THE NEW YORK DAILY NEWS DAILY POLITICS BLOG:

THE WAY THINGS ARE SUPPOSED TO BE, Shirley Temple ....

VERSUS THE WAY THEY REALLY ARE ....

That is what much of the discussion in here has been centering on since we all began a migration down to here last April from the CRAPORIFIC CENSORED TU CRAPCON BLOG up in Albany ....

And people generally tend to focus in on the ways things are ...

I.e., what you are stating about the NYS Senate ....

We don't know what it is supposed to be ....

All we know is the way it is right now ...

And in here, at this time, we have finally achieved some type of level where people are talking back and forth and discussing things in here without the RANCOR and ENMITY that so characterize the TU CRAPCON ...

And a new year is just starting out ...

So at least as a sidebar between yourself and mine ...

We can kick this matter back and forth some ....

My one critique of your first post, if you will, is a similar one I have to many posts in here ....

The author of the post assumes that things are intuitively obvious, or simple to understand, and that is not always the case ....

At least with me ....

I need things sometimes spelled out in more detail ....

And that would apply right now to your statement above that:

The New York State Senate should track the Senate before the 17th Amendment.

end quotes

Quite frankly, Shirley Temple, and I am not ashamed or afraid to admit it in here, you are pitching way above my level of ignorance with this statement ....

Right now, I cannot interpret it ....

I'm thinking that maybe there is some APPLES & ORANGES here ....

I assume that you mean the 17th Amendment to the US Constitution ....

Which I don't see as having any bearing whatsoever on this issue ...

BUT ...

That is not a challenge to a fight in here with you ....

I'm sick of that CRAP and if I wanted fights, I'd stay with the TU CRAPCON ...

Rather, it is an invitation to you to talk to me as if I were a child here ....

Develop this thought of yours a tad more, if you will .....

The beauty of this type of forum is that even though everybody and the subjects in here are always "moving on", sometimes at "light speed" it seems to me ....

As with your first post that I saved ....

Your words are frozen in time in here and can be further studied by people who are slow thinkers like myself ...

And so ...

Posted by John Galt on January 3, 2008 7:26 AM

http://www.nydailynews.com/blogs/dailypoli...8.html#comments

THE NEW YORK DAILY NEWS DAILY POLITICS BLOG:

THE WAY THINGS ARE SUPPOSED TO BE, Shirley Temple ....

VERSUS THE WAY THEY REALLY ARE ....

And for "us", the citizens of the US who are also citizens of NYS, back in Kingston, on the 20th day of April, 1777 ....

The way things really were HERE IN NEW YORK is expressed in the following words, to wit:

Whereas the many tyrannical and oppressive usurpations of the King and Parliament of Great Britain on the rights and liberties of the people of the American colonies had reduced them to the necessity of introducing a government by congresses and committees, as temporary expedients, and to exist no longer than the grievances of the people should remain without redress .....

end quotes

TYRANNICAL AND OPPRESSIVE USURPATIONS OF THE KING AND PARLIAMENT ON THE RIGHTS AND LIBERTIES OF THE PEOPLE OF THE AMERICAN COLONIES .....

Hhhhhhmmmmmmm ....

A pregnant phrase, Shirley Temple ....

In 1777 ....

That has got us to where we were in 2007 here in NYS ...

When you made your post above that I have saved in here, because of its timeliness and importance, to me, anyway, since I am not the MASTER OF GROUPTHINK in here ....

Those words above in 1777 resulted in these words from OUR NYS Constitution, to wit:

THE CONSTITUTION OF THE STATE OF NEW YORK

We The People of the State of New York, grateful to Almighty God for our Freedom, in order to secure its blessings, DO ESTABLISH THIS CONSTITUTION

ARTICLE III - Legislature

Section 1. The legislative power of this state shall be vested in the senate and assembly.

end quotes

LEGISLATIVE POWER SHALL BE VESTED ....

Which comes directly from:

TYRANNICAL AND OPPRESSIVE USURPATIONS OF THE KING AND PARLIAMENT ON THE RIGHTS AND LIBERTIES OF THE PEOPLE OF THE AMERICAN COLONIES .....

Circular reasoning, Shirley Temple ....

There is one school of thought out there that says when we gave George III the boot, that we did not really get rid of the TYRANNICAL AND OPPRESSIVE USURPATIONS ON THE RIGHTS AND LIBERTIES OF THE PEOPLE OF THE AMERICAN COLONIES .....

ALL WE DID WAS TO CHANGE "OWNERSHIP" OF THEM ...

The TYRANNICAL AND OPPRESSIVE USURPATIONS ON THE RIGHTS AND LIBERTIES OF THE PEOPLE OF THE AMERICAN COLONIES were never really done away with, according to this school .....

Which has as its faculty such political luminaries here in NYS as Eliot Spitzer and his "partner" Joe Bruno ....

So that instead of being tyrannized and oppressed by some foreign king ...

We get to be tyrannized and oppressed by people in Albany ....

WHEREAS ....

I myself tend to focus on on these words:

THE RIGHTS AND LIBERTIES OF THE PEOPLE OF THE AMERICAN COLONIES

end quotes

WHAT EXACTLY ARE THOSE?

And how come we upstate people here in NYS don't have any?

IF PEOPLE HAD RIGHTS AND LIBERTIES BACK IN 1777 HERE IN NYS, HOW COME WE DON'T HAVE ANY TODAY?

MY POSITION in here is that OUR NYS Constitution was intended to END the TYRANNICAL AND OPPRESSIVE USURPATIONS ON THE RIGHTS AND LIBERTIES OF THE PEOPLE OF THE AMERICAN COLONIES forever ....

And thus has the stage been set for where we are in here right now, Shirley Temple .....

As I see it anyway .....

And the eternal question lingers, as always, for each of us in here:

WHICH SIDE ARE YOU ON?

And so ...

Posted by John Galt on January 3, 2008 7:57 AM

http://www.nydailynews.com/blogs/dailypoli...8.html#comments

THE NEW YORK DAILY NEWS DAILY POLITICS BLOG:

Good morning, John: that arcane discussion of the Senate and its history was interesting, and, speaking just for myself, I did not intend to give Shirley's or your comments short shrift.

The 17th Amendment to the US Constitution, a product of the age of reform, provided for the direct election of US Senators; 1/3 of the Senate every 2 years, with 6-year terms following each election.

This was to give the voters more say in choosing this august legislative body and taking it out of the realm of political corruption and control by the wealthy; to move it towards exactly the opposite of the English House of Lords, at least in theory.

The NY State Senate, on the other hand, seems like an appendage useful only to provide another big shot player (in this case, Joe Bruno) to be Majority Leader and have at least 1/3 of the power in the Empire State (a well-chosen nickname, dontcha think?).

We could get along just fine with just a one-house legislature representing the people and doing the people's business.

Other states seem to manage.

However, there's about as much chance of that ever happening as there is of eliminating member items and other pork.

Posted by IronMike on January 3, 2008 8:18 AM

http://www.nydailynews.com/blogs/dailypoli...8.html#comments

THE NEW YORK DAILY NEWS DAILY POLITICS BLOG:

Posted by IronMike: Good morning, John: that arcane discussion of the Senate and its history was interesting, and, speaking just for myself, I did not intend to give Shirley's or your comments short shrift.

The 17th Amendment to the US Constitution, a product of the age of reform, provided for the direct election of US Senators; 1/3 of the Senate every 2 years, with 6-year terms following each election.

This was to give the voters more say in choosing this august legislative body and taking it out of the realm of political corruption and control by the wealthy; to move it towards exactly the opposite of the English House of Lords, at least in theory.

The NY State Senate, on the other hand, seems like an appendage useful only to provide another big shot player (in this case, Joe Bruno) to be Majority Leader and have at least 1/3 of the power in the Empire State (a well-chosen nickname, dontcha think?).

We could get along just fine with just a one-house legislature representing the people and doing the people's business.

Other states seem to manage.

However, there's about as much chance of that ever happening as there is of eliminating member items and other pork.

JOHN GALT RESPONDS: Mike, dude ...

Whether or not something might or might not happen, in my opinion, is no reason not to have the conversation AS IF ....

If we have no idea where we are in this state government-wise, then it is damn sure that we will never change ....

And so ....

In this conversation that Shirley Temple has started with that post, I am simply interested in the conversation ....

I am interested in how other people see this issue ....

And that can't happen if the conversation is still-born because people assume we will never be able to change things here in NYS ....

And so ...

The fact is that in the course of our history, WE, THE PEOPLE have in fact altered or amended the NYS Constitution to take power away from the governor ....

And to cut back the size of the NYS Senate from some 300 or so state senators to 50 ....

So it can be done, Mike ....

But that is not the issue right now, as I see it ....

The issue is more one of what would we do, IF we could do something .....

AND WHY?

WHY would we want to change our government?

What are we curing by doing so ....

And so ....

Posted by John Galt on January 3, 2008 6:20 PM

http://www.nydailynews.com/blogs/dailypoli...9.html#comments

THE NEW YORK POST

"IT'S CAPITAL CHILL AS SPITZ SPURNS ALBANY"

By KENNETH LOVETT Post Correspondent

January 3, 2008 -- ALBANY - Gov. Spitzer spent just 47 nights in the Executive Mansion here in 2007, The Post has learned.

All told, his aides said in response to inquiries from The Post, the new governor was in Albany a total of just 99 days last year - a time in which state government experienced its first gubernatorial transition in 12 years.

Spitzer and his family spent most nights in their Fifth Avenue apartment in a building owned by his wealthy real-estate developer father, as well as at an upstate farmhouse the governor and his family own.

Russell Haven, of the New York Public Interest Research Group, said Spitzer's lack of presence in the capital sends the wrong message when little is being accomplished in state government.

"The public normally doesn't really care where the governor's head hits the pillow, but when there's gridlock in Albany, it feeds into the perception that he should be in town more often," Haven said.

The last governor to live full-time in the mansion was Mario Cuomo, who famously spent few nights away from Albany.

While Cuomo wouldn't criticize Spitzer for choosing to live in New York City, he said he felt it was important during his years as governor to be a regular presence in Albany.

Cuomo made the move even after former Gov. Malcolm Wilson suggested he spend more time in Manhattan "because that's where the money is; that's where the power is."

"I chose to stay in Albany because that's where the government was," Cuomo told The Post.

"We enjoyed it."

"I was closer to government; the agencies and the agency heads."

"There's a lot more to the government than just the Legislature."

Before Cuomo, Gov. Hugh Carey lived at the mansion with his 13 kids.

Gubernatorial spokesman Errol Cockfield said that during the 2006 campaign, Spitzer committed to staying in Albany "as much as possible, given the fact he has three teenage daughters who are in high school.

"While the governor has to be in the state Capitol conducting business, he also has to be where there are many powerbrokers in the state, which is why there is an Albany office and a New York City office," Cockfield said.

New York spends $175,000 a year on the mansion to cover operating costs, including utilities, laundry, food, housing, events, and equipment, according to state Budget Division spokesman Jeffrey Gordon.

That does not include the salaries of those assigned to work there, he said.

Spitzer's frequent absences from Albany continue a trend started over the previous 12 years by his predecessor, George Pataki, who was frequently criticized for his time away from the capital.

kenneth.lovett@nypost.com

http://www.nypost.com/seven/01032008/news/...bany_831331.htm

THE NEW YORK DAILY NEWS

"Spitzer ex-aide Darren Dopp fights subpoena for Troopergate diary"

BY JOE MAHONEY, DAILY NEWS ALBANY BUREAU CHIEF

Thursday, January 3rd 2008, 4:00 AM

ALBANY - Darren Dopp, Gov. Spitzer's former spokesman, is seeking to quash a subpoena for diary-like notes he kept while the Troopergate plan was unfolding, sources said Wednesday.

The subpoena was issued to Dopp by the state Public Integrity Commission, which is investigating the dirty tricks plot against Senate Republican Leader Joseph Bruno.

Dopp, now employed by one of the state's largest lobbying firms, has been officially notified that he is the target of an investigation into potential ethics law violations.

Dopp's attorney, Michael Koenig, declined to comment on the attempt in state Supreme Court to stop the commission from getting Dopp's notes.

Sources said the so-called diary has already been sent to Albany County District Attorney David Soares by the governor's office.

When the first Troopergate probe was conducted by Attorney General Andrew Cuomo, investigators were unaware of the existence of Dopp's notes.

On the advice of administration lawyers, Dopp and Richard Baum, Spitzer's top aide, refused to undergo questioning at that time.

Soares also did not have access to the Dopp notes when he initially determined there was no criminal wrongdoing by anyone connected to the effort to tar Bruno with a story in an Albany newspaper that suggested the senator may have misused state helicopters.

Dopp himself disclosed the existence of the notes when he was quizzed for some 12 hours by commission lawyers.

Because of alleged inconsistencies in Dopp's testimony and the signed statement he gave to Cuomo's probers, the panel referred the matter again to Soares, whose probe is continuing.

With Troopergate probes still brewing, Bruno insisted yesterday that any attempt to make peace will have to come from the governor.

"That's his move," the GOP leader said.

"The governor started this war."

"The governor started this fight."

The Spitzer administration had no comment on his remarks, though one official close to the governor said privately Spitzer has gone out of his way to be "conciliatory" to Bruno.

jmahoney@nydailynews.com

http://www.nydailynews.com/news/2008/01/03...s_subpoe-1.html

"Deal would weaken NYRA power - Association's control of board cut under state plan"

By JAMES M. ODATO, Capitol bureau, Albany, New York Times Union

First published: Thursday, January 3, 2008

ALBANY -- State officials are crafting a deal that would weaken the New York Racing Association's control of its board of trustees.

NYRA is objecting privately to the plan, which is part of a deal being worked out by negotiators for Gov. Eliot Spitzer, Sen. Majority Leader Joseph L. Bruno and Assembly Speaker Sheldon Silver to extend NYRA's franchise to run state racetracks for another 20 to 25 years.

Under the plan, NYRA would have to reduce its board from 28 members, 20 of whom are NYRA appointees, to 21 members, 11 of whom would be appointed by NYRA.

Of the other 10 board members, the governor would appoint three, the Assembly speaker and Senate majority leader would each appoint two, and horse owners, breeders and organized labor would each name one.

Just before negotiators resumed private talks Wednesday, Bruno said in a news conference that the holdup in getting a deal completed includes the composition of the NYRA board, along with a guarantee on purse money for horse owners and a plan to get input on NYRA's affairs from the communities that host the races at the Aqueduct, Belmont Park and Saratoga tracks.

Bruno said the NYRA board needs fresh blood.

Its board of trustees currently includes people involved in thoroughbred horse breeding and ownership.

Most government appointees were named by Gov. George Pataki.

Several have been trustees for many years.

Under a proposal worked out in September, NYRA, a nonprofit racing association, had agreed to shrink its board to 19 members, with 13 NYRA appointees and six government appointees.

That deal preserved NYRA's super-majority.

The new proposal would give NYRA a simple majority on the board.

Blaming the lack of a deal on NYRA's resistance to changes aimed at increasing accountability and oversight, Bruno said he can support extending NYRA's franchise but isn't sure how long the term should be.

Negotiators for Spitzer have been able to move Bruno from his proposal of 15 years and are pushing for 30 years, one official close to the talks said.

The official said the framework of a deal is in place.

But NYRA will need some convincing, and a final deal will need the approval of a judge handling NYRA's Chapter 11 bankruptcy filing.

NYRA submitted a plan to emerge from bankruptcy after 13 months under protection from creditors who are owed some $310 million.

The plan is to be considered by a bankruptcy judge on Jan. 14, the latest deadline for negotiators to reach a franchise agreement.

The plan would have to be amended based on the deal now being worked out.

The goal is to give NYRA certain incentives -- including some $75 million to get out of bankruptcy and a franchise extension -- so that NYRA would drop its claim to owning the tracks and turn over the deeds to the state.

Last week, the state temporarily prolonged NYRA's right to run races until Jan. 23 even though its franchise expired after Dec. 31.

The move avoided a potential shutdown of the Aqueduct meet.

NYRA Chairman Steven Duncker declined to comment.

James M. Odato can be reached at 454-5083 or by e-mail at jodato@timesunion.com.

