Empire Center Alleges Cuomo, Legislators Have Secret Slush Fund

Aug 5, 2015

Fiscal watchdog group The Empire Center said it has uncovered what it calls a "secret slush fund," used by New York Governor Andrew Cuomo and state legislators to fund pet projects around the state, but the governor’s budget office says the grants are subject to oversight.

Ken Girardin, the Empire Center's Communications and Marketing Manager, describes a fund that resembles the old member item system, which gave lawmakers millions of dollars for pet projects in their districts, but on steroids. He said the money is borrowed, and the recipients, ranging from $5 million dollars to CBS to upgrade the studios for Steven Colbert’s new show to $25 million dollars for a shopping mall, don’t seem to be vetted by any independent criteria. He likened the $1.1 billion dollar fund to “one big credit card” that the state’s been using for the projects.

“This is a new kind of pork that’s happening completely outside public view,” Girardin said. “The only thing we’re ever going to see from this is the bill for a billion dollars of borrowed money.”

The fund, known as the State Municipal Facility Program, was part of the 2013 budget. Bonds would be issued through the semi-independent entity the State Dormitory Authority for $385 million dollars, and the money was supposed to finance upgrades to government owned properties, such as repairing village halls or state roads. But, in 2014, that definition was expanded to include economic development projects, and the fund was increased to the present $1.1 billion dollars. The Empire Center used the Freedom of Information Law to obtain a list of the projects, and after waiting four months, finally got the details on 588 projects worth $187 million dollars on the final Friday of July. Some are big ticket items, like $35 million dollars to the State University’s nanotech center, and money for the mall on Staten Island. Many of them resemble the former members’ items, like the purchase of a new fire truck, or money to a senior center.

Girardin said it appears that many of the projects, a skateboard park in the City of Albany or tennis court restoration in the wealthy Buffalo area suburban school district of Amherst, could be funded more directly, without the state borrowing the money.

“But that’s the not the biggest issue,” he said.

He said it’s troubling that no one seems to have had any idea up until now about how the billion dollars is being spent.

“The legislature and the governor have together created together this shrouded slush fund that no one can see into,” he said. “And that’s deeply concerning to us.”

The fund also takes the widely criticized member item practice one step further. Under the old system, state lawmakers names were listed next to the allocation grants. Those lists caused legal troubles for some legislators in the past, when it was found that they or their relatives were personally profiting from the money.

“Several people went to prison because we connected specific grants with specific people,” he said.

Girardin said there’s nothing illegal in what the governor and legislature are doing, as far as he can tell, but he says the lack of transparency is “unprecedented.”

Cuomo said he’d abolish member items, and no new grants under the old system have been authorized for legislators.

Morris Peters, a spokesman for the governor’s budget office, says the Empire Center report is not entirely accurate in its assessment of how the grants are distributed.  Peters says in a statement that there is indeed oversight, and that the grant applications are subject to a “rigorous agency review process” and must also be ultimately approved by the budget office. And he says there are limits on what types of projects can be authorized. Peters says the program does not operate all that differently from normal appropriations for roads and other infrastructure.

Peters' full statement:

“This program provides capital allocations that are subject to a rigorous agency review process, must be approved by DOB, and are limited to certain types of projects. This is not unlike other capital appropriations for roads, infrastructure and economic development that are accessed throughout the year for critical projects as needs emerge but that are not specifically lined out in the budget.”

Still unanswered, though, is who chooses the grant recipients in the first place? According to the Dormitory Authority’s website, the grants are awarded not by the Authority but by “local elected sponsors.” Those elected officials are not named.