In the waning days of 1999, three men gathered in a room to make decisions about a $10 billion bill to govern New York’s health care system for the next three years.It was called the Health Care Reform Act of 2000, or HCRA, which raised the cigarette tax by 55 cents a pack to insure a million poor New Yorkers. In those darkest days of the year, as the century drew to a close, Governor George Pataki, Assembly Speaker Sheldon Silver and Senate Majority Leader Joseph Bruno were making giant decisions.
Blair Horner — then, as now, the legislative director of the New York Public Interest Research Group — had a big stake in that special session of the legislature, both for its health care reforms and because the legislature was considering lobbying reform after a scandal involving undisclosed gifts from tobacco giant Phillip Morris.
“Lots of things were happening and almost all of it outside the public view,” Horner said in a telephone interview from Albany. He watched, as Albany’s leaders scurried around the statehouse, whispering, divulging little. Lobbying reforms were watered down. The health care bill passed just before New Year’s. At the very end of the four-page press release announcing the deal, there was a final bullet point about a “commissioner’s priority pool.” It also mentioned “an additional $15 million annually will be available for the Legislature for emerging priorities.”
Thus was born Sheldon Silver’s secret health care fund, one major thread in the U.S. Attorney’s stunning criminal complaint against him last week. Silver says he will be vindicated. And what the complaint doesn’t reveal is that the governor and the state senate also had their special funds to spend however they pleased. That language was buried deep in the legislation itself.
Today, we are four governors later (one felled by scandal), and three comptrollers later (one felled by scandal) and two senate majority leaders later (one felled by scandal), and with the same Speaker of the Assembly (about to be felled by scandal). But even now, no one in Albany is ready to produce any records of the spending, or even admit that records were kept. A week’s worth of calls and emails to the state Comptroller, the Assembly and the New York State Departments of Health and Budget produced no information about what happened to more than $200 million of your money. Spent, without a trace.
The original off-budget pool had been had been launched by Pataki four years earlier, in an era when deregulation was popular, as a way to cut through red tape to help out failing hospitals and clinics for the poor.
But the existence of the fund displeased Sheldon Silver, who wanted one of his own, according to two sources involved in those negotiations. Preet Bharara, the U.S. Attorney, says the fund proved an irresistible temptation, an opportune way for Silver to monetize his office when he was retained by an asbestos litigation firm, an area in which he had no expertise.
“What he did have," Bharara said when announcing his complaint “was extraordinary power over state money that he had the ability to dole out quietly, even secretly. So Silver, in the early 2000s, forms a relationship with a doctor who is an expert in asbestos-related disease.”
The complaint says the doctor began referring patients to Silver’s firm, who was handsomely remunerated. In return, Silver handed out $500,000 dollars in grants for the doctor’s research. In 2007, when Governor Eliot Spitzer swept into town, he passed reforms requiring the fund’s disbursements to be disclosed. That’s when Silver turned off the doctor’s spigot.
All of this can happen in Albany, because everyone understands that lax ethics rules and the secret slush funds are the grease that keeps the machinery of state government running smoothly. In Albany, you could at one point eat every meal on a lobbyist’s tab. You can still abuse your per diem, or use your campaign fund to pay for parties and trips. Silver is known to fly to Albany through Washington, D.C., racking up the frequent flyer miles that enable him to fly first class.
“The greedy art of cynical self-reward is practiced with particular cleverness and cynicism by the Speaker himself,” Bharara said.
Silver might have gotten away with it, had it not been for the Moreland Commission, appointed by Governor Andrew Cuomo in 2013 to investigate the culture of corruption. Cuomo personally suggested to the commission co-chairs that they investigate the outside income of the legislators.
Some legislators did turn over the records, but when the subpoenas got to Silver he hired a law firm, at taxpayer expense, to block them.
“The commission we believe has exceeded its mandate and has been engaged in a fishing expedition to intimidate legislators,” Silver told Albany reporters in February of last year. Bharara put this quote in his complaint as evidence of Silver’s attempts to cover up his deeds.
By March of last year, the commission had also begun to scrutinize Cuomo’s use of soft money to bolster his own election campaign. So now two of the three men in the room had a substantial motive for the Moreland Commission to stop its investigation. “A deal was cut that cut off the Commission’s work, to the great relief of Sheldon Silver,” Bharara said.
Just as the special funds had been announced in the last sentence of a four-page press release on one of the darkest days of the year in 1999, so the dissolution of the Moreland Commission was revealed by Cuomo 40 minutes into a 50-minute, Saturday afternoon conference call on the 2014 budget deal. And then only in answer to a question from New York Daily News reporter Ken Lovett. Cuomo said he had achieved the ethics reforms he wanted.
“That’s what this package is Ken,” the Governor said. “If we adopt this package then I would end the Moreland commission.”
If not for Preet Bharara, Cuomo and Silver might have gotten away with this too. Because everyone needs something from everybody else.That’s how Albany works.
One hand washes the other, and everyone winds up dirty.