"GOP places tax relief on table - Senate Republicans offer to triple STAR rebate, end school property taxes"

By RICK KARLIN, Capitol bureau, Albany, New York

First published: Friday, January 4, 2008

ALBANY -- The Senate Republican majority on Thursday unveiled an $8.4 billion proposal to eventually triple school tax rebates, and for another $9.5 billion, give local school districts the option of eliminating school property taxes altogether by turning over that cost to the state.

The sheer cost and scope of the proposal almost guarantees it won't all be passed this year.

But the plan puts Senate Republicans -- who have a slender two-seat majority and who consider the tax-burdened suburbs of Long Island their power base -- on record as making school property tax relief their legislative priority this year.

"The property tax is the tax that all of the experts agree is hurting every region of this state," said Senate Majority Leader Joseph L. Bruno, R-Brunswick.

The plan calls for doubling the 2007 School Tax Relief, or STAR, rebate and then tripling it by 2009.

For seniors, the rebate would triple this year and quadruple in 2009.

Another proposal, dubbed NY-STOP, or Stop Taxing Our Property, would let people petition and then vote to have their districts drop their property taxes 20 percent for five years.

The state would then take over that responsibility.

The plan would also do away with income thresholds that Spitzer pushed through to favor middle- and lower-income families and freeze assessments for seniors.

Democrats were cool to the idea, which some suggested was unrealistic, especially given the projected $4.3 billion deficit looming in the coming year's budget.

"We all support property tax relief," said Assembly Speaker Sheldon Silver, D-Manhattan.

"How do you pay for it?"

"Are we shifting taxes?"

"Are we going to be forced to raise income taxes in order to pay for property tax reductions?" Silver questioned.

Gov. Eliot Spitzer's budget spokesman, Jeffrey Gordon noted the governor and Legislature instituted a sweeping boost to the STAR program which targeted relief to those who most needed it.

"This year, the governor is developing a budget proposal that balances the need for property tax relief with the need to control spending," said Gordon.

"Ex-Spitzer aide wants state panel probe halted - Darren Dopp's lawyer says Public Integrity Commission should hold off while DA investigates"

By RICK KARLIN, Capitol bureau, Albany, New York Times Union

First published: Friday, January 4, 2008

ALBANY -- The lawyer representing former gubernatorial aide Darren Dopp wants the state's Public Integrity Commission to freeze its investigation of Dopp pending another ongoing probe by District Attorney David Soares.

The commission, however, is fighting back, hiring its own lawyer, Thomas Gleason, to help keep its investigation moving forward.

While Albany County Supreme Court Justice Michael Lynch hasn't decided if the commission should hold off its inquiry, he did say that Dopp -- at least for the time being -- doesn't have to give the commission papers, e-mails or other documents pertaining to last spring's travel records scandal.

This latest episode unfolded on Thursday when Dopp's lawyer, Michael Koenig, sought to halt the commission's probe until Soares completes his investigation.

"When an individual is under criminal investigation, I believe all other investigations should be held in abeyance," said Koenig, who also suggested that leaks about the probes could represent an effort to influence Soares.

"I am increasingly concerned about the unnamed and anonymous sources who are appearing in the newspaper as the district attorney is conducting his investigation," he said.

Both the Public Integrity Commission and Soares are probing a scandal in which State Police produced travel records on the governor's main political foe, Republican Senate Majority Leader Joseph L. Bruno.

Police, responding to a request by the governor's office, re-created from memory Bruno's itineraries on trips that the Brunswick Republican made to New York City on a state helicopter.

Attorney General Andrew Cuomo in July concluded that there were no illegalities in that affair, but he said State Police should not have been drawn into what was essentially a political dustup.

Then, in September, Soares issued a report of his own that also found no laws had been broken.

In November, however, Soares reopened his probe, focusing on Dopp amid concerns that the former communications director gave conflicting statements to the district attorney and Cuomo.

Since that time, Soares has subpoenaed records from Spitzer's office, and the commission has proceeded with its own investigation.

Both the commission and Soares are seeking a variety of records, including details about a so-called "diary" or collection of notes that Dopp kept on the initial affair.

Rick Karlin can be reached at 454-5758 or by e-mail at rkarlin@timesunion.com

THE NEW YORK POST

"SPITZER-PROBE BOSS IN VACATION UPROAR"

December 31, 2007 -- THE man supposedly leading a key state probe of Gov. Spitzer and the Dirty Tricks Scandal has abruptly taken a 21/2-week vacation in South America - after secretly receiving a $15,000 pay raise, The Post has learned.

Recently hired Public Integrity Commission Executive Director Herbert Teitelbaum's extended vacation in Argentina has left stunned commission employees questioning his commitment to a probe aimed at determining if Spitzer and his aides broke the law by using the State Police in an effort to politically damage Senate Majority Leader Joseph Bruno (R-Rensselaer.)

"People can't believe Teitelbaum just took off in the middle of the investigation," said a source close to the commission.

"This is the biggest scandal in a generation, and he leaves in the middle of the investigation, before the governor has undergone questioning?"

Teitelbaum, a longtime Manhattan lawyer with close ties to Spitzer's aides, was named in mid-July by another Spitzer appointee, commission Chairman John Feerick, as the $140,000-a-year head of the Ethics Commission.

He was then appointed to head the Public Integrity Commission in October, after the Ethics and Lobbying commissions merged into the new entity, with Feerick again as chair.

It's unclear if Teitelbaum has earned enough vacation and personal leave days to have 2½ weeks' paid time off.

Commission spokesman Walter Ayres contended that Teitelbaum was hired with the understanding that he would take a long vacation in December and said he would take unpaid leave, if necessary.

Ayres also claimed Teitelbaum was able to do his job from Argentina since "he's in contact almost on a daily basis."

But a second commission source insisted, "The whole place is adrift."

Teitelbaum's $15,000 pay raise two weeks ago was approved without public notice by Feerick, a former Fordham Law School dean accused by Bruno aides of seeking to cover up the scandal.

The nearly 11 percent pay hike came at a time when the state faces a massive, $4 billion-plus, projected deficit.

Teitelbaum's commission has been expected for months to take under-oath testimony from Spitzer, who has denied any wrongdoing but has repeatedly refused to answer questions about his possible involvement.

Spitzer is also fighting a subpoena issued by the GOP-controlled state Senate for a variety of scandal-related records, including e-mail messages.

Feerick, meanwhile, is being paid at least $75,000-a-year - along with undisclosed stock options - as a member of Wyeth Pharmaceuticals' board of directors, even as the drug giant employs a lobbyist whose activities are regulated by Feerick's own commission, The Post has found.

Feerick vowed earlier this year to sever business ties that could present a conflict-of-interest.

But Ayres insisted there was no conflict because Feerick is pledged to recuse himself from any issue involving Wyeth.

He also said Feerick will be required to leave Wyeth when he turns 72 next July.

But a source who deals with many drug-company lobbyists contended, "Feerick's ties to Wyeth will definitely raise the suspicion that one company and its lobbyists will be favored over all the others."

fredric.dicker@nypost.com

http://www.nypost.com/seven/12312007/news/...roar_906744.htm

"$15,000 more for ethics chief - Pay bump amid Spitzer probe; GOP senator delays exit for lobby job"

By MICHAEL GORMLEY, Associated Press

First published: Thursday, January 3, 2008

ALBANY -- The New York state ethics investigator probing the Spitzer administration is making $15,000 more after four months in state service.

Meanwhile, the Senate Energy Committee chairman has postponed his resignation and will remain in the Legislature after accepting a job with an energy lobbyist.

Senate Majority Leader Joseph L. Bruno said Wednesday that the raise for Public Integrity Commission Executive Director Herbert Teitelbaum to $155,000 is troubling.

The commission is investigating whether top Spitzer aides misused state police to compile records of Bruno's use of state aircraft.

"I never dreamt that you would have an executive director getting a $15,000 raise in the middle of an investigation," Bruno told reporters Wednesday.

"The people have a right to know this stuff."

But the Public Integrity Commission and Spitzer administration say Teitelbaum didn't get a raise.

Instead, they say his new salary reflects the change from executive director of the state Ethics Commission to executive director of the state Public Integrity Commission, which is a merger of the former ethics and lobbying commissions.

Public Integrity Commission spokesman Walter Ayres said, "We did not seek the governor's approval on this, and we did not seek the governor's input."

In the Legislature, Senate Energy Committee Chairman James Wright has reportedly decided to briefly extend his stay in office after already accepting a job with an energy lobbying firm.

The Republican from Watertown will step down Jan. 7, according to The Post-Standard of Syracuse.

Wright announced his resignation Dec. 12, effective Dec. 31, so he could work for Fleishman-Hillard Government Relations, a national lobbying and consulting firm where Wright will continue to work on energy issues.

Having a sitting lawmaker pledged to joining a lobbying firm on the topic over which he holds sway in Albany doesn't violate the ethics rules the Legislature created itself, said the committee's co-chairman, Democratic Assemblyman Kevin Cahill of Kingston.

Delaying his resignation means Democratic Gov. Eliot Spitzer wouldn't be able to set a special election to fill the seat on the state's presidential primary day, Feb. 5.

Wright's resignation will leave Republicans with a one-seat majority.

THE NEW YORK POST

"COURT DROPS DOPP 'STOP'"

By FREDRIC U. DICKER

January 4, 2008 -- ALBANY - An attempt by a former aide to Gov. Spitzer to block a subpoena in the Dirty Tricks Scandal was rejected yesterday in Albany Supreme Court.

Justice Michael Lynch rebuffed efforts by a lawyer for Darren Dopp, Spitzer's former communications director, to block a state Public Integrity Commission subpoena for notes and other records relating to a sworn statement.

Dopp was issued the subpoena last July in the wake of a scathing report on the scandal from Attorney General Andrew Cuomo.

Dopp's lawyer, Michael Koenig, had sought to prevent the commission from obtaining - from either Dopp himself or Spitzer's office - notes and other records, including dated documents that some have called a "secret diary."

"With the ruling, we're going to proceed to obtain Mr. Dopp's diary or notes," Commission spokesman Walter Ayres said.

http://www.nypost.com/seven/01042008/news/...p_stop_6453.htm

THE NEW YORK TIMES

"Panel’s Inquiry on Spitzer Aide May Go On"

By DANNY HAKIM

Published: January 4, 2008

ALBANY — The State Commission on Public Integrity can continue, for now, to gather evidence related to Gov. Eliot Spitzer’s former communications director, Darren Dopp, while a separate criminal investigation proceeds, a state judge ruled on Thursday.

Mr. Dopp, a key figure in several investigations into the Spitzer administration’s efforts to discredit a political rival, had sought to prevent the commission from gathering information about him until an investigation by the Albany County district attorney, P. David Soares, had been completed.

While the judge, Michael C. Lynch of State Supreme Court, rejected a request by Mr. Dopp’s lawyer, Michael Koenig, that he immediately halt the commission’s collection of evidence, he did say he would consider the motion to block the investigation.

Justice Lynch also rejected a motion to keep the court filings secret, people on both sides of the case said.

The commission recently subpoenaed a diary kept by Mr. Dopp that has already been turned over by the Spitzer administration to Mr. Soares.

Mr. Koenig said, “Until the district attorney completes his investigation, I believe it is inappropriate for other investigations that could influence or prejudice the district attorney’s investigation to continue.”

Errol Cockfield, the governor’s press secretary, declined to comment.

The ruling was the latest development in a six-month-old dispute that erupted when Attorney General Andrew M. Cuomo, a Democrat, issued a withering report in July saying the Democratic Spitzer administration had misused the State Police in gathering information on the governor’s chief rival, Joseph L. Bruno, the Republican Senate majority leader.

Mr. Bruno had used state planes and cars on trips that blended fund-raisers and government activity, a mixed use that was permissible at the time under state guidelines.

The dispute continues to dog the governor as he starts his second year in office, with the administration wrestling with three investigations, including one by the Republican-led Senate Investigations Committee.

Mr. Soares concluded his first inquiry in September, finding that no laws had been broken, but began a new investigation amid allegations that Mr. Dopp’s testimony to the commission had conflicted with a statement he provided to Mr. Cuomo’s office.

Mr. Soares held off on bringing charges in the second inquiry last month after complications arose, including the fact that the statement presented to Mr. Cuomo’s office by the administration was not a sworn affidavit.

It appears, however, that the integrity commission, after a delay, is moving ahead with its own investigation.

Mr. Koenig declined to say much about the case.

“As has been my policy from the beginning of representing Darren, I’m not going to speak substantively about this matter,” he said.

“We will be making whatever appropriate motions we believe are necessary.”

http://www.nytimes.com/2008/01/04/nyregion...amp;oref=slogin

THE NEW YORK DAILY NEWS

"Judge: turn over Troopergate diary"

BY JOE MAHONEY, DAILY NEWS ALBANY BUREAU CHIEF

Friday, January 4th 2008, 4:00 AM

ALBANY - Gov. Spitzer's former spokesman must surrender his Troopergate diary to the state Commission on Public Integrity, a state Supreme Court judge ruled Thursday.

Darren Dopp unsuccessfully sought to quash a commission subpoena for his diary-like notes and prevent the governor's office from giving copies to ethics investigators looking into his role in the dirty tricks plot aimed at Senate GOP Leader Joe Bruno last year.

Judge Michael Lynch shot down both requests - and also refused to seal the court proceedings, as requested by Dopp's lawyer, Michael Koenig of Albany.

Albany County District Attorney David Soares also has Dopp's notes and is moving forward with a grand jury probe.

Dopp's lawyer had no comment on the ruling.

http://www.nydailynews.com/news/politics/2...gate_diary.html

POUGHKEEPSIE JOURNAL

Friday, January 4, 2008

"Spitzer's intermittent Albany residency generates criticism - Some say he's there more than Pataki"

By Joseph Spector, Journal Albany bureau

ALBANY - Maybe this is a sign of a new beginning in state politics: Gov. Eliot Spitzer has already stayed a night this year at the Executive Mansion in Albany.

Whether New York governors should make the mansion their home has been a debated issue for decades, with some officials suggesting staying there gives governors more control over state government.

Others, though, say that premise is overrated: Governors need to be visible across the state, especially in New York City, the largest city in the country and home to four out of 10 New Yorkers.

Some officials are criticizing Spitzer for not being in Albany more, yet others say he's doing better than his predecessor, George Pataki.

According to aides, Spitzer spent 47 nights at the Executive Mansion in 2007 and was in Albany 99 days in his first year as governor.

After hosting an open house at the mansion with his wife, Silda, on New Year's Day, Spitzer also spent Wednesday at the sprawling 39-room mansion, which has been home to New York governors since 1875.

Spitzer has balanced his time living between Albany, his family's apartment on Fifth Avenue in Manhattan and in their farmhouse in Columbia County.

Aides were unable Thursday to provide the number of days he spent traveling the state.

"While he was running for office, the governor said that he would spend as much time as possible in Albany, but he also made it clear that he has three teenage daughters who attend high school in New York City," spokesman Errol Cockfield said.

Effectiveness questioned

Still, some critics questioned whether the Democratic governor has spent enough time in Albany, especially because it was his first year and because his poor relationship with the state Legislature has led to gridlock.

"It's disturbing because this governor talked about being a great reformer," said Senate Republican Leader Joseph Bruno, Spitzer's chief political foe.

"He said from Day One he was going to change everything."

"And if anything has changed, it's a lot worse than it's ever been."

Still, others say Spitzer has been at the Capitol and the mansion more than Pataki, who rarely stayed in Albany and commuted to his home in Garrison, Putnam County.

Spitzer was in Albany Thursday, preparing for his State of the State address next week.

"Although the legislative leaders may not have liked the time Mr. Spitzer spent here, he probably did increase the amount of time" he stayed in Albany compared to Pataki, said Barbara Bartoletti, legislative director for the state League of Women Voters.

Gannett News Service filed a Freedom of Information Law request in early December seeking records on how many nights Pataki stayed at the mansion.

But the state Office of General Services, which maintains the mansion, said it does not keep those records.

State police, which provides security for the mansion, said it also doesn't maintain records on governors' stays there.

Reach Joseph Spector at jspector@gannett.com

http://www.poughkeepsiejournal.com/apps/pb...40318/1006/NEWS

THE NEW YORK POST

"SILVER'S RECKLESS BAILOUT"

January 4, 2008 -- It sure must be nice to live in Assembly Speaker Shelly Silver's consequence-free world - where Joe and Eileen Taxpayer can always be hit up to cover the losses of their less prudent neighbors.

