Fictional City Budget Entries
Embarrass Speaker Quinn,
She Agrees to Full Disclosure
But Members Protest Changes
By Henry J. Stern
April 15, 2008
The unfolding drama of Speaker Christine Quinn and the City Council's secret discretionary accounts, held in the names of fictitious organizations, was discussed at length today in the Gotham Gazette. The story gives details on the transactions which led to investigations by the United States Attorney and the Manhattan District Attorney that have been going on for some months. Who dropped the dime is not yet clear.
The story broke in the New York Post on April 3, in an article by Frankie Edozien, THIS $$ IS HERS FOR THE FAKING. Juan Gonzales of the Daily News gave it fuller coverage in a column on April 4. CHRISTINE QUINN SAYS HER OFFICE HID MILLIONS IN CITY BUDGET. The Times ran a story by Ray Rivera and Ross Buettner, PHONY ALLOCATIONS BY CITY COUNCIL REPORTED. Counting the day (4/3) the affair hit the press as Day One, today, April 15, is Day Thirteen. As we said, Gotham Gazette, an admirable daily published by the Citizens Union Foundation, provides the details.
The twist that attracted public attention and some derision is the use of fictitious names for imaginary recipients of city funds. Although no money ever went to these phantasms, and they were simply place-holders for latter-day subsidies, the fact that the protagonists of the plot felt it necessary over the years to resort to deception to conceal their machinations does raise a question of ethics.
It recalls the imagination of Andrew Fastow, chief financial officer of the former Enron Corporation, who created off-budget entities with names taken from Star Wars, including Chewbacca, Han Solo, Darth Vader and Luke Skywalker. The City Council officials were less imaginative than Fastow at fictional nomenclature.
The purpose of the mislabeling was to enable the Speaker to make allocations during the year, as she deemed fit, to cultural or other organizations considered worthy and needful. Since the city budget is adopted once a year, in June, and is supposed to list the appropriations for each beneficiary, making official modifications during the year would require a new public process. When appropriations are made en masse at the adoption season, fewer people notice individual items. It is also plausible that new needs may arise during the year. The Speaker or the Council could want to grant immediate subsidies without waiting until the annual distribution of largesse.
As a former member of the City Council (1974-83), my recollection is that we had no member items such as we have today. It is also possible that they did not tell the lone Liberal Party councilmember about these items, but it is likely that I would have heard about them from my good friend and colleague, the Democratic Councilmember at large from Manhattan, Robert F. Wagner, Jr., unless he, too, was cast out of the loop for his independence from the party machine.
In those days, if you followed the instructions on how to vote that came from the Vice Chairman and Majority Leader, a title compressed to Speaker by a new City Charter, you would be compensated for your fidelity by a new playground in your district, possibly even a public school if the Board of Education was willing. If you disobeyed, forget it.
The matter of rewarding loyalty and punishing dissent was carried out by investments in public works in the members' districts, which usually had intrinsic value, some more so than others.
Government did not play the role it does today in subsidizing non-profit organizations. There were contracts with outside agencies, particularly in the social service areas, to administer programs. In time, some agencies came to become identified with particular elected officials who became their patrons.
From my own experience over nine years, I support the existence of member items in a controlled setting. If a person is elected to the City Council, representing 140,000 people, s/he should have a modest amount of discretion in allocating public funds. These items should be capped, perhaps at the limit Councilmembers are allowed to spend on themselves, their staffs and their offices.
These items should be subject to review on an objective basis to see that no money is stolen or wasted. But if a group is doing an exceptional job, there is nothing wrong with helping them to do good work, with that small decision made at the local level by the elected official. The mantra at that time was "maximum feasible participation" in the war on poverty. Let elected officials be among the participants in the democratic process, after all that is how they were elected, even if the system is far from perfect.
What appears to have happened is that the investigative agencies appear to have the Speaker in a position where she is obliged to change the system. What happens in some cases where the Feds investigate is that they catch the target in what may be a white lie. Nothing compared to what the Presidential candidates are doing. It happens to be a Federal crime to make a misstatement to a Federal officer. You do not have to lie under oath to commit perjury.
Prosecutors have heavy weapons they can use on people in their sights. This can be done even when the underlying offense is relatively minor. We have no knowledge that this is part of this case, but it has happened elsewhere. For example, wiretapping to catch a governor who used a prostitute is not what one could fairly call a matter of national security. In addition, releasing the tape to the media when no one has even been charged with a crime is an action which violates any reasonable standard of fairness.
Whether under duress or not, Ms. Quinn is now trying to change the rules, without the consent of the colleagues who elected her speaker under the illusion that she would assist them to frustrate the people's will by giving themselves an extra four years. Now they feel betrayed again because they will give up considerable flexibility in grantmaking if the plan is adopted. They believe they are losing discretion because of her indiscretion in making secret mid-year appropriations, concealed by imaginary budget entries.
There have been no complaints, as far as we know, that the Speaker took any of the money for herself or any improper purpose, or that the organizations she favored were unworthy. One group named the High Line, a park on a former railroad right-of-way in lower Manhattan, is particularly meritorious. Understand that the complaint here, at least at this point, is not one of dishonesty but one of procedures, which everyone now agrees need to be changed.
A more troubling signal is the City having to pay $95,000 to hire the prestigious law firm of Sullivan & Cromwell to advise and represent the City Council in connection with the Federal and local investigation. In addition, the Speaker has retained her own lawyer, W. Lee Richards, also at public expense. How much will all this eventually cost?
We agree that it is disconcerting to be under fire, even if your sins, if they are sins at all, are venial rather than mortal. It is also politically unhelpful since, in the absence of major wrongdoing, the press may pick at trivial flaws or failings. Of course, where there is no transparency or disclosure, it is easy to believe that something sinister is being hidden. If what is found is favoritism, is that a crime? Since Andrew Jackson, government has lived under the shadow of "To the victor, belong the spoils." Today, many believe that that doctrine has meaning and value, but to a very limited extent.
We do not believe that all, most or even many government jobs should be awarded with political considerations in mind. And politics should have absolutely no role in awarding contracts with government agencies, either for procurement of goods or performance of services. That rule was routinely violated in Congress, as highlighted by the Abramoff affair, where Republican congressmen received gifts and contributions in exchange for the services in steering business to the lobbyist's clients.
At this point, the City Council controversy appears to be about procedure rather than integrity. But when procedures cross the edge of truthfulness and propriety, questions arise which are difficult to answer. It would be desirable if these issues were resolved quickly so everyone can return to the business of government.
Experience tells us that is unlikely.
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