2008-04-10 / This Week's Attitude

This Week's Attitude

Council's Rainy Day Fund Enough For A Hurricane
By Neil S. Friedman

By Neil S. Friedman

When teaching children to sensibly manage money, parents often recommend "to save a little for a rainy day." Apparently, the last few City Council speakers never forgot the lesson. Nevertheless, the torrent of cash they allegedly squirreled away looks more like a misappropriation of taxpayer funds rather than an emergency stash.

Last week, the New York Post revealed that current City Council Speaker Christine Quinn's office hid an estimated $17 million in the annual municipal budget under the guise of fabricated groups. The suspect funds were subsequently distributed, like under-the-table compensation, to political allies for supporting measures sponsored by the speaker.

No wonder some council members want to put an end to term limits. They don't want to give up the tangible golden eggs set aside for them, in this instance, by Mother Goose. Besides, where did they think the generous rewards came from?

Whatever happened to officials following the wishes of the constituencies who elected them? Self-serving politicians do more than just line their own pockets, they undermine the value of democracy.

Perhaps the most troubling aspects of this disclosure is that so many people in city government - from the mayor to council members on the finance committee to the comptroller - had no clue of the practice that reportedly began nearly twenty years ago.

One has to wonder if the reach of the City Council was overextended after it was granted full power over the municipal budget in a court-mandated overhaul of the City Charter in 1989.

Quinn admitted that setting aside "reserve funds" with fake names only began seven years ago, not long after she took her seat on the Council and before she assumed the speaker's role in 2006.

According to an unnamed aide to former Speaker Peter Vallone Sr., the practice started when Mayor Giuliani refused to negotiate on the budget so, he told the Daily News, they created "four or five bogus groups." An aide to Gifford Miller, Vallone's successor, also reportedly confirmed the cagey practice.

Quinn explained that the money was intended "to fill future gaps" at city agencies to avoid "messy battles" with the mayor's office when funds ran short. What may sound like a sound gesture betrays the notion of an open government that was a critical part of Quinn's public statements when she got the speaker's post.

At a press conference in the wake of the revelation, Quinn said when she learned of the financial shenanigans last spring, she told her finance staff to stop it, but they purportedly didn't. The council's top two finance staffers recently resigned.

That was Quinn's first mistake. Those aides should have been fired or Quinn could have announced they got better offers and resigned or family matters took precedent. The speaker could then have doled out the money little by little with no one knowing about it. Instead they kept the aides kept the cushy six-figure jobs for almost a year after the deception was discovered.

Her second slip-up was keeping the matter to herself. If Quinn had been candid in the first place, she may have been applauded for blowing the whistle, but by staying silent, thinking her staff would stop the practice, it seems awfully deceitful.

It has been widely speculated that Quinn had aspirations to succeed Mike Bloomberg at City Hall in 2009. This blunder could damage what once appeared to be a good chance of Quinn becoming the first female - and first lesbian - mayor of New York City.

Mayor Bloomberg said if he had been aware of the phantom funds, he would not have approved budgets containing them. Even so, for a man who built a billion dollar business and promised a transparent government, it's surprising the matter didn't come to his attention before now.

The mayor told reporters his office never "vetted the phantom groups" because the funds were never paid out to them, so his office didn't consider it a priority.

Such bogus groups earmarked for concealed funds in the 2006 budget, according to various media accounts, included The Association of Community Partners ($150,000), Moving Up, Building Bridges and the American Association of Concerned Veterans ($300,000). They may sound genuine, but apparently no one bothered to check into their legitimacy to determine exactly how they spend taxpayer money.

Apparently, only months after the money was budgeted to the illegitimate organizations, when no one was watching the till, were they given out at the whim of the speaker.

The recently passed $51 billion city budget included a 4.5 percent cut for all city agencies. Perhaps the $17 million can now be reallocated to trim the trimming for some agencies.

Anyone who learns the financial lesson of their youth should realize that a rainy day - or slush - government fund might come in handy in emergencies. However, the grants reportedly concealed under Speaker Quinn, and her predecessors, were not allocated in that capacity. The city's Department of Investigation and the U.S. Attorney's office are both trying to determine if the practice involved any misuse of taxpayer funds.

Obviously, there needs to be stricter oversight on dubious budget odds and ends. But first someone's got to question the validity of such items. If the mayor, comptroller and speaker claim they did not know the rainy day fund existed, perhaps an independent audit should be conducted to scrutinize it and other allocations of taxpayer money.

What's most troubling about the Council's slush fund exposé is that it comes on the heels of a number of high profile politically-connected scandals in recent years from the White House to Albany, including several elected officials already convicted or who face pending criminal charges, to other state capitals.

It's no wonder when Americans are polled every few years on the trustworthiness of a variety of professions, politicians tend to rank at the low end of the spectrum, not much above lawyers and journalists.

Before the rainy day funds are doled out by the book, I hope someone throws a five-figure sum my way for the Friedman Freedom Fund. Contributions have been few and far between, which has curtailed its goodwill - not to mention my occasional rash spending habits. And you wouldn't believe the expenses that have accrued in my attempts to foster freedom. If only I'd known the City Council was being so generous…

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