Yesterday, Silver and his Assembly pals proposed socking taxpayers with a $180 million tab to bail out strapped subprime mortgage borrowers.

Now, if Albany were flush with cash, such a move would be merely wrong-headed and unfair.

But with lawmakers already planning to spend $4.3 billion more than they collect in revenues next fiscal year, it's beyond reckless.

In microcosm, it's precisely this kind of thinking (it's OK to spend more than you earn) that has led to so many borrowers facing foreclosure in the first place.

Question is, who'll bail out New York when it can't pay its bills?

Oh, yeah: Joe and Eileen Taxpayer.

Even though New Yorkers are already the most heavily burdened taxpayers of any state in the nation.

No wonder so many businesses and residents are looking to locate in other states, as recent Census data show.

How many times, after all, can they be ordered to make up for the shortfall of others?

Most astounding about Silver's plan, though, is that it not only seeks to hold harmless those who take on more than they can handle, but it also essentially legitimizes that practice - by doing the same thing itself.

We repeat: There's no money to fund it.

And when asked about this wee oversight, Silver gave the classic response of those who can't say no: The state would just have to find the money, he said, for the 50,000 households "in some state of foreclosure" - just as it does for cops and other key public servants.

(That is, the financially responsible other 19 million New Yorkers will have to pony up.)

"We have to be creative," said Banking Committee Chairman Darryl Towns, in trying to close the budget gap.

But "this is one of our priorities."

Again, even if there were billions on hand, Silver's bailout is terribly ill-conceived.

While he lets deadbeat borrowers off the hook (they're "victims," you see), he calls lenders "unscrupulous," demanding they "pick up their share of the tab."

The fact is that many lenders (investors, actually) - who hold bad mortgages - stand to lose a fortune, as their collateral turns out to have been wildly overvalued.

No bailout for them - right, Mr. Speaker?

Of course not.

Never mind that many of the lenders may have been misled by the borrowers themselves - particularly in cases where mortgages required no document or income verification.

Indeed, law-enforcement agencies say mortgage fraud - including false statements by borrowers on applications - has doubled since 2005 and soared eight-fold since 2000.

Never mind that when lenders tighten their standards, folks like Silver hold them up as villains for impeding upward mobility and home ownership.

But the misguided thinking and squeezing of taxpayers is secondary.

The main point, as Silver well knows: There's just no money in the kitty.

And even if there were, this isn't a proper way to spend it.

http://www.nypost.com/seven/01042008/posto...lout_915682.htm

"Spitzer urged to focus on economics - Business leaders, elected officials say they hope speech will address property tax relief, aid to cities"

By JAMES M. ODATO, Capitol bureau, Albany, New York Times Union

First published: Sunday, January 6, 2008

ALBANY -- When Gov. Eliot Spitzer delivers his second State of the State speech, on Wednesday, he should focus on strengthening New York through property tax relief, financial aid to cities and economic development while keeping some of the commitments he made during his campaign, elected officials and business groups across the state say.

In two addresses a week apart, the governor is expected to indeed to such priorities.

Spitzer will key on "driving economic growth," said a person familiar with the State of the State address and who requested anonymity.

Spitzer will follow up with his first "State of Upstate" address a week later in Buffalo.

"What I've seen with the governor's action in his first year, I'm hoping to see more of," said Rochester Mayor Robert Duffy.

"The fact that he's holding his state of upstate speech in Buffalo reinforces that."

Mayors from across upstate say they want and expect more promises of help as the governor confronts a top commitment he made in his 2006 campaign: improving upstate's fortunes.

The mayors emphasized they rely on Albany to keep improving aid for revitalization and property tax relief, and cutting mandates such as the Wicks Law that forces up the costs of public construction projects.

Although his aides so far refuse to divulge details of his plans for his second year of office, Spitzer has signaled his intention to unveil a new jobs initiative.

And he has shown a commitment to following through with popular programs, such as his three-year, $5.3 billion plan to reduce taxes for middle-class property owners.

Spitzer's two economic development czars have been teasing the new job creation idea in recent weeks.

The program is expected to commit at least $300 million to upstate and may dovetail with the "City by City" initiative, unveiled a year ago, in which the state provides regional economic development grants.

The governor's job-creation team, led by Dan Gunderson and Patrick Foye, has mentioned a new Investment Opportunity Fund to provide funds for "transformative projects" valued at $20 million or more to leverage private investment.

The governor also will talk about changing the way the state subsidizes businesses through cleaning up urban polluted areas known as brownfields, industrial development agencies and Empire Zones.

The current programs have been criticized as overly generous and relatively short on results.

Mayors hope Spitzer continues adding $50 million a year over four years to statewide aid to municipalities.

This year's budget made the first payment on the deal.

They also hope for more targeted grants from Spitzer's City by City venture under which the governor traveled upstate announcing government money for big-ticket urban projects.

In many cases, Spitzer still needs to work out a capital project deal with the Legislature to fund such commitments, something he and lawmakers failed to agree on last year.

"City by City is a good thing, looking at specific strategies," said Syracuse Mayor Matt Driscoll.

"I'm hoping for more of the same, in terms of his focus on upstate."

The $65 million dedicated to Rochester for its Midtown Plaza project under the program is already resulting in private sector investment interest, said Duffy.

"He made a promise during his campaign and he followed through," Duffy said.

Joseph Shay, mayor of the state's smallest city, Sherill (population 3,200), said the governor would help his municipality if he backed up his pledge to collect taxes from sales to non-Native Americans who shop at Oneida Indian Nation stores.

"I don't think he'll put it in his State of the State," Shay said.

"The sales tax we lose from the Oneida Indian Nation equates to $150,000 a year and we've been losing it for the last 10 years."

Mayor Jerry Jennings said if the governor is committed to upstate's economy he must zero in on cities and not feel he's done enough with his first-year initiatives.

He hopes the governor will get behind programs to improve urban neighborhoods, such as new incentives to fix up deteriorated buildings.

He also said more must be done in education, too, holding schools more accountable, and stretching the school year and school day to help students succeed and stay off the streets.

Following a similar theme, Yonkers Mayor Phil Amicone said cities like his need to get a proportionate share of education aid to make public schools viable.

He said he's confident Spitzer will keep helping cities.

But he hopes the governor will think twice about changing the brownfields law.

Polluted city sites have a better chance of remediation and redevelopment if the governor will no more than tweak the current statute, he said.

Spitzer is proposing to switch the emphasis so state incentives are based on the cost of cleanup, not the value of the redevelopment project.

"Pretty much our entire downtown is a brownfield," Amicone said.

"I'm happy with the status quo."

"I understand there are some who abuse it ..."

"If there's no longer economic incentive, and just a cleanup program, it would render it useless."

Buffalo Mayor Byron Brown is looking forward to attending both speeches the governor gives this month.

He said he hopes Spitzer recognizes that Buffalo was rated the second poorest city in the nation in a 2007 Census Bureau report.

Spitzer, Brown said, will prove his commitment to upstate if he talks about directing a greater share of the state budget to cities outside New York City in general and Buffalo in particular.

"I want to see the reality behind the rhetoric," Brown said.

James M. Odato can be reached at 454-5083 or by e-mail at jodato@timesunion.com.

How'd he do?

Gov. Eliot Spitzer laid out many goals in his first State of the State address last year.

Here's a recap of how he did.

(X means he checked off that goal, O means he's still working on it, P means he made progress)

P - Started historic bipartisan partnership with Legislature.

O - Restored confidence of elected leaders following front-page stories of scandal.

O - Overhauled campaign finance and election laws.

X - Reformed lobbying laws.

X - Changed budget process and improved transparency.

O - Reformed judicial system by consolidating and integrating courts through constitutional change.

O - Changed system of public authorities.

P - Consolidated local governments.

X - Restructured education funding.

P - Delivered on universal pre-kindergarten.

X - Raised the charter school cap to 200 from 100.

O - Provided for longer school days, longer school year and after school sessions.

X - Set up middle class property tax relief ($6 billion, three-year program).

X - Expanded aid and incentives to municipalities.

O - Cut out mandates such as the Wicks Law that impose costs on local governments.

O - Reformed brownfields law to end abuses.

X - Appointed upstate Empire State Development Corp. chairman and set up Buffalo office.

X - Appointed downstate ESDC chairman.

X - Set up stem cell and innovation research fund ($600 million, 60 percent of plan.)

P - Opened doors to minority- and women-owned businesses.

X - Won workers compensation reform.

X - Fundamentally restructured health care.

X - Closed excess hospitals.

X - Got a false claims act.

O - Created a Martin Act for health care.

X - Won law to expand health care to children.

X - Streamlined health care enrollment process.

P - Set up "bold" investments in infrastructure (wasn't able to get capital budget.)

P - Made high-speed Internet available statewide. (Formed council to work on issue.)

X - Expanded affordable housing

X - Made progress with transportation projects, including Second Avenue Subway, I-86, Peace Bridge.

O - Created a law allowing for siting of new power plants.

X - Proposed no new taxes and lower spending growth from previous year.

P - Learned to say "no" to unaffordable budget requests.

X - Helped upstate agri-businesses ($30 million to dairy farmers while developing downstate markets.)

X - Set up task force to obtain 25 percent of energy needs from renewables.

X - Expanded the Department of Environmental Conservation and Environmental Protection Fund.

P - Protected reproductive health rights.

P - Assured government is open and honest with New Yorkers so that they understand threats to safety.

P - Made private/public partnerships with entities that control critical infrastructure.

X - Developed a plan to revitalize Ground Zero.

X - Evaluated state's preparedness for emergency management.

X - Proved to be prescient by saying: "There will be occasional missteps and mistakes."

-- James M. Odato

"Home prices put strain on buyers - Rise in cost of housing far exceeds growth in region's income, pricing out middle class from real estate"

By CHRIS CHURCHILL, Business writer, Albany, New York Times Union

First published: Thursday, January 3, 2008

The cost of buying a house in the Capital Region has outpaced income growth during much of the decade, making homeownership a struggle for many first-time buyers.

In Albany County, for example, median household income grew by 19 percent from 1999 to 2006, according to the U.S. Census Bureau.

During the same period, the median sale price of a single-family home in the county jumped 76 percent.

The trend was more severe in Saratoga County, where median income grew 16 percent while the median home price rose 98 percent.

The numbers, which are not adjusted for inflation, dramatize just how beneficial the period was for homeowners in the region, who saw property values skyrocket.

But they also illustrate the difficulties faced by families trying to break into the housing market and may explain why many foreclosure rates are spiking.

It's an oft-heard adage that a household can afford a home worth three times its income.

Yet in 2006, the median household income in Albany County was $51,042, while the median home price was $198,500.

In Saratoga County, the 2006 median household income was $57,374, the Census Bureau said, while the median home price that year was $257,500, according to the Greater Capital Association of Realtors Inc.

The gap between incomes and home costs was not limited to the Capital Region.

All across the country, home prices moved higher for much of the decade, even as income gains failed to keep pace.

Economists had warned the trend could not hold.

And it hasn't:

The nation's median home price, at $210,000, is down 3.3 percent from a year ago, according to the National Association of Realtors.

The Capital Region has not seen a similar decline, but prices in 2007 were generally flat.

"We knew that you couldn't support the rates of appreciation we've seen for the last three or four years," said James Ader, president of GCAR, a Colonie-based trade group.

"Or pretty soon, nobody could afford to buy a house."

But even if home prices stabilized last year, the effects of the earlier price run-up may have been manifest:

RealtyTrac, a California company that tracks foreclosures, says the 1,125 foreclosure filings in the Capital Region through the first nine months of the year were more than double the number for all of 2006.

Some observers link rising foreclosure rates to the so-called exotic mortgages that gained popularity during the period.

Those mortgages, frequently used by borrowers with shaky credit histories, often included adjustable rates requiring borrowers to pay more with time.

Kirsten Keefe, the Albany-based executive director of Americans for Fairness in Lending, said it's unclear if people borrowed under exotic mortgages because rising housing costs left them no choice or if housing costs rose dramatically because such mortgages became widely available.

"It's the age-old chicken-or-the-egg question," she said.

But it's clear that home prices pinched many families, both locally and nationally, Keefe said.

And some say many potential buyers continue to struggle, despite flattening prices.

Dennis Brunelle, director of the Saratoga County Economic Opportunity Council, said that a decade ago it was the poor who felt priced out of the county.

"But 10 years later, the middle class is being squeezed out," he said.

Brunelle, whose Saratoga Springs-based group directs the Workforce Housing Partnership, a coalition hoping to expand affordable housing, worries that housing costs in Saratoga County may continue to outpace local income gains because the area is attracting many buyers from areas with higher incomes and housing costs.

"And the people who built this community are locals who can't afford to live here anymore," he said.

Economists on Wednesday warned that comparing home prices from different years is an imperfect measurement.

Still, economists say there should be a close correlation between home prices and incomes.

The gap that emerged in recent years is a historical anomaly, said Kajal Lahiri, an economics professor at the University at Albany.

The median household income in Rensselaer County grew by 24 percent from 1999 to 2006, to $53,016.

The median home sale price, meanwhile, jumped 83 percent, to $171,900.

In Schenectady County, income grew 24 percent during the period, to $51,584, while home prices climbed 86 percent to $158,000.

The 2006 income statistics are the most recent available from the Census Bureau and were released in August.

Chris Churchill can be reached at 454-5442 or by e-mail at cchurchill@timesunion.com.

"For retailers, holidays fizzled out - Storms, economic concerns blamed as statewide survey gives Christmas season a C+"

By ALAN WECHSLER, Business writer, Albany, New York Times Union

First published: Thursday, January 3, 2008

ALBANY -- It started out so well.

When the holiday shopping season began with Black Friday nearly six weeks ago, retailers across New York had high expectations.

Despite worries about the economy and fuel costs, shoppers were flocking to stores and pulling out their wallets.

It didn't last.

Thanks to several winter storms and, perhaps, those nagging fears after all, retailers statewide gave the 2007 Christmas season a grade of C+, according to the Retail Council of New York State.

In the last of three seasonal phone surveys of retailers, the Albany-based trade group said Wednesday the strongest shopping periods were early and late.

The week before Christmas -- generally the busiest week of the year -- was only lackluster, according to survey respondents.

Half the survey participants reported that week-before-Christmas sales met their expectations.

But merchants also reported an after-Christmas boon -- nearly three quarters of respondents described their after-Christmas sales as better than or the same as 2006.

The C+ is a full letter grade below those of previous years' results from the group's Retail Holiday Watch surveys.

Yet that doesn't mean many business owners lost money.

The majority of retailers still managed to eke out a modestly successful holiday season, the council said.

"The week-before-Christmas rush that merchants were counting on just didn't materialize for many," said Retail Council Chief Executive James Sherin.

Looking back, some still think the economy did not play a big role in sales.

"People always find money to make Christmas come," said Kevin Murphy, manager of The Toy Maker at Stuyvesant Plaza in Guilderland.

"You can't tell your child, 'Santa's not coming because there's mortgage problems or your heating bill costs are up.' "

At the Toy Maker, holiday sales were down only slightly from last year.

And last year, Murphy said, would rate an A.

The biggest problem this year was the weather.

"Ten years ago, if you had a big storm you'd know you'd make it up," he said.

"Now you lose it to online shopping."

"It's a fact of life."

Perhaps many shoppers were like Susie Rosenmann of West Sand Lake, who was checking out the post-Christmas sales at Stuyvesant Plaza Wednesday.

"We spent a little less this year," said Rosenmann, who discussed it with her family before the season began.

"We said, 'let's not be extravagant.' "

At Stuyvesant Plaza, other store owners had mixed reports about the season.

At The Rugged Bear, a clothing store for children, Assistant Manager Stefanie Bowman said sales were up over last year.

Even during the various storms, shoppers still came, she said.

Barry Richman, owner of Pearl Grant Richman's, said the gift store barely broke even this year.

"Those two major storms, they set us back," he said.

"We lost at least $50,000."

And even breaking even was questionable at times, he said.

"We're lucky to be where we are," he said.

Before Thanksgiving, the Retail Council said a survey of store owners found 78 percent expected the season to be equal to or better than last year.

