It’s the one question that’s not really been addressed during this dubious week for New York legislators: How is it that so many — from Pedro Espada to Larry Seabrook to Malcolm Smith to Hiram Monserrate — have been able to so blatantly funnel taxpayer money to their own interests?
The answer is both shocking and not: Because they can.
“New York has its own brand of mischief that’s more lethal than other states,” says Ken Boehm of the National Legal and Policy Center. “When millions of dollars are being sent to non-existent organizations, clearly there’s a problem.”
Unlike every other state, New York allows legislators to set up their own non-profits and then steer taxpayer money to those same organizations. So, as will happen, many state and city lawmakers have done just that. “Like DC,” Boehm says, “New York allows earmarks cloaked in secrecy.”
As of 2008 — the last year for which records are available — each City Council member has been allocated about $340,000 per year to spend at their own discretion. Quite often, a lot of that money winds up at non-profit organizations run by people very close to the legislator who is dispensing those funds. And the dispersal is very hard to track; non-profit organizations file tax forms called 990s, which are self-reported.
And it’s often hard to tell whether what’s happening is illegal or just unethical: “It’s a little cobwebby,” Boehm says. “With state Sen. Malcolm Smith and [his non-profit] New Directions — did he make money on this, or did he just give it to a group he was associated with?”
“The bottom line is, there’s no oversight,” says a former staffer in ex-Comptroller Alan Hevesi’s office. “Each elected official comes up with their own project and programs, is allocated a set of money by the city, and nobody pays any attention.”
One former city government official blames the Bloomberg administration’s management style for much of the current corruption and chaos. “The question is not, ‘What enables this to happen?’ ” he says, “but ‘What has been broken apart?’ ”
This official believes that the centralized approach begun under Koch and continued through Dinkins and Giuliani kept much of this creative accounting at bay.
“Under Dinkins and Giuliani, we’d ask, ‘Who are you? Have you ever been indicted?’ But now the contracts are not reviewed in a centralized way. Bloomberg’s management approach gives more power to communities than any other mayor. They had this thought that they could reduce the size of the staff. But this is the people’s money, and it needs to be centralized.”
Not to say that the bar was set exceptionally high under previous mayors.
“I’ll give you an example of a comptroller doing the right thing,” says the former Hevesi staffer. “A Councilwoman had a member-item for a program run by her sister and that also employed her son. We picked up on it and went back to the department that have the grant. And they said, ‘You’re right, but we’ve discussed it with the mayor’s office’ — this was Giuliani the crime-fighter, by the way — ‘and [they said], “Since we made the deal with the council, they can spend it on whatever they want.” ’
“And Hevesi, to his credit, refused. She called up and screamed and yelled at him.” The staffer laughs. “As far as I know, that may be the only member-item that never made it through in recorded history.”
Well, there was at least one other. Last year, Pedro Espada tried to steer state money to a “green” non-profit he had just set up. As The Post reported over the summer, when that member item was rejected, Espada was furious, and began plotting the infamous coup that briefly switched the state Senate to Republican control.
But for the most part, member items sail through. Particularly when it comes to the state Legislature, the issue of oversight is murky: Who knows who’s keeping track?
When asked how to fix it, those who spoke to The Post all offered the same solutions: Post everything on the Web — where money is coming from, where it’s going and to whom. Form an independent oversight committee. Eliminate earmarks entirely — though that would punish legitimate non-profits that benefit. Or institute a vetting system similar to the one employed by the mayor’s office, something as close to forensic accounting as possible.
Of course, no one thinks any of this will ever come to pass.
“If you’re a commissioner, and you’re buried in work and this stuff is coming at you — you’re just taking the money and processing it out,” says the Hevesi staffer. “Why should you have a hassle with the council? It’s not going to change anything.”
So, in brief: This is a solvable problem that won’t get solved because those who could solve it have no interest in doing so?
“Well, we have a succession of people getting arrested, which I guess is healthy,” says the staffer. “If people get blamed for allowing this to happen, then they’ll have an interest in solving it.”