Originally Published: March 19, 2015
Proposed $2.6 Billion in spending needs greater accountability and transparency
Governor’s good proposed ethics reforms should apply to all lump sum pots and provide more sunlight of spending decisions
Citizens Union today released a report during Sunshine Week, Spending in the Shadows: Discretionary Funding in the NYS Budget – FY 2014 – 2016 Update, that finds the proposed executive FY 2016 state budget contains $2.6 billion in opaque “lump sum funds” which allow spending decisions to be made in the shadows by our elected officials after budget bills are passed.
The continued presence of these pots presents a risk for corruption that must be reformed as state ethics negotiations are underway. The report also updates Citizens Union’s previous report on the topic from 2013 to look at trends over a three-year period: FY 2014, FY 2015, and the current proposed FY 2016 budget.
This report’s major findings include:
- The proposed FY 2016 Executive Budget contains $2.6 billion in lump sum funds, through 66 separate pots. The Assembly has proposed adding 12 pots totaling $53 million more; the Senate proposes adding $83 million more in 21 additional pots of which $10.6 million is for new pots.
- The Governor, Assembly and Senate each have considerable amounts of lump sum funds available for their use in the FY 2016 Executive Budget: $2.4 billion for the Governor; $902 million for the Senate; and $765 million for the Assembly.
- While the Governor proposed some reforms to increase transparency and accountability of some lump sum funds, these reforms do not go far enough. Only 12 of the 66 pots are covered, covering $821 million, missing many legislative pots, and excluding all executive pots.
While the state budget provides important funding for needed public services, it has also provided an unfortunate opportunity for corruption. Most recently, former Speaker Sheldon Silver has been charged with personally directing $500,000 in grants from a lump sum fund to a prominent doctor, who began referring his patients to a law firm that, in turn, paid referral fees to Silver. Former Senate Majority Leader Malcolm Smith was also convicted in February 2015 of conspiracy in a scheme to funnel $500,000 from lump sum funds known as “multi-modal” transportation funds to a developer who, in turn, would provide funds to bribe Republican officials. Statewide officials have also not been immune to corruption in pay-to-play scandals.
“The risk of corruption continues as long as decision-making on lump sum pots of funding remains in the shadows,” said Dick Dadey, Executive Director of Citizens Union. “Our state’s leaders should embrace reform during Sunshine Week to provide greater transparency of all spending decisions from lump sum funds, which total billions of dollars and persist year after year without proper public transparency.”
“The state budget process is not known for being transparent, and the process of distributing lump sum funds after budget bills are passed is even more opaque,” said Rachael Fauss, Director of Public Policy and author of the report. “Comprehensive, online disclosure of all lump sums, their recipients, detailed purposes, and elected officials sponsoring the items is essential to increase public confidence in our state’s spending decisions.”
Citizens Union, in releasing the report, calls on state lawmakers to enact reforms through the state budget to bring greater sunlight to spending decisions and:
- Eliminate Conflicts of Interest and Ensure Proper Public Use
- Require Comprehensive, Online Disclosure of All Lump Sums Grants and Contracts
- Apply Reforms to All Lump Sums in the Budget, Including the Governor’s
A detailed listing of our recommendations is available in Section IX of the report.
Other findings of the report for the proposed FY 2016 budgets are the following:
The Governor’s budget provides the following elected officials at least partial discretion over the following amounts:
- Governor: $2.4 billion
- Senate: $902 million
- Assembly: $765 million
- Attorney General: $81.5 million
The Senate and Assembly have both proposed in their budget resolutions reappropriating previous lump sum pots in the FY16 Aid to Localities Budget:
- $72 million in the Senate’s proposal (13 more pots beyond those proposed by the Governor); and
- $53 million in the Assembly’s proposal (12 more pots beyond those proposed by the Governor).
- The Senate also proposes adding 8 new pots of funding, totalling $10.6 million more. All the Senate’s additions would total $83 million, including reappropriated and new pots.
The report also covers budgets from the past three years from FY 2014 – FY 2016, and shows that while some new lump sum pots have been added, funds are gradually declining, perhaps reflecting increased scrutiny. Notable new pots of funding were created last year in the FY 2015 budget as a result of the mortgage settlements, providing $668 million in new funding, including a pot for the first time for the Attorney General at $81.5 million.
The data from the report is also available in excel on Citizens Union’s website.