At the season's end, 60 percent of surveyed merchants said the 2007 holiday period was the same as or better than 2006, the Retail Council reported.

Meanwhile, the Siena Research Institute in Loudonville, threw cold water on the early optimism.

In late November, it said that 35 percent of those interviewed said they would spend less this year due to the economy.

About 54 percent planned to spend the same as last year, but only 8 percent planned to spend more.

Wechsler can be reached at 454-5469 or by e-mail at awechsler@timesunion.com.

"Spitzer says economy, higher education will be cornerstone of '08"

By VALERIE BAUMAN, Associated Press

Last updated: 5:43 p.m., Monday, January 7, 2008

ALBANY -- Gov. Eliot Spitzer on Monday foreshadowed how he will use higher education and growth in high tech fields such as stem cell and nanotechnology research to try to revitalize the state's economy despite a $4.3 billion deficit.

The Democrat hinted the items could be part of his second State of the State speech on Wednesday.

"The entire thrust of what the State of State is going to be about is, 'How do we bring back and revitalize the economy of New York state?'" Spitzer said Monday.

"What are the investments?"

"What is the new strategic thinking we need to embrace?"

"... It means good education, it means keeping costs low, it means energy that you can afford, it means investing in intellectual capital."

Lacking, however, was any explanation of how to pay for the investments, when the economy and its revenues are declining and budget deficits are projected for several years.

That likely will be addressed in Spitzer's executive budget proposal to the Legislature on Jan. 22.

Spitzer spent Monday holding two press events -- one about stem cell research and another about nanotechnology.

Spitzer said developing these specialized fields will contribute to economic growth and stability in New York.

The state awarded $14.5 million in grants to promote stem cell research.

Spitzer and Lt. Gov. David Paterson announced the funding Monday, about eight months after a stem cell research initiative was incorporated into this fiscal year's budget.

The 25 institutions receiving the one-year development grants are just the beginning -- Spitzer says the state's efforts will contribute $600 million in stem cell research in the next 11 years.

Many scientist hope stem cell research will yield therapies that could prevent, treat, or cure a number of health conditions.

With some Americans traveling overseas seeking early stem cell treatments, breakthroughs could be an economic boon in the future.

The stem cell funding is just one part of the governor's economic development plan and will add jobs upstate and downstate, Paterson said.

Biomedical research already contributes $48 billion and 560,000 jobs in New York state.

The money was distributed to programs from all over the state, from New York City to Rochester and Buffalo.

Spitzer also made his first public comments on a lengthy report by his expert panel on higher education.

The report by the state Commission on Higher Education provided to Spitzer last month calls for 2,000 more full-time faculty at the State University of New York and City University of New York; a $3 billion research fund; the recruitment of 250 top scholars over five years; programs to make college more affordable; and "educational partnership zones" in low-income neighborhoods where colleges would help high schools prepare students for higher education.

Under its many proposals, SUNY and CUNY schools would be able to set their own tuition levels based on the demand for entrance and their needs.

The commission also supports regular, predictable increases in tuition that supporters say help families and colleges plan better.

The commission also calls for cooperative ventures between public and private colleges.

"It seems to me to be a blueprint for where we go in terms of economic revitalization," Spitzer said Monday.

Other hints released Monday about what could be in Wednesday's State of the State address include a possible cap on local property taxes, so that billions of dollars in relief sent to school districts isn't lost in increased local spending.

This was former Gov. George Pataki's original proposal when the STAR program to use state dollars to ease local school taxes was devised.

The cap was dropped in negotiations with the Legislature and local school taxes have continued to rise despite the subsidy.

Spitzer spokesman Errol Cockfield, however, refused to confirm or comment on the idea, which was first reported in The New York Sun.

----

AP Writer Michael Gormley contributed to this report from Albany.

"Spitzer health plan stresses prevention - Governor's annual speech will call for changes in Medicaid program"

By CATHLEEN F. CROWLEY, Staff writer, Albany, New York Times Union

First published: Tuesday, January 8, 2008

ALBANY -- In his State of the State speech Wednesday, Gov. Eliot Spitzer will propose shifting New York's health care to focus more on prevention, starting with the Medicaid program.

In an exclusive interview Monday, the state's Medicaid director and architect behind the reform plan, Deborah Bachrach, outlined flaws in the current health system.

Bachrach did not reveal the governor's proposal, but the problems she identified hint at the areas Spitzer will target.

Medicaid, the state public health insurance program for low-income individuals and families and the disabled, overpays hospitals for inpatient care and pays too little for routine doctor visits, said Bachrach, who spent the past 12 months digging through the financial records of hospitals, clinics and doctors' offices.

It also pays too little for hospital emergency room visits, hospital outpatient clinics and freestanding clinics, said Bachrach, who is also deputy commissioner of the new Office of Health Insurance Programs in the Department of Health.

"Services follow the dollars."

"So if you want more of a particular service, you put more money there," Bachrach said.

"Ultimately, it influences the whole delivery system."

She is hopeful that Spitzer's overhaul -- a mix of rate and regulatory changes and legislative proposals -- will tilt the system toward preventive and primary care, which is the direction the governor has said he wants to take.

Previously, the Medicaid director did not have the power to set Medicaid's reimbursement rates.

Spitzer changed that and gave Bachrach the reins.

"I have the job I always wanted," said Bachrach, a health care lawyer and former chief assistant under Attorney General Robert Abrams.

Bachrach believes that changing the way Medicaid pays for care will affect all New Yorkers.

Medicaid has 4.5 million enrollees and spends $47 billion annually.

One-third of all health care in New York is paid by Medicaid, so health care providers are likely to rearrange their service priorities based on where Medicaid pays more.

"The rules we put in place, the standards we put in place will ripple through the system," Bachrach predicted.

Here are the problems she thinks plague the current system:

Inaccurate hospital rates.

The formula for paying hospitals for inpatient care is the "base cost" of treating a patient multiplied by the service weight, or the intensity of the treatment a patient receives.

However, service weights were calculated in 1992 and haven't been updated despite changes in technology, length of hospital stays and changes in delivery, Bachrach said.

The base rates, essentially the average cost of treating a patient, were calculated in 1981 and except for inflation increases, have not been revised.

An analysis by Bachrach's office found the state pays more for inpatient services than hospitals' actual costs for Medicaid patients.

Paying more for less.

The state insulates hospitals from shifting markets by paying higher rates if patient volume decreases.

Consequently, hospitals are paid not to adapt, Bachrach said.

Pay-per-visit.

Medicaid reimburses visits to primary care doctors, hospital clinics and independent clinics on a per-visit basis "whether the patient comes in with an ear infection or a comprehensive physical," Bachrach said.

That, Bachrach said, encourages doctors to provide the easiest services at a high volume, instead of full care at an appropriate cost.

"It isn't fair to providers," she said.

Frozen rates.

New York pays the second lowest rates to physicians in the nation.

Reimbursement rates for primary care doctors, hospital clinics, emergency rooms and independent clinics have been frozen for more than a decade.

A hospital clinic receives $67.50 for an office visit no matter what treatment is given.

"It's not a very sound methodology because you want to encourage comprehensive care to be delivered inside a visit," Bachrach said.

"If you can provide multiple services in one day or one visit, we want clinics to do that, but we have set up rules that made it against their financial interest to do that."

Daniel Sisto, president of the Healthcare Association of New York State, which represents hospitals, agrees hospitals aren't paid enough for outpatient visits and emergency room care, but he did not endorse Bachrach's analysis of inpatient care.

He cited two reasons.

First, reimbursement rates have been held so low that hospitals postponed facility maintenance and investment in information technology, making the hospitals' costs look lower than they should be, he said.

Second, he said, Medicaid should pay slightly more than the cost of treatment because hospitals need a surplus to reinvest in capital improvements.

Sisto said he hopes to continue conversations with the Spitzer administration as the budget process goes forward.

Bachrach declined to share the details of Spitzer's proposed changes before he discloses them in the State of the State and as the budget process unfurls, but she suggested big changes are ahead.

"I have to believe that if we get it right for Medicaid patients," she said, "we will influence the care received by every single New Yorker."

Cathleen F. Crowley can be reached at 454-5348, or by e-mail at ccrowley@timesunion.com.

THE NEW YORK DAILY NEWS DAILY POLUITICS BLOG:

As we upstate folks here in NYS wait with bated breath for "STEAMROLLER" Spitzer to unleash his BILLION DOLLAR INCENTIVE PACKAGE for business here in NYS in his "STATE OF THE STATE" address ...

On the specious premise that the "OMNISCIENT, ALL-KNOWING SPITZER-ITIC STATE" knows where business trends are heading with great precision ...

We should take a long moment and we should step back and cast a real critical eye on this AMD/NANOTECH BOONDOGGLE that is on-going up here in the Albany area, even as I write these words ...

Essentially, with respect to AMD in particular, the "STATE" of NY made a decision, USING OUR TAX DOLLARS, to interpose itself into a TRADE WAR between INTEL and its second-place rival, AMD, with the "STATE" choosing to financially back the second-place team, AMD ...

This, of course, coming at a time when chip inventories are rising ....

And AMD's stock is tanking ...

And the nanotech field is maturing ...

So that OUR huge investment of OUR tax dollars in second-place AMD appears to be on a par with investing huge amouints of our tax dollars in the Conestoga wagon industry ...

Hey!

With the cost of gas these days, maybe Constoga wagons will come back into vogue, so the "STATE" of NY should be spending our money on developing manifacturing facilities for Conestoga wagons as well, starting now, to get a BIG JUMP on all the other states in the union ....

The question that comes to my mind in here this as an older person who remembers simlar "GOVERNMENT CONTROL OF INDUSTRY" in the now-defunct Soviet Union ...

And Chairman Mao's disastrous "GREAT LEAP FORWARD" in China that resulted in the stavation and death of countless thousands of common people in China ...

IS HOW ON EARTH HAS THE STATE OF NEW YORK BECOME THE ARBITER AS TO WHO GETS TO DO BUSINESS IN THIS STATE WITH "STATE SUPPORT" ...

AS WELL AS BEING THE ARBITER OF WHAT BUSINESSES ARE GOING TO BE THE "SURVIVORS" INTO THE FUTURE?

What has happened to "free enterprise"?

And what has happened to "Darwinism" in the world of business?

The "STATE" is taking OUR tax dollars, and by investing these tax dollars into failing companies like AMD to PROP THEM UP, unnaturally ...

The "STATE" is creating a huge CORPORATE WELFARE system that is going to bankrupt those of us out here in the countryside who are going to have to pay for continuing these failed ventures, long after their markets have ceased to exist ...

As Forrest Gump once said, "STUPID IS AS STUPID DOES" ....

So where does that put us as a "STATE", I wonder ...

And so ...

Posted by John Galt on January 9, 2008 8:04 AM

http://www.nydailynews.com/blogs/dailypoli...9.html#comments

THE NEW YORK TIMES

"Spitzer Wants to Endow State’s Public Colleges"

By DANNY HAKIM

Published: January 7, 2008

In his annual address to the Legislature on Wednesday, Gov. Eliot Spitzer will propose establishing an endowment for the state’s higher education system and adding 2,000 faculty members, according to a person with knowledge of the speech.

The proposals are part of an effort by the governor to put New York’s public universities on a par with those in states like California and Michigan.

But it remains to be seen how much the administration would be willing to spend initially, as the state already faces a budget gap of more than $4 billion and is confronting weakness in a critical source of tax revenue — Wall Street.

The proposal for more faculty members comes from a recent report on higher education by a 30-member commission convened by the governor.

It is unclear whether Mr. Spitzer will embrace the commission’s other recommendations, including starting a $3 billion fund for research grants, modestly raising tuitions across the system and allowing individual campuses to raise prices further.

The last two proposals appear to have drawn the most opposition.

The person who provided details of the governor’s proposals did not want to be identified because the speech was still taking shape.

The state’s public higher education system includes the State University of New York, with more than 400,000 students on 64 campuses, and the City University of New York, with more than 200,000 students on 23 campuses.

Higher education experts have said the system has fallen short of Gov. Nelson A. Rockefeller’s goal of being a pre-eminent higher education system and lacks research institutions close to the prestige of the University of California, Berkeley, or the University of Michigan at Ann Arbor.

The state generally lags in the percentage of the budget it allocates to higher education, and while its relatively low tuitions are politically popular, some critics say the system lacks the resources to soar in collegiate rankings.

Several top university systems have multibillion-dollar endowments — pools of money set aside for future needs — and also allow campuses to charge different tuitions to better finance campuses with higher research ambitions.

The latter idea, however, could be a political nonstarter.

Both Senator Kenneth P. LaValle, the Republican chairman of the Senate Higher Education Committee, and Assemblywoman Deborah J. Glick, a Democrat who heads the Assembly’s Higher Education committee, have expressed opposition to so-called differential tuitions.

Ms. Glick said in an interview last month that price-conscious 17- and 18-year-olds who get into several SUNY colleges would choose based on price, not on which one was best for them, if differential tuitions were in place.

Undergraduates at SUNY colleges who are state residents now pay $4,350 a year in tuition and $4,000 at CUNY.

At University of California campuses, by comparison, the cost is more than $8,000.

The proposal to establish a central endowment goes beyond the recommendations of the commission, though the amount of money that the governor has in mind was unclear Sunday.

A memorandum from the governor’s office said that the commission’s plan over 13 years would require an initial investment of $1.6 billion for new faculty members, buildings and capital projects, and $226 million annually for the additional faculty members.

John Clark, the interim chancellor of the SUNY system and a commission member, said capital needs — new dormitories and academic buildings — were urgent.

“The great building of the State University of New York was done during the Rockefeller years,” he said.

“We need massive reinvestment."

"The governor has really embraced it.”

http://www.nytimes.com/2008/01/07/nyregion...amp;oref=slogin

THE NEW YORK POST

"BOASTFUL GOV'S 1ST-YEAR CHEER"

By MICHAEL GORMLEY, AP

January 6, 2008 -- ALBANY - Gov. Spitzer released a detailed comparison of more than 50 campaign promises that were addressed in his first tumultuous year yesterday, days before he is scheduled to deliver his second State of the State address.

Despite gridlock in the Legislature since late in the 2007 regular session that ended in June, Spitzer reports major progress is education, health, economic development, environmental protection, tax relief and government reform.

"Many of the accomplishments described here, and indeed some of the most significant ones, resulted from collaboration between the Legislature and the executive," Spitzer said as part of the 240-page "Report to the People of New York State."

But Spitzer credited the implementation of changes to state government to his agencies, his appointed commissioners and department heads often with relevant private sector experience and their work force, most of which carried over from the Pataki administration.

Candidate Spitzer had promised to reinvigorate the agencies and return greater power to their commissioners and department heads.

"The Pataki guys had been in a holding pattern for a year and half or more, and the agencies I'm familiar with have had very capable people at their head," said Russ Haven of the New York Public Interest Research Group.

"The agencies matter because the Legislature gets all the attention, but the agencies are the ones that make the trains run on time by implementing laws."

Among the report's highlights:

* Tax relief and changes to regulations that saved businesses $1 billion.

* $1 billion in property tax relief, most for the first time steered to middle-class families.

* Construction under way of the Freedom Tower and related buildings and development at ground zero in lower Manhattan after years of delay.

* More than 500 jobs retained or promised by business in New York or relocating to New York.

* A $30 million bailout of dairy farmers.

* Efforts to help minority- and women-owned businesses gain access to bonding and state contracts.

http://www.nypost.com/seven/01062008/news/...heer_836664.htm

THE NEW YORK SUN

"Spitzer Is Set To Cap Taxes on Property"

By JACOB GERSHMAN, Staff Reporter of the Sun

January 7, 2008

Governor Spitzer, in his State of the State address on Wednesday, will signal support for imposing a cap on local property taxes in New York, which tower over the national average despite billions of dollars spent by Albany to ease the burden.

According to a knowledgeable source, Mr. Spitzer will also propose renaming Hudson River Park in Manhattan after his three-term predecessor, Governor Pataki, who in 1998 signed the original legislation creating a vast strip of public piers, boat houses, lawns, gardens, sporting facilities, bike paths, and walkways on the West Side waterfront between Battery Park City and 59th Street.

In doing so, the governor would be bestowing permanent public recognition on a man whom Mr. Spitzer once suggested left no lasting mark on the Empire State.

