up to investigate state government ethical lapses – Governor Cuomo spoke about ethics at NYU Law School.

“The challenge” the governor said was “the inherent conflict of interest posed by outside employment. . . .  Are clients paying privately for the actions of a public official?”

The governor nailed it when he said: “The cleanest solution is to end the conflict rather than attempting to police or regulate it. . . . Congress probably has the best compromise model” that caps the amount of outside income any member can make.

Instead of calling for a limit on the total amount and sources of outside income—as Congress did post Watergate—the governor took a U-turn in his speech:

“We will propose what we call ‘total disclosure’—the most extensive disclosure of outside income in the United States of America.  You have heard the phrase ‘follow the money.’  We’re creating a new expression, ‘explain the money.’”

A version of the governor’s proposal passed both houses under literal and figurative cover of darkness this week.  More window dressing than reform, the package falls far short of even the inadequate “total disclosure” or “explain the money” standards set by the governor.

Here are two key parts of the governor’s proposal that passed:

1. Legislators will provide a general description of the professional services they offer while moonlighting, for example as lawyers, insurance and commercial real estate brokers; and
2. They’ll report more detail about clients who pay their firms $10,000 or more a year for services related to state government action, such as legislation, budget items and contracts.

These changes may have been groundbreaking ten years and dozens of scandals ago.  From the perspective of 2015, it’s clear the loopholes are so plentiful and so large that government watchdogs are uniformly underwhelmed.  Here are four of the problems with these so-called “historic” reforms:

1. Legislator-lawyers and other professionals who do not provide direct services, like those who are “of counsel” or managing partners, will continue to practice without having to disclose much of what they do to make money.
2. Lawyer-legislators will be able to seek an exemption from disclosing their clients in cases where they believe disclosure “may result in undue harm to the attorney-client relationship.”
3. Longstanding clients may be “grandfathered” in and thus continue to be exempt from disclosure.
4. The new disclosures won’t apply until 2016, with the information first made public May 2017.

The upshot is these new disclosures won’t eliminate the conflict of lawmakers indirectly paid by those who seek favors from state government.  And they won’t even shed much light on the problem of legislators serving two masters: the voters and the clients of the firms that lawmakers work for.

Bet your last dollar we’ll soon be talking about ethics reforms again, more than likely when you see the photo of another public official being carted off in handcuffs to federal court.  As U.S. Attorney Preet Bharara said, “stay tuned.”