A year ago, Mr. Spitzer in his inaugural address shocked many in the audience, including the former governor, when he likened New York during the Pataki years to Rip Van Winkle, the fictional short story character who fell asleep for 20 years.

Hudson River Park, or what will be George E. Pataki Park, is the largest open space development in Manhattan since Central Park.

More than a third of it has been completed, including the Pier 40 courtyard fields at West Houston Street and Pier 84 at West 44th Street.

The two State of the State moves — one an unexpected, gracious gift to a Republican who has begun to fade from the public eye and the other an endorsement of a policy long championed by fiscal conservatives — signal an awareness by the embattled governor of the urgent need to retool his image.

Taken together, they suggest that part of Mr. Spitzer's strategy is to attempt to reposition himself as a centrist and to broaden his support among state Republicans, his toughest foes, with both policy changes and acts of random kindness.

As a candidate, Mr. Spitzer vowed to tackle New York's property taxes, which are 56% higher than the national average on a per-capita basis, according to 2005 data.

Unlike his Republican challenger, John Faso, Mr. Spitzer rejected the idea of cap on property taxes, but he has softened his position since taking office.

In August, he acknowledged that state efforts to lower property taxes by subsidizing school budgets and mailing rebate checks to homeowners were undermined by the expanding budgets of school districts and local governments.

It is not clear if Mr. Spitzer would favor placing a percentage cap on local or school tax levies, or restricting annual growth in home assessments.

More than a dozen states have some sort of cap on the annual growth of property tax collections.

A well-known version is Massachusetts's Proposition Two-and-a-Half, a 26-year-old statute that forbids communities from levying more than 2.5% of the total full cash value of taxable property in the community.

Also, the levy cannot increase by more than 2.5% of the prior year's limit.

Communities can vote to override the limit to pay for specific expenses.

Another form of a cap was put in place in California, which limits increases to the assessed value of homes by 2% a year, unless a transfer of ownership takes place.

The state also imposes a 1% a year cap on the full value tax rate.

In the first 10 years of the cap's existence, Massachusetts went from having a tax burden that was 22% above the national average to one that was 1% below average.

Mr. Spitzer's first budget increased the School Tax Relief program, an initiative known as STAR that was started under Mr. Pataki, by $1 billion.

By 2010–11, the program is expected to reach a cost of $6 billion a year.

Despite the additional subsidies, property taxes have continued to rise.

The problem, fiscal observers such as the Manhattan Institute's E.J. McMahon contend, is that the subsidies encourage school districts and localities to spend more.

A cap, they say, would force Albany and local governments to tackle the union contract and pension mandates that sustain high levels of municipal spending.

While Albany last year added $1.7 billion to its education budget and expanded the STAR program, school districts, which represent 58% of the property tax levy outside of New York City, raised spending by an average of 6%.

As the Citizens Budget Commission noted in a recent report, tax caps have also been criticized for being undemocratic and artificially limiting demand for public services.

A property tax cap, by encouraging a tightening of school budgets, would be certain to meet fierce resistance from the state teachers union, a powerful interest group outside of New York City, and skepticism from Senate Republicans.

In the city, however, a cap would have less of an impact because school budgets don't depend on property taxes.

Mr. Pataki, when he originally proposed the School Tax Relief program in the mid-1990s, included a tax cap in the legislation.

At the behest of the New York State United Teachers union, state lawmakers removed the cap from the bill.

http://www.nysun.com/article/68992?page_no=2

THE NEW YORK POST

"PROBERS FEAR THE FIX IS IN - SAY BOSS BIASED"

January 7, 2008 -- THE state commission supposedly probing the Dirty Tricks Scandal faces a revolt from employees who believe it's improperly steering the investigation "away from Gov. Spitzer," commission insiders say.

Several disgusted senior officials, as well as lower-level workers at the Commission on Public Integrity, have decided to resign or are close to doing so, the insiders told The Post.

The resignation threats come as aides to Spitzer turn over what one source called "embarrassing" information about the scandal in response to a subpoena from Albany District Attorney David Soares, who has also been accused of covering up for the governor.

"The feeling is that [Commission Executive Director] Herb Teitelbaum has been steering the investigation away from Gov. Spitzer to [former Spitzer aide] Darren Dopp, not going after the governor and others in the executive chamber where the evidence points," said a source with direct knowledge of the situation.

"People on the inside are embarrassed by the situation and some are considering quitting," the source continued.

Two sources, meanwhile, also said commission staff is convinced that Teitelbaum is secretly providing inside information on the commission's probe to Spitzer Special Counsel Richard Rivkin and to another Spitzer aide, Robert Hermann, Rivkin's former law partner who now heads the governor's Office of Regulatory Reform.

"Teitelbaum is giving the governor's people information that should only be kept within the commission," one source said.

Commission spokesman Walter Ayres denied the charge.

Hermann did not return a call seeking comment.

The Post disclosed in the fall that a memo opposing the Dirty Tricks probe written by Rivkin - who once held Teitelbaum's job - was secretly distributed to the 13 commission members last fall by Commission Chairman and Spitzer appointee John Feerick, prompting charges of improper interference in the probe.

Dopp, Spitzer's onetime communications director, is being actively investigated by the commission for alleged violations of the state Ethics Law in a plot that used the State Police to gather purportedly damaging information on Senate Majority Leader Joseph Bruno (R-Rensselaer).

The commission won the right in state court last week to subpoena scandal-related records kept by Dopp and it has told DA Soares that Dopp may have committed perjury in testimony before the commission in October.

For his part, Dopp has told friends that he fears Spitzer aides are trying to make him the "fall guy" in the scandal, in part because of his strong loyalty to the governor.

fredric.dicker@nypost.com

http://www.nypost.com/seven/01072008/news/...s_in_169079.htm

THE NEW YORK POST

"COMMISSION FOR SALE"

January 2, 2008 -- Forget integrity - do Gov. Spitzer and his supposedly "independent" Public Integrity Commission have any shame?

As The Post's Fredric U. Dicker reported Monday, Commission Executive Director Herbert Teitelbaum recently accepted a $15,000 pay hike - and promptly scurried off to a 21/2-week vacation in South America.

Teitelbaum's near-11 percent raise comes only months after his appointment to the panel - and right in the middle of his commission's unprecedented investigation into the governor's role in his office's Dirty Tricks Scandal.

That's a problem.

Let's be clear:

Teitelbaum's commission is currently engaged in an investigation that could have dramatic consequences for Spitzer and his entire administration.

If, after months of denial but little forthrightness, the governor is found to have had any foreknowledge of his aides' plot to use the State Police to dig up dirt on a political rival, he stands to lose a lot more than just the public trust.

(Which has long since vanished, anyway.)

The commission, to put it mildly, must not only be above reproach, it must appear to be above reproach.

Under the circumstances, a 15-cent raise would be inappropriate, let alone $15,000.

The commission, to be sure, makes much of its "independence" from the executive chamber; it was Commission Chairman John Feerick, not Spitzer himself, who technically approved the raise.

But that independence is looking more and more like a sad charade.

Seven of the 13 commissioners are Spitzer appointees, and Teitelbaum himself has close ties to the Spitzer administration.

Which, needless to say, makes it all the more incumbent upon Feerick, Teitelbaum and - ultimately - Spitzer himself to prove that nobody at the commission is pulling any punches in this investigation.

An extra 15-grand from the Spitzer-administered state treasury sure doesn't help.

This is not to accuse the gov of attempting to buy off his investigators - as New Yorkers have already seen, Spitzer has a range of other weapons at his disposal when it comes to stonewalling probes.

But that neither Spitzer, Feerick nor Teitelbaum see any problem with such a raise speaks volumes to the seriousness (or lack thereof) with which they take the commission's probe.

Or are they really that morally obtuse?

Could it be that they just don't care?

Either way, it's a pretty good indication that the entire investigation was never meant to be more than a farce, to begin with.

And that makes Teitelbaum's entire $155,000 salary little more than a giant waste of taxpayer money.

Not to mention, grounds for a much longer vacation.

http://www.nypost.com/seven/01022008/posto...sale_578350.htm

THE NEW YORK DAILY NEWS DAILY POLITICS BLOG:

With respect to the SPITZER-ITIC "State of the State" address yesterday, and specifically, Spitzer's call for yet another SPITZER-ITIC COMMISSION, this time to "STUDY", in Spitzer's words, the high cost of property taxes in upstate New York ...

ARTICLE IV of OUR NYS Constution, entitled "Executive", provides in section 3 as follows with respect to the governor of the state reporting to the Legislature about the condition of the state, to wit:

§ 3. The governor shall communicate by message to the legislature at every session the condition of the state, and recommend such matters to it as he or she shall judge expedient .....

end quotes

GOVERNOR SHALL COMMUNICATE BY MESSAGE THE "CONDITION" OF THE STATE ...

CONDITION: a state of affairs that hampers or impedes or requires correction ..

- Webster's New Collegiate Dictionary

In yesterday's SPITZER-ITIC version of fulfilling this Constitutional requirement of his office yesterday, Spitzer correctly identified excessive property taxes as a "condition" of the state ...

But then, the very best that Spitzer could propose to the Legislature as a matter that he deemed expedient was to put together yet another SPITZER-ITIC COMMISSION to continue to study what Eliot obviously already knows ....

THE CONDITION OF THIS STATE IS LOUSY, AND IT IS GETTING LOUSIER AND LOUSIER SINCE THIS STRUTTING POPINJAY GOT INTO OFFICE LAST YEAR AND CHANGED EVERYTHING IN NYS FOR THE WORSE ......

So that Spitzer can make NYS into the "best place in the world to do business" for the members of the special interest group, the NYS Business Council, to whom Spitzer is beholden ...

Spitzer has been in office for a full year now, and this is the best that he can offer us in terms of property tax relief - ANOTHER COMMISSION AND YET MORE STUDY?

GET REAL HERE, Eliot!

And we know from the NYS BUSINESS COUNCIL BIBLE "New York State Government, 2d Ed." by Robert B. Ward that way back in November of 2005, Spitzer, even though he was taking the paycheck of the NYS AG at the time, was by then already working on his plan to reform NYS government if and when Spitzer did become governor ...

And that is over TWO YEARS AGO now ...

And so ...

WHAT IS WITH THIS COMMISSION, Eliot?

SO YOU CAN STUDY THIS PROBLEM FOR THREE MORE YEARS?

OR WHAT?

In your paper to the NYS Business Council's Rockefeller institute on November 21, 2005 entitled "Government Reform", Eliot, you stated as follows at p. 7 of 9, to wit:

"There has been a lot of talk about reform during the past year."

"BUT VOTERS SHOULD BE WARY, AND SHOULD JUDGE THE SELF-PROCLAIMED REFORMERS NOT BY WHAT THEY PROMISE, BUT BY WHERE THEY HAVE BEEN DURING THE FIGHTS IN THE PAST."

end quotes

Well, Eliot, dude ....

From where I sit, anyway ...

THE ONLY SELF-PROCLAIMED "REFORMER" OUT THERE IS YOU ...

And based on our personal experiences with you ....

Where you are and have been with respect to the "FIGHT" for true reform in NYS IS ON THE WRONG SIDE ....

YOU HAVE BEEN PROTECTING THE CORRUPTION, Eliot ....

While talking out of every side of your more than ample lawyer's mouth about how you are the "REFORMER PAR EXCELLANCE" here in NYS ....

Which is CRAP, Eliot ....

Because if it were true, you would have posed real solutions to the real problem of excessive property taxes in upstate NY yesterday ...

Instead of yet more study by yet another worthless COMMISSION ...

While we older folks and young people with families continue to get taxed to death up here ...

BY THE GREEDY STATE OF NEW YORK, ITS GREEDY POLITICAL SUBDIVISIONS AND GREEDY SCHOOL DISTRICTS, AND CORPORATE WELFARE HAND-OUT AGENCIES LIKE THAT HEADED UP BY AVI SCHICK, PAT FOYE AND DANIEL "PORKMEISTER" GUNDERSON ...

And so ....

Posted by John Galt on January 10, 2008 7:27 AM

http://www.nydailynews.com/blogs/dailypoli...d-ends-163.html

"Spitzer wants 'real' property tax relief, higher education boost"

By MICHAEL GORMLEY, Associated Press

Last updated: 5:42 p.m., Wednesday, January 9, 2008

ALBANY -- Gov. Eliot Spitzer took steps Wednesday toward a long-sought cap on local school spending and property taxes, using universities to create a high-tech economy, and leading Albany to hard spending choices so the state isn't "paralyzed by challenging fiscal times."

Spitzer called during his State of the State address for a bipartisan commission to consider capping growth in local school spending, a politically dicey idea opposed by powerful teachers unions and other school interests.

But after school taxes continued to rise last year at its annual 7 percent average pace despite a historic increase in state aid, Spitzer said it was time to reconsider his campaign position against spending caps.

"Experience has taught us that we need stronger medicine," Spitzer said.

"A rebate check may temporarily ease the pain, but it doesn't cure the disease."

"In the end, it's a losing game for the taxpayer if the state gives you a rebate check on Monday and then on Tuesday your local government taxes it away."

To head the commission, Spitzer also took a rare look back.

He chose his feisty Democratic primary opponent from 2006, Nassau County Executive Tom Suozzi.

On Wednesday Spitzer called a spending cap "a blunt instrument, but it forces hard choices and discipline when nothing else works."

"I think it's very promising," said E.J. McMahon of the Empire Center for New York State Policy, part of the fiscally conservative Manhattan Institute.

"If the governor is serious, it could be a turning point for heavily burdened New York property owners."

The commission, with the power to subpoena records and compel testimony, would examine the state's unfunded mandates, find ways to cut costs in school instruction, ferret out wasted spending and make tax relief more effective for middle class families.

While New York City would not be part of any cap plan, the other large city school districts of Yonkers, Syracuse, Rochester and Buffalo could see separate caps or no cap at all, said Spitzer's director of state operations, Paul Francis.

Spitzer also wants to create an endowment of at least $4 billion to generate $200 million a year for the State University of New York and City University of New York.

That could come from leasing the operation of the state lottery to a private firm for as long as 40 years after an upfront payment of tens of billions of dollars to the state.

Any such deal would continue to provide about $2.1 billion -- with annual growth -- in revenue for schools while creating the higher education endowment.

The state would continue to regulate all lottery games and any new games, Francis said.

Spitzer also proposed a $1 billion fund to help revitalize upstate downtowns and to help businesses, build roads and create "shovel-ready sites" to attract new employers.

While the annual speech is about ideas, the tougher part begins Jan. 22 when Spitzer proposes his second budget to the Legislature.

He will have to deal with a $4.3 billion deficit and declining revenues because of a slowing economy.

In addition, Spitzer wants to continue a $1 billion increase in school aid and steer more Medicaid funding away from hospitals to primary care and prevention to encourage early, lower-cost treatment.

Spitzer will also have to deal with lawmakers, including some Democrats and all in an election year, still stinging from his targeting their roles in Albany's dysfunctional status quo.

After a first year in office marked by political gridlock on many major issues, Spitzer reached out to opponents during his speech.

"We can work together for the common good, despite any political or personal differences, and we must," Spitzer said.

"We in this chamber are all New Yorkers ..."

"We have work to do, a lot of work, for the people who sent us here."

Spitzer and his main political foe, Republican State Sen. Majority Leader Joseph Bruno, have promised no tax increases and are expected to rely on raising fees.

Spitzer may also close what he considers loopholes in business tax rules to raise revenue.

"We must make the hard choices necessary to live within our means," Spitzer said.

He made a similar pledge a year ago, then agreed with the Legislature to increase spending by more than twice the inflation rate to get an on-time budget.

But the opposition was already clear Wednesday.

"We don't need commissions," said Senate Acting Majority Leader Dean Skelos, a Long Island Republican.

"He said he listens to people about the high cost of living on Long Island and other suburban communities, but I don't think he gets it."

"That's a real problem."

"The governor has lost none of his zeal for governing," said Assembly Speaker Sheldon Silver, a Manhattan Democrat and Spitzer ally.

"And that's critical because we're going to need all of the energy, all the enthusiasm, all of his passion and all the leadership we can get in order to deliver an on-time budget this year that is fiscally responsible and true to our obligations in what is clearly a difficult economic climate."

"It sounds like an awful lot of new spending," said Heather Briccetti of the state Business Council.

She is concerned that Spitzer's second annual promise of no tax increase will again result in what Spitzer calls loophole-closers that cost business millions in taxes starting last year.

Spitzer's renewed push for paid family leave is also a concern because it's an added cost for doing business, she said.

------

Associated Press Writer Richard Richtmyer contributed to this report.

"Spitzer proposes new panel on tax caps - State of State speech also calls for leasing the Lottery"

By JAMES M. ODATO, Capitol bureau, Albany, New York Times Union

Last updated: 1:02 p.m., Wednesday, January 9, 2008

ALBANY -- Gov. Eliot Spitzer will assign former Democratic rival Thomas Suozzi to lead a commission that will look for a way to cap school taxes, and direct his budget experts to figure out whether it is worth leasing the New York Lottery to Wall Street investors to raise billions of dollars for public education.

The tax commission idea appeared to already be running into trouble, with Assembly Republican Minority Leader James Tedisco of Schenectady saying Spitzer should skip the study and tackle a tax cap now.

In a speech released this morning and to be delivered at 1 p.m. by the governor, Spitzer will honor the missing Senate Majority Leader Joseph Bruno, who is grieving the death of his wife Barbara.

The governor will also urge teamwork with the Legislature.

"Although our differences often attracted more attention than our agreements, we came together to produce real change where progress has eluded the state for years,'' his speech states.

Among key ingredients of his message of change:

-- An idea to lease a major part of the Schenectady-based Lottery division to raise money for a new endowment fund for higher education.

The endowment would be fueled by up-front money paid to the state for leasing the gaming agency.

The roughly $2.3 billion annually provided by the lottery for K-12 education would be maintained and the new partner would be regulated through the state's continued control of lottery games.

"We should unlock some of the value of the New York State Lottery, either by taking in private investment or looking at other financing alternatives,'' Spitzer said.

Paul Francis, Spitzer's top director of operations, said the Lottery concept comes with a guarantee that the 350 employees of the lottery would be fully protected no matter who might lease the operation or for how long.

He said if 100 percent of the Lottery was leased the deal might result in $25 billion to $50 billion up front.

He said such "monetization'' could be for as long as 40 years although the structure of a deal is so far uncertain.

-- A new bipartisan commission to evaluate and recommend the best way to cap school taxes on all real estate owners.

Suozzi, the Nassau County executive, would lead the commission.

He made a name for himself the past three years, including during his gubernatorial run in 2006, as an anti-tax Democrat.

The commission would have Moreland Act powers, meaning it could almost operate like prosecutors in a probe of school finances.

"A tax cap is a blunt instrument, but it forces hard choices and discipline when nothing else works,'' Spitzer wrote.

-- Building the SUNY/CUNY system through 2,000 more faculty members.

-- A $1 billion fund to revitalize upstate's economy, spending it on infrastructures, businesses and agribusiness.

-- A $400 million housing opportunity fund to find ways to build more affordable homes.

"Lake George contract ended - State agency fires company that crafted proposed environmental regulations, in unanimous vote"

By BRIAN NEARING, Staff writer, Albany, New York Times Union

First published: Wednesday, January 9, 2008

LAKE GEORGE -- The state agency responsible for Lake George stepped back Tuesday from proposed environmental rules meant to protect the water that gives the lake its legendary clarity.

By a 7-0 vote, the Lake George Park Commission terminated its contract with Saratoga Associates, a consulting firm that crafted regulations to limit clear-cutting of trees and shield vulnerable hillside streams.

While there was no debate, commission Chairman Bruce Young said later that his group wants "someone who could take a fresh look" at the proposals, which took Saratoga Associates more than a year to create.

Tuesday was the first time the commission had meet publicly since the proposals were made public in November.

As the first steps to protect streams and trees since the commission was created by the state in 1961, the proposals would have reduced land available for building around a lake where scenic hills contain more than 120 streams, and limited lawn size and views of many new high-end homes.

Included were a ban on tree-cutting up to 100 feet from dozens of streams that feed the lake, and a limit on tree removal on building sites.

The goal was to reduce the amount of sediments, fertilizers and pesticides being washed into a lake where more and more homes dot the hillsides.

In November, landowners and businesses from the lake's fastest-growing towns -- Bolton and Lake George -- decried the proposals as akin to land theft by regulation, while environmentalists said rules are needed to reverse the lake's worsening water quality.

Lake advocates were uneasy Tuesday about the departure of Saratoga Associates.

"This is a shame."

"It is a big step backward for lake protection," said Chris Navitsky of Lake George Waterkeeper, a local affiliate of the Riverkeeper environmental organization.

"We would hope that all this work does not just disappear," added James Hood, a spokesman for the Lake George Association, a 123-year-old nonprofit group that monitors lake issues.

Matt Rogers, an engineer with Saratoga Associates, said the company was waiting to hear from the commission whether the contract was going to be "completely closed out."

Commission members voting to withdraw the contract included Young, Thomas Conerty of Bolton, Thomas Morhouse of Ticonderoga, James Kneeshaw of Queensbury, Roger Phinney of Queensbury, Kenneth Parker of Diamond Point and Thomas Hall, a representative from the state Department of Environmental Conservation.

Brian Nearing can be reached at 454-5094 or by e-mail at bnearing@timesunion.com.

"NY's Cuomo subpoenas Intel over competition questions"

By MICHAEL GORMLEY, Associated Press

Last updated: 6:23 p.m., Thursday, January 10, 2008

ALBANY -- New York Attorney General Andrew Cuomo is investigating possible violations of state and federal antitrust laws by Intel Corp., the worlds largest manufacturer of computer microprocessors.

A Cuomo spokesman said subpoenas were being delivered Thursday seeking information on whether Intel coerced customers to exclude Advanced Micro Devices, known as AMD, from the market for a specific computer processing unit.

Cuomo said his preliminary review showed a need for a full investigation.

The subpoenas seek data about Intel's pricing strategies and whether Intel penalized computer makers, cut off competitors' distribution channels, and improperly paid customers for exclusivity.

"Our investigation is focused on determining whether Intel has improperly used monopoly power to exclude competitors or stifle innovation," Cuomo said.

"We will also look at whether Intel abused its power to remove competitive threats or harm competition in violation of New York and federal antitrust laws."

Intel said no laws have been broken despite these latest of several actions worldwide that Intel believes are being driven by AMD, its closest competitor.

"We believe our business practices are lawful," said Intel spokesman Chuck Mulloy.

"We also believe the microprocessor market is a competitive market and is functioning the way one would expect a competitive market to function."

He said Cuomo's concerns mirror those in a lawsuit AMD filed against Intel in 2005.

The case is scheduled to be heard in a Delaware court in April 2009, Mulloy said.

Mulloy also said Intel filed its response this week to the European Union, which has a statement of objections after a six-year investigation.

Intel is also responding to preliminary charges by a regulator in Korea, he said.

AMD also has two private lawsuits pending against Intel in Japan, Mulloy said.

Japan's Fair Trade Commission said in 2005 that Intel violated fair trade laws -- a ruling the company accepted without admitting wrongdoing.

"In all cases, we denied we violated any laws," he said.

AMD spokesman Michael Silverman said the company believes Intel is engaging in illegal practices and regulators around the world are finding evidence of it.

Silverman said the loser is the consumer.

"The harm goes to innovation and consumer choice, the stunted growth of innovation," he said.

"If AMD is giving up markets to Intel, what does that mean for computer users looking for an alternative product?"

At issue in Cuomo's probe is whether AMD has a fair chance to supply its X86 computer processing units for desktop and laptop computers and servers.

Cuomo says Intel commanded 80 percent of the $30 billion market.

AMD's 2005 lawsuit claims Intel bullied major customers -- PC makers like Dell Inc. -- into exclusive deals and offering secret rebates.

The lawsuit alleged anticompetitive practices in several countries, including Britain, Germany and Japan.

Intel, which commands three-quarters of the worldwide microprocessor market, has denied AMD's allegations and defends its business practices as legal and beneficial to consumers.

In July, the European Union charged Intel with violating antitrust rules by selling its chips below cost to strategic customers, among other practices.

U.S. regulators, however, appear to be resisting a formal probe of Intel's marketing practices, despite requests from members of Congress and AMD.

In August, Sen. Charles Schumer and Rep. Kirsten Gillibrand asked the Federal Trade Commission to investigate the company.

A letter to the FTC from the New York Democrats said:

"If the allegations against Intel are true, the potential harm to consumers could be profound."

In a response in September, the FTC told legislators the agency is barred by law from disclosing investigations.

Schumer has met with AMD representatives about the company's plans to build a $3 billion semiconductor plant in upstate New York, a project strongly backed by powerful state Senate Majority Leader Joseph Bruno -- a Republican whose district includes the proposed site -- and Democratic Gov. Eliot Spitzer.

"Antitrust investigations into Intel are springing up everywhere except Washington," Schumer, a Democrat, said Thursday.

"The FTC needs to stop looking the other way on Intel and start getting serious about enforcing antitrust law."

Mulloy wouldn't comment when asked if he thought the support from New York lawmakers for AMD, and now the investigation by Cuomo, have anything to do with the plant AMD has proposed near Albany.

"I cannot speculate about the proposed factory in New York and this decision," Mulloy said.

Though AMD is the world's second largest maker of microprocessors, it's a much smaller company than Intel and has been struggling in recent years.

AMD's stock has taken a beating the past two years amid fears the Sunnyvale, Calif.-based company has been losing some of its competitive edge against Intel because of debt from a costly acquisition and because its technology is aging.

In October, AMD posted a loss of nearly $400 million for the quarter that ended in September.

Intel said it earned $1.86 billion in the same period.

Last month, AMD CEO Hector Ruiz said the chip maker is committed to breaking even in the second quarter of 2008 and returning to profitability in the third.

------

On the Net:

http://www.oag.state.ny.us

"Spitzer, industry pushing for more power plants to spur jobs"

By MICHAEL GORMLEY, Associated Press

Last updated: 6:23 p.m., Thursday, January 10, 2008

ALBANY -- Gov. Eliot Spitzer's promise this week to unlock, then speed the process to build more power plants to spur jobs and cut business expenses drew an assist Thursday from the industry.

Spitzer said he will push a bill to "fast track" the building of power plants in a small, but closely watched element of his State of State speech in which he listed his top priorities of the 2008 legislative session.

The more expansive and direct mention in this year's speech comes as Consolidated Edison of New York reports record energy use in New York City and Westchester County, economic engines for the whole state.

The demand was driven by construction of office buildings and homes and more use of electronics such as flat-screen televisions, games, computers and handheld devices.

Summer demand for electricity in New York and Westchester alone has grown by equivalent of powering an additional 200,000 homes per year according to Con Ed.

The need for reliable, less expensive power is an annual plea from businesses who pay some of the highest rates in the nation.

Cheaper electric rates are also seen as a key to retaining and attracting employers upstate.

"I will apply a simple principle: We must get more supply into the grid," Spitzer stated in Wednesday's State of the State address.

That part of the address by the Democratic governor drew support from power producers industry group.

"I thought the governor showed a willingness to compromise on a lot of these complex and difficult issues," said Gavin Donohue, CEO of the Independent Power Producers of New York.

"Clearly, economic development was the focus of this speech and energy is so intertwined."

Spitzer's director of state operations, Paul Francis, said Thursday that the passage in the State of the State speech was written more broadly to make room for a new chance at compromise in the Legislature.

Past efforts to renew a permit-granting process known as Article X have failed to gain approval by the Senate's Republican majority.

The years-long battle has pitted business interests against environmental activists.

"We can't make an energy sighting bill into an environmental regulatory bill," Donohue said.

"That's exactly what happened last year."

Spitzer, supported by both groups, didn't exclude the environmental concern in his speech.

He noted that a fast-track method of building new plants "must also help us confront the challenge of global warming."

"Spitzer pushes lottery lease to fund higher education"

By MICHAEL GORMLEY, Associated Press

Last updated: 6:03 p.m., Thursday, January 10, 2008

ALBANY -- New York may try to cash in on the future its lucrative lottery as a way to create a permanent education fund, and Wall Street is interested in taking the bet.

The stakes are high for everyone, from students who could get better education to poor communities that might see more grocery money scratched away.

For state government, a long-term leasing for part of the lottery and part of its profits to a private investor for 30 or 40 years could attract a massive upfront payment, perhaps in the tens of billions of dollars.

Spitzer wants $4 billion of that upfront payment to create a permanent endowment for higher education.

That would yield $200 million a year from investments for the State University of York and its 64 state-run campuses.

The endowment would also guarantee the current $2.1 billion in lottery revenues devoted to public school aid, from pre-kindergarten through high school.

All of education funding would be indexed to grow annually, said Paul Francis, Spitzer's director of state operations.

But that index could be the rate of long-term growth in personal income, about 5.3. percent, which is more than the 2 percent growth the lottery is now producing.

Francis said the plan Gov. Eliot Spitzer laid out in his State of the State speech Wednesday would also guarantee the state its revenue over an uncertain future for lotteries.

Lotteries are facing increasing competition from other forms of gambling including casinos and Internet wagering.

The lottery currently provides $6.7 billion a year in revenue.

"The lottery is a business," Francis said Thursday.

"It's a business that's marketed ..."

"I still think there's an opportunity to run it even better when you have a profit incentive."

Critics say it will create a "huge expansion" in problem gambling.

"This third party is not going to lease that unless they know they can make a bundle of money," said the Rev. Dwayne Motley of New Yorkers for Constitutional Freedoms.

He notes the state constitution allows only the state to run lotteries, but Francis said an arrangement can be made that won't violate the constitution.

"People get addicted and they will spend all of their income, all of their resources, their assets, and it destroys families," Motley said.

"There is an extremely large number of negatives that cost money, but also there is the personal destruction of lives ... gambling and drug additions are the same -- they control you."

Francis said the administration considers the lottery a "form of entertainment," and that responsible people play the lottery without becoming problem gamblers.

If Spitzer and the Legislature proceed and find a private investor who will commit this year, New York would likely be the first state in the nation to cash in on the value of its lottery.

California, Illinois, Indiana, Texas and Florida have considered or are considering cashing in on their lottery or, more to the point, the anticipated future revenue of the lottery.

That's what a private investor would be betting on -- that it could increase lottery revenues through more or different games, more or differently allocated sites to bet, and through efficiencies.

For New Yorkers, that could mean far more lottery outlets that already are already in thousands of convenience stores and gas stations.

Community activists and antigambling groups has long criticized lotteries, saying the lottery saps the lower income players they most attract.

The next steps include hiring a finance expert -- who won't be allowed to be part of any lease.

The expert will determine the lottery's value and the best arrangements for the state.

The Legislature will decide with Spitzer whether to proceed and what the state will need from a deal.

Francis said the possibilities are infinite.

For example, the state could take a big upfront payment, take its guaranteed education revenue, then allow the operator to keep the additional revenue it generates.

Or the state could continue to retain part of any additional revenue.

Francis downplayed the option of simply borrowing against the value of the lottery.

That, he noted, increases debt and won't guarantee growth in the education revenue.

In addition, after suitors show how they would increase lottery sales, the state might decide simply to revise the program and increase profit on its own.

New York is widely seen as having one of the biggest and best run state lotteries.

Other states have so far not sought to cash in on their lotteries because of political disagreement, or opposition to short-term funding goals.

"States probe banks' role in risky loans"

By PAT EATON-ROBB, Associated Press Writer

Sat Jan 12, 5:37 PM ET

HARTFORD, Conn. - Authorities in New York and Connecticut are investigating whether Wall Street banks hid crucial information about high-risk loans bundled into securities that were sold to investors, Connecticut's Attorney General said Saturday.

The investigations, first reported Saturday by The New York Times, center around "no-doc" or "exception" loans, that did not even meet subprime standards, Attorney General Richard Blumenthal said.

"The loans were made to people who did not have any documents to verify their income or other verification for key requirements normally applied to mortgage borrowers," he said.

"Many of the lenders made large amounts of loans, so that the exception swallowed the rule, or became the rule."

The loans were sold by subprime lenders to Wall Street firms that bundled them with other, less risky, loans into securities.

Investigators want to find out whether the banks properly disclosed the high risk of default on those loans when selling those securities to investors in Connecticut and elsewhere, Blumenthal said.

"The investment banks may have used very broad, boilerplate disclaimer language that effectively failed to disclose fully and fairly all the information," he said.

Blumenthal said Connecticut is cooperating with New York and that the investigation may eventually include the Securities and Exchange Commission.

The Times said charges could be filed in the coming weeks.

Jeffrey Lerner, a spokesman for New York Attorney General Andrew Cuomo, declined to comment Saturday.

In November, Cuomo said he issued subpoenas to government-sponsored lenders Fannie Mae and Freddie Mac in his investigation into what he claims are conflicts of interest in the mortgage industry.

He said he wanted to know about billions of dollars of home loans they bought from banks, including the largest U.S. savings and loan, Washington Mutual Inc., and how appraisals were handled.

Spokesmen for both lenders said they require accurate appraisals and both agreed to appoint independent examiners as requested.

Washington Mutual said it was conducting its own internal investigation into Cuomo's claims and that "the company will vigorously defend itself from all unfounded allegations and lawsuits."

Blumenthal declined to say which firms were under investigation, but said his office had issued over 30 subpoenas.

"These practices involving trillions of dollars in securities sold to ordinary investors go to the core of our financial system's integrity and efficiency," Blumenthal said.

"We regard this investigation as a priority."
___

Associated Press writer Michael Virtanen in Albany, N.Y., contributed to this report.

"NY seeks to steer patients from ERs to family doctors"

By VALERIE BAUMAN, Associated Press

Last updated: 3:03 p.m., Sunday, January 13, 2008

ALBANY -- Instead of waiting for hours in an emergency room or landing in a nursing home, New Yorkers with government health coverage will soon have opportunity to avoid those costly treatment venues by going to their own family doctor.

In his State of the State address Wednesday, Gov. Eliot Spitzer proposed changing the way New York reimburses hospitals and doctors for services -- part of overall changes aimed at making health care cheaper for taxpayers and better for patients.

The current system for reimbursing doctors in the pay-per-visit Medicaid and Family Health Plus programs hasn't been updated since 1981, said Dr. Richard Daines, the state health commissioner.

When primary care doctors are paid a fee that reflects the service they deliver, patients will have more options, he said.

While managed care programs tend to pay doctors about what private insurers pay, a doctor treating a Medicaid patient under the pay-per-visit system receives $67.50 per visit, whether it's an expensive, complex treatment process or a simple booster shot, Daines said.

"If we are able to pay higher rates to primary care doctors, it will be easier to find a family doctor," Daines said.

Patient advocates like the proposal.

"The most serious and most expensive health care problems that New Yorkers face -- asthma, diabetes, HIV/AIDS, hypertension, stroke -- these are things that can be treated and sometimes prevented if you've got strong, community based primary and preventive care," said Michael Kink, legislative council for Housing Works, an organization serving low income people and people with HIV/AIDS.

"We shouldn't be waiting until people get really sick and incur really kind of high cost, high complexity illnesses."

"If you've got a Medicaid card in your pocket, you're going to see more primary care doctors in your neighborhood," Kink said.

"You may see doctors sooner."

It's unclear what types of procedures and visits will start to reimburse doctors at a lower rate.

Health officials said they won't know until the state budget comes out later this month.

Hospitals and health care providers tend to have very small profit margins, and changes in reimbursements raise concerns that if primary care physicians are paid more, other specialties could be paid less, said William Van Slyke, spokesman for the Healthcare Association of New York State.

"Any reduction, period, in health care reimbursement increases the challenge of providing community care," Van Slyke said.

Hospitals support providing preventive and outpatient care but are apprehensive about the transition.

"It's a necessary shift to a new way of the government funding of the health care," Van Slyke said.

"Our concern is that we have to get to this new system first before we pull the rug out from under the old one ..."

"What we need is time to transition and financial support to keep the existing system viable while we move to the more outpatient based system."

Officials at the state health department said data suggests some providers may not be thrilled with the changes, but most would find a balance between procedures paying more and those paying less.

"A year ago I was one of those hospital executives waiting to hear what the budget would do, so I've been on that end of it," Daines said.

"So it's a perspective that I've brought that there are rates of change that can be tolerated and there are bottom line issues."

"We're sensitive to those."

Chandler Ralph, CEO of Adirondack Medical Center, said she supports increasing the reimbursement rate for primary care physicians, but believes no payment should ever be less than the actual costs of the care.

"You have to be sure the reimbursement system is fair to every physician," she said.

"I have physicians who are asking me to pay (them) to be on call in the emergency room."

"One of the key factors of that is when they get called in, in the middle of the night, to either a patient with no insurance or a patient with low reimbursement, that's no longer sustainable."

If the reimbursements cut down on total income, the center will probably have to cut back on community services, Ralph said.

That could eliminate diabetes classes, wellness classes at businesses and exercise classes for the elderly.

------

On the Net:

Health Department: http://www.health.state.ny.us

Healthcare Association of New York State: http://www.hanys.org/

"Some spending halted in Colonie - 'Nonessential' items won't be purchased while deficit solutions studied"

By JORDAN CARLEO-EVANGELIST, Staff writer, Albany, New York Times Union

First published: Sunday, January 13, 2008

COLONIE -- Supervisor Paula Mahan has halted all "nonessential" spending in town while her administration continues to evaluate the multimillion-dollar deficit it inherited when she took office earlier this month.

Road salt, asphalt and other materials necessary to maintain services and public safety will not be affected, but items such as work-related trips, conferences and some equipment upgrades will be frozen until at least April, Mahan, a Democrat, said Saturday.

"There are certain things that we have to have, that we cannot do without," Mahan said, calling the situation "quite serious."

She said "anything in the departments that is not necessary to the daily functioning of the town" may have to wait.

The freeze, announced to town department heads late this week via e-mail, is one of several efforts Mahan said she and newly appointed Comptroller Craig Blair hope will cut costs while they assess the town's financial condition.

While town officials said they don't yet have a short-term savings goal, the town's former money manager said nonessential expenses were already "pretty much bare bones."

A Moody's Investors Service report last year said the town's general fund deficit had grown to $8.5 million.

Mahan said it may now be larger.

The 2008 town budget is $83 million.

The report also said the town appeared to have no practical plan to improve its credit rating, which Moody's put just below Albany's and a shade better than Schenectady's -- a bitter pill for a suburban town with a huge tax base and a reputation built on prosperity.

In addition to curbing spending, Mahan said she has restructured parts of the work force, not filling one full-time attorney's job or the management job at the town golf course vacated by Blair.

"We're raising the bar for the people that we have (appointed)," Mahan said.

That was one of the reasons Mahan used to defend the salary of newly appointed Town Attorney Michael Magguilli.

Republican Town Board members earlier this month questioned the wisdom of hiring Magguilli at $105,500, the top of the pay scale, when for years the town hired between the bottom and the middle.

But Mahan said Magguilli's office will be taking on responsibilities once performed by outside lawyers, thus saving money.

Officials also are reviewing the town's numerous contracts with other outside agencies for services, like one for $15,000 related to Colonie's Web site.

Mahan and her three fellow Democrats who won seats on the Town Board in a historic upset in November used the Moody's report as foundation of their campaign -- though officials from Republican Supervisor Mary Brizzell's administration said they believed the report was misleading.

Former town Comptroller Ronald Caponera, who left with Brizzell's administration, said Saturday that for some time his office had reviewed requisition orders of more than $200.

"It's not where the big bucks are," Caponera said, adding that salaries and benefits are a much larger expense.

They are also more difficult to revamp because much of the town work force is unionized.

Another union for 200 more employees, including department heads, is being formed.

In recent years, town cars have been taken away from some department heads.

Mahan said she will re-evaluate the freeze in April.

By then, the town expects to have heard from the state comptroller's office on a routine audit of its finances conducted in the last year.

The results of that audit could come as soon as the next several weeks.

Eventually, Mahan said she plans to meet with residents and explain the town's financial situation to them.

"I believe they deserve the truth, and they're going to have that opportunity to hear the truth," the supervisor said.

"It's a hard thing to have to tell people that we're in such tough shape."

Jordan Carleo-Evangelist can be reached at 454-5445 or by e-mail at jcarleo-evangelist@ timesunion.com.

"Challenges of 2008 exacerbated by chill at Capitol - Toxic relationships among New York's leaders bode ill for issues from the budget to the economy"

By RICK KARLIN, Capitol bureau, Albany, New York Times Union

First published: Monday, January 14, 2008

ALBANY -- For anyone wondering how this year's legislative session is likely to proceed, consider this long-distance exchange between Republican Senate Majority Leader Joseph L. Bruno and Democratic Assembly Speaker Sheldon Silver:

Bruno early last month said Silver was a "wimp" for not standing up to Gov. Eliot Spitzer.

Silver retorted that Bruno was full of "baloney," and noted the senator was still under FBI investigation.

The atmosphere at the Capitol, often described as toxic last year, has hardly cleared as the Legislature heads into the 2008 session.

During a Christmas luncheon Bruno held for the media last month, he said he believes the governor has created "a continuous declaration of war heading into the (legislative) session."

The ongoing travel-records scandal, in which Spitzer aides ordered up information from State Police on Bruno's use of state aircraft and his travels to New York City, is another point of conflict, with Republican senators continuing to accuse Spitzer of conducting dirty tricks against the majority leader.

With ongoing investigations by Albany County District Attorney David Soares and the state Public Integrity Commission, the issue isn't likely to die anytime soon.

As if that tumult isn't enough, all 212 lawmakers are up for re-election in November, and Spitzer has shown a determination to help Democrats seize control of the Senate.

And with the possibility of a presidential contest featuring one or even two New Yorkers, Sen. Hillary Rodham Clinton and Rudy Giuliani, sparking what could be an unusually high turnout next November, there's a potential for plenty of posturing.

And on Wednesday, as Spitzer outlined his vision for the year in his State of the State address, Republicans were openly subdued, offering tepid applause or none at all.

Against that backdrop, Spitzer and the Legislature will confront an estimated $4.3 billion budget gap and the prospect of a slowing economy.

And don't forget ever-rising gas prices, which are likely to prompt a variety of bills and proposals ranging from cutting fuel taxes to boosting ethanol and mass transit.

With that in mind, here's a readers' guide to some of the major issues that Spitzer, Silver, Bruno, et al., will be grappling with in the coming months:

The issue: Property taxes

Background: No secret here, New York leads the nation when it comes to how much homeowners pay.

It's been a perennial issue, but there's new pressure this year.

Senate Republicans have made it clear that property tax relief is their top priority, wanting by 2009 to triple the school tax rebates people currently get.

Spitzer on the other hand has appointed a commission to look at capping school property taxes rather than more rebates.

Prognosis: A cap that would limit the levy, or amount that can be generated from a given community, is already in place in Massachusetts.

A similar cap was just passed in New Jersey, as well.

While it's unclear how the Democratic Assembly would stand on the issue, there will likely be a lot of debate.

The toughest part may be containing the costs that drive those taxes, which could mean confronting the powerful teachers union.

And if the state looks to make up the money school districts forgo by holding the line on property taxes, there could be pressure to raise state taxes, which leaders are loath to do.

The issue: Upstate economy and capital plan

Background: Spitzer raised the issue in his campaign, describing upstate as Appalachia.

Aside from the Capital Region, much of that vast region is living up to that reputation for dim job prospects and population loss.

Spitzer wants a $1 billion upstate revitalization fund to help turn that around.

Prognosis: Spitzer and the Senate will likely continue to wrangle over where capital spending goes.

Senators will all want pieces of this pie for their districts, while Spitzer will likely accuse them of pork barrel spending.

But eventually, some amount of money will likely be allocated.

The issue: Revitalizing SUNY

Background: Last year, Spitzer added some $1.7 billion to the K-12 system and also set up a framework in which spending increases are targeted to needy or underperforming school districts.

The plan is designed to ensure money goes to improving classroom results.

Now, the governor wants to upgrade the state and New York City university systems, hiring more professors and, as per recommendations of a Spitzer-appointed panel, giving various SUNY campuses flexibility on tuition, which is now locked in statewide at $4,350 for the state-run SUNY campuses and $4,000 at CUNY.

The governor also wants to create an endowment for the system.

Prognosis: No one opposes boosting spending at SUNY and CUNY, but the Democratic Assembly has already signaled its opposition to variable tuition, with members complaining that it could create class distinctions.

The issue: Pay raises for lawmakers, judges, statewide elected officials and commissioners

Background: They've had no raise since 1999 (although many lawmakers get more than the $79,500 base pay for additional duties, such as committee chairmanships).

Judges are grousing about their stagnant pay ($136,700 in the trial courts, higher in some other venues).

Much of the pressure for the increase for lawmakers has come from New York City, where costs are higher and City Council members earn $112,500.

Spitzer has suggested he'd grant raises in return for campaign finance reform.

Bruno struck a deal last year, but it fell apart.

Lawmakers tend to believe that hiking pay for judges will give them some cover so they don't look greedy.

Prognosis: Don't bet on pay raises this year, at least not without lawmakers giving the governor some big concessions.

For one thing, this is an election year, a time when legislators are cautious about hiking their pay (technically, a Legislature can't raise its own pay; raises would take effect in 2009. But most incumbents who run get re-elected in New York).

If there is a trade-off, it could come with Silver agreeing to a property tax cap and both the Assembly and Senate conceding to some type of campaign finance reform.

The issue: State horse racing franchise

Background: The New York Racing Association's franchise to run Aqueduct, Belmont and Saratoga expired last year.

State leaders worked out a short-term deal to let NYRA keep running the tracks, but a long-term arrangement isn't yet in place.

Spitzer, Bruno and Silver have yet to reach an agreement.

Bruno wants bigger changes at NYRA, while Silver resists the idea of a video lottery machine casino at Belmont.

Prognosis: The leaders will probably reach an agreement that involves some changes at NYRA and a separate franchise for an operator of a large video slot operation at Aqueduct.

The issue: Health care

Background: Spitzer is looking to fundamentally shift the emphasis in New York's system of health care from costly hospital-based treatment to prevention.

He plans to make changes in the Medicaid system in an effort to influence the private sector as well, with higher reimbursements for preventive and less-costly care, such as regular checkups and clinic treatment.

There is also talk of trying to create a system of universal health coverage in the state.

Prognosis: So far, it doesn't appear that the governor will get major resistance to the Medicaid idea, as leaders from both parties agree that something needs to be done about health care costs.

A universal health care system, however, would be a more complex discussion, particularly when it comes to whether the state would mandate coverage for all New Yorkers, whether they want to pay for it or not.

The issue: Immigration

Background: Last year, Spitzer touched off a firestorm with a proposal to let illegal immigrants obtain driver's licenses.

In the face of unrelenting opposition from Republicans and pundits, and dissension among Democrats, he backed off.

But Republicans got a taste of how hot the issue can be in New York.

Prognosis: While Spitzer isn't likely to resurrect his plan, Republicans in an election year could put forward some immigration-related proposals just to remind people of the Democratic governor's mistake last year.

"DiNapoli Releases Debt Study, Urges New Cap on State Debt - 31 Percent Hike in Debt Over Five Years Highlights Need for Reform"

New York State Comptroller Thomas P. DiNapoli today urged State lawmakers to enact a new debt cap following the release of the 2007 Debt Impact Study, which indicates that State-funded debt grew to nearly $51 billion in the last fiscal year from $39 billion in the 2002-03 State Fiscal Year, a 31 percent increase that raises concerns about the sustainability of New York’s borrowing practices.

“The State’s increasing debt burden is a real concern,” DiNapoli said.

“Debt is not a cost-free option."

"Every dollar we spend on paying off debt is another dollar that can’t be used for other public needs and services."

"The debt cap in the Debt Reform Act of 2000 simply wasn’t real."

"We need a meaningful cap that includes all State-funded debt and sets parameters based on how much the State can afford.”

The Debt Reform Act of 2000, which limited State-supported debt to 4 percent of personal income, has not effectively controlled the growth of State funded debt.

The Act used a narrow definition of State-supported debt and does not apply to roughly $33 billion of about $51 billion of State-funded debt outstanding as of March 31, 2007.

When all State funded debt is counted, current outstanding debt is 6.45 percent of personal income, more than 50 percent higher than the cap.

DiNapoli’s report found that State-funded debt outstanding had grown more than 31 percent between April 2002 and March 2007.

The report also shows that annual State-funded debt service is projected to rise from $4.6 billion in the current fiscal year to nearly $7.1 billion by SFY 2012, an average annual growth of nearly 9 percent.

DiNapoli’s debt reform proposal would place all new and existing outstanding State-funded debt under the cap, and limit State-funded debt to 5 percent of personal income.

DiNapoli’s cap would be phased in over a 9-year period.

DiNapoli is also proposing to prohibit debt for any purpose other than capital projects.

DiNapoli’s report also found that since the passage of the Debt Reform Act of 2000, $7.6 billion in new debt has been issued for deficits or budget relief; this debt was excluded from the provisions in the Act prohibiting borrowing for non-capital purposes.

Roughly $11.5 billion, or about 22.5 percent, of all State-funded debt outstanding as of March 31, 2007, was used to cover operating deficits or budget relief.

Fifty-five percent of the growth in State-funded debt outstanding between SFY 2002-03 and SFY 2006-07 was issued for the non-capital purposes.

DiNapoli’s Debt Impact Study also found:

State-funded debt as a percentage of personal income increased to 6.5 percent in SFY 2006-07 from 5.7 percent in SFY 2002-03;

The State’s reliance on debt rather than current resources to support capital projects has increased over time.

Despite various levels of budgetary surplus, New York has used cash for just 33.8 percent of its non-federal capital spending over the past decade.

The current five-year capital plan projects pay as you go non-federal capital spending to average only 26.2 percent over the five-year plan period;

Voter-approved General Obligation debt accounts for $3.3 billion of all State-funded outstanding debt or only 6.5 percent, significantly limiting the public role in determining the overall level of borrowing; and,

The per capita State-funded debt burden has reached $2,641 by the end of SFY 2006-07 and is forecast to grow to $3,263 by SFY 2011-12, an increase of 23.6 percent.

###

Albany Phone: (518) 474-4015 Fax: (518) 473-8940

NYC Phone: (212) 681-4840 Fax: (212) 681-7677

Internet: www.osc.state.ny.us

E-Mail: press@osc.state.ny.us

http://www.osc.state.ny.us/press/releases/jan08/011108.htm

"Auditor: Company steered state-funded contracts through fake bids"

Associated Press

Last updated: 2:53 p.m., Monday, January 14, 2008

ALBANY -- An upstate agency that serves the developmentally disabled submitted as many as 60 fictitious bids to direct state preservation funds to specific vendors, state Comptroller Thomas DiNapoli said Monday.

The fictitious bids were uncovered during an unannounced audit of Springbrook NY Inc., a not-for-profit company based in Oneonta that serves 550 people with developmental disabilities.

"Submitting false bids is not only against the law, it also undermines public confidence in the use of state funds," DiNapoli said.

"Springbrook management had a responsibility to ensure that its internal controls were working as intended."

"The lack of oversight opened the door for this fraud."

The audit findings were turned over to the Broome County District Attorney's Office, DiNapoli said.

The state provides preservation funds to assist agencies with the maintenance and upkeep of their structures, including such work as renovating kitchens and bathrooms and replacing boilers, furnaces and water heaters.

Between July 2003 and June 2007, Springbrook received funding totaling $512,513 for 67 such projects at its 19 community homes through the Broome Developmental Disabilities Services Office.

After reviewing the projects, auditors found 60 fictitious bids related to 36 projects involving $235,705.

DiNapoli said it appeared 25 of the fake bids appeared to have been created by either Springbrook's facilities manager at that time or a member of his staff using vendor bid templates that auditors found on Springbrook computers.

DiNapoli said it appeared the former facilities manager or his staff member may have created the remaining 35 fictitious bids as well.

Although it appeared the contracted work was completed, Springbrook officials cannot be sure that they received the best price for the work because the projects were not competitively bid.

Springbrook's chief financial officer failed to periodically review the work of the former facilities manager, who had complete control over the bidding process and was able to create fictitious bids without detection.

The former manager was not identified.

Auditors also discovered that the chief financial officer became aware of the potential improprieties shortly after the termination of the manager, but did not try to determine the extent of the improprieties and did not advise higher-level Springbrook officials of the situation.

The audit recommended that Springbrook develop and implement adequate internal controls regarding the selection of vendors for Preservation Fund projects.

Springbrook officials agreed with the audit's findings and recommendations, and have already taken actions to implement them.

The audit found no bidding infractions before the hiring of the former manager or subsequent to his termination.

------

On the Net:

http://www.osc.state.ny.us/audits/allaudits/093008/07s51.pdf.

THE ROCHESTER DEMOCRAT & CHRONICLE

"Spitzer must clarify how upstate will get aid"

(January 14, 2008) — In his upcoming State of Upstate speech, it's imperative that Gov. Spitzer be a lot clearer about his proposed $1 billion economic development fund for upstate than he was during a recent Editorial Board meeting.

Questioned last week whether the proposed fund involved borrowing, Spitzer insisted the bulk of the $1 billion would be generated by selling capital assets such as state-owned buildings in Manhattan.

Hours later, however, a top aide advised the Editorial Board that Spitzer had misspoken when he insisted the state's debt load wouldn't increase "in any significant way."

The aide said as much as $700 million would be borrowed to help fund projects such as the demolition of Rochester's Midtown Plaza.

That's hardly insignificant.

True, Spitzer has lots on his mind lately as he seeks to rebound from political missteps.

But the fund is the cornerstone of his strategy to revitalize the upstate economy.

It's reasonable to expect him to know how it operates — the ins and outs.

Spitzer now must use his speech, scheduled for Wednesday, to clarify the extent to which his proposed fund will depend on borrowing.

Moreover, he must reassure New Yorkers that the fund makes the most sense.

After all, the state is already in so much debt that just last week, state Comptroller Thomas DiNapoli urged the state Legislature to put a new ceiling on state debt.

In the past fiscal year alone, state-funded debt grew to nearly $51 billion from $39 billion in the 2002-2003 fiscal year.

Spitzer, who vowed to change state government on "Day One" of his new administration, is right to give special attention to upstate, as a fiscally wobbly New York City received 30-plus years ago.

But he must be smart about it.

Spending more money — considerably more, as he did in last year's state budget, which increased 7 percent, and borrowing more as he's proposing this time around — isn't smart.

Clear-thinking New Yorkers didn't expect Spitzer to put the state on a new path without dramatic policy shifts.

He can make tough calls on spending and borrowing, as well as help revitalize upstate at the same time.

He must.

http://democratandchronicle.com/apps/pbcs....13/1041/OPINION

NEWSDAY

"Gov. Spitzer risks dividing state against itself"

BY MATTHEW CROSSON | Matthew Crosson is president of the Long Island Association, the largest business organization in New York State.

January 14, 2008

On Wednesday, Gov. Eliot Spitzer will deliver the first State of Upstate address, in Buffalo.

The speech is a well-intended attempt to encourage the people upstate as they try to rebuild their faltering economy.

Last week, in his State of the State speech, Spitzer announced a $1-billion upstate revitalization program, a concrete commitment of cash to that rebuilding effort.

There's no doubt that upstate New York needs economic help from Albany.

But there's also no doubt that downstate areas, including Long Island, need that help, too.

Spitzer risks widening the economic and political divide that has long separated upstate and downstate with what now appears to be an imbalanced, two-state approach to economic development.

At first glance, the economic divide between upstate and downstate seems profound.

More than 5,000 vacant homes are now being bulldozed in Buffalo, with another 5,000 soon to follow - 10,000 vacant homes being ground to dust.

Here on Long Island, young people are fleeing because they can't find an affordable place to live.

Could there be a starker contrast?

But the real comparison between economic conditions on Long Island and in upstate New York is more complex and surprising.

Long Island, despite having a gross product that almost equals all upstate metropolitan areas' combined, faces its own impending economic problems.

And it faces them largely without state help.

New York needs a real one-state economic development strategy.

We need a plan that responds to the true economic conditions of each region, in balance with that region's economic output.

We need a plan that integrates upstate and downstate economic development.

We need to promote understanding among upstaters and downstaters of the economic facts that affect us all.

And we all need to understand that we are in the same economic boat, and it's not just the upstate part of the boat that's leaking.

Unfortunately, when Spitzer took office, he divided the Empire State Development Corp. into two parts, because of a campaign promise.

But the divided structure risks promoting political competition for scarce resources.

Instead of inspiring a one-state economic approach, it risks ensuring continued division.

Now, by committing $1 billion exclusively to revitalize upstate New York, and by singling out that area for an unprecedented address focused on solving only its problems, the governor is literally placing a price tag on the upstate-downstate competition - and signaling which region he favors to win.

He's making it fair game for downstate advocates, like me, and our legislative delegations to make our case for that money and to compete in the State Legislature to get it.

Making Long Island's case is not difficult.

For example, according to the Federal Reserve Bank of New York, in 2007 private-sector employment upstate grew at just a 0.5 percent rate.

Long Island's rate of private-sector employment growth through November was also 0.5 percent.

During the 1990s, upstate New York lost 20 percent of its younger residents - exactly the same percentage who moved away from Long Island.

So far in this decade, Long Island's 25- to 44-year-old population has declined by 14.8 percent, compared with 9.4 percent upstate.

In fact, since 2000, Long Island has been losing young residents at a greater rate than any other region in the state, or the nation as a whole.

Long Islanders pay 20 percent more of their household income for property taxes than all other New Yorkers as a group, and the gap is wider when compared to upstate taxpayers alone.

Because of the higher taxes and housing costs, Long Islanders have negative median disposable income; all upstate residents enjoy significantly positive disposable income, even though their average household income is somewhat lower.

Yet Long Island's taxpayers still effectively help subsidize state economic support for upstate New York.

According to the Rochester-based Center for Government Research, as of 2001, that subsidy was $2.7 billion a year.

Now it's certainly much higher.

That's a compelling case for Long Island to share in that $1 billion of state aid, but a case it would be better not to have to make.

A state divided against itself cannot prosper.

Spitzer needs to return balance to New York's economic development investments.

http://www.newsday.com/news/opinion/ny-opc...0,7779182.story

THE NEW YORK DAILT NEWS DAILY POLUITICS BLOG:

This Spitzer dude sure does have a JONES to MOVE a lot of money from somewhere through the NYS economy ....

And nobody ever questions where exactly that money is going to come from, which is to say, where is that money sitting right now, waiting for the PROFLIGATE Spitzer to "borrow" it?

Here we are, supposedly in the midst of a HUGE CREDIT CRUNCH in America ...

And yet, "STEAMBOAT" Spitzer seems to have a BILLION DOLLARS or more, waiting at his fingertips to be BORROWED ...

Which is to say, be MOVED ....

IS THE STATE OF NEW YORK A WASHING MACHINE, I wonder ...

IS OUR STATE TREASURY A LAUNDRY?

Dirty money in ....

Clean money back out ....

No questions will ever be asked ...

No answers will ever be given ...

AND WE, THE FOOLS WHO COMPRISE THE CITIZEN BODY OF THIS STATE, WILL PAY NOT ONLY THE FREIGHT FOR "BORROWING" THIS MONEY ...

The lawyer's fees ...

We will also pay interest on it, as well ...

According to Comptroller Tom DiNapoli's recent report ....

The PER CAPITA (EACH ONE OF US, MAN, WOMAN, CHILD) State-funded debt burden in New York has reached $2,641 by the end of SFY 2006-07 and is forecast to grow to $3,263 by SFY 2011-12, an increase of 23.6 percent ....

Sooooo .....

On top of what we already owe for everything else we might owe for in OUR OWN LIVES, we also owe, right now, each of us, including your children and grandchildren, another $2,641 to pay for what THE THUG (NYS) borrows to keep its politicans and special interests fat as hogs and twice as hungry ....

But, hey, folks ....

We''re in the midst of the BUSH BOOM ....

We're all rolling in dough, thanks to the ECO-NOMIC polices of the HAVARD-trained financial wizard George W. Bush ...

So what is another couple of GRAND coming out of our pockets to pay for Eliot Spitzer's FISCAL PROFLIGACY?

And so ....

Posted by John Galt on January 15, 2008 8:21 AM

http://www.nydailynews.com/blogs/dailypoli...2.html#comments

"Spitzer rakes in campaign contributions nationwide through scandal back home"

By MICHAEL GORMLEY, Associated Press

Last updated: 6:33 p.m., Wednesday, January 16, 2008

ALBANY -- State records show Gov. Eliot Spitzer collected nearly $3 million in campaign contributions during the last half of 2007 despite a scandal that made his popularity plummet in New York.

About $50,000 came from California including from $5,000 from Abigail E. Disney of the Walt Disney family; and from prominent New Yorkers including actor Edward Norton ($10,000), model Christie Brinkley ($500), and Ivanka M. Trump, daughter of developer and TV star Donald Trump, ($1,000).

More than $100,000 more came from Texas fundraisers and thousands more came from lobbyists and law firms in New York state.

The state campaign finance records reflect donations from July 2007 to early this month.

Much of that time Spitzer was dogged in Albany by a scandal in which top aides were accused of a plot against Republican Sen. Joseph Bruno.

In the fall, Spitzer was regularly criticized by CNN's Lou Dobbs over the governor's proposal to make it easier for illegal immigrants to get driver's licenses.

Spitzer eventually withdrew the proposal, but his historic popularity that swept him into office in 2006 took a big hit as his approval rating dropped to under 40 percent by the end of 2007.

"The governor has always had deep support among Democratic activists nationwide," said Jonathan Rosen, spokesman for the Spitzer 2010 campaign.

"He's always been a strong voice on national progressive issues."

Spitzer attended Texas fundraisers on Oct. 3-4 in Houston and Dallas.

He had a fundraiser scheduled in California on Oct. 23, but canceled because the Senate had called for a special session of the Legislature.

Some of the Californians -- a frequent source of campaign funds for politicians with national stature -- sent their checks anyway.

In his 2006 campaign for governor, Spitzer attracted donations from Hollywood moguls Steven Spielberg ($5,000) and Jeffrey Katzenberg ($25,000), and smaller donations from singers Barbara Streisand and Don Henley of The Eagles, as well as actor Ben Affleck.

Among his expenses in the last half of 2007 was $129,000 in tickets for having his campaign signs up in violation of a New York City ordinance, a measure that also snared Mayor Michael Bloomberg.

Spitzer's New York donors include the Wilmot family of Pittsford, near Rochester, which is a major developer in New York.

Through several family members, more than $20,000 was donated to Spitzer's campaign on Dec. 6.

Stephen Berger of New York City donated $10,000.

Berger headed a state commission appointed by former Gov. George Pataki known as the Berger Commissioner to recommend the closing of underused hospitals as way to cut runaway costs in the Medicaid program.

Spitzer had all $2.9 million collected from July to Jan. 11 on hand when he filed the required report this week.

He returned some contributions that violated his own rules which limit individual contributions to less than a fifth of that allowed by law.

He had almost $1.5 million more on hand this month than he did in July.

Last year, Spitzer used some campaign funds for television commercials that pushed some of his measures to cut health care spending and to counter a million-dollar TV campaign by a healthcare workers' union.

----

On the Net:

http://www.elections.state.ny.us

"Supreme Court upholds New York's system of choosing trial judges"

Associated Press

Last updated: 10:22 a.m., Wednesday, January 16, 2008

WASHINGTON -- The Supreme Court unanimously upheld New York's unique system of choosing trial judges Wednesday, setting aside critics' concerns that political party bosses control the system.

"A political party has a First Amendment right to limit its membership as it wishes and to choose a candidate-selection process that will in its view produce the nominee who best represents its political platform," Justice Antonin Scalia wrote for the court.

In New York, primary voters elect convention delegates who choose candidates for the judgeships.

Once nominated, those candidates run on the general election ballot.

In practice, they frequently have no opposition.

Unsuccessful candidates for judgeships and a watchdog group filed a lawsuit challenging the system.

A federal district judge and the 2nd U.S. Circuit Court of Appeals agreed that it is very difficult for candidates to get on the ballot if they don't have support of the party leaders.

In striking down the system, the two federal courts said judgeship candidates who are not the choice of the party leaders are excluded from elections by an onerous process that violates their First Amendment rights.

Critics have said the conventions are patronage-driven affairs in which allies of party leaders are rewarded with judgeships and all others are shut out.

The 2nd U.S. Circuit Court of Appeals said that between 1990 and 2002, almost half the state's elections for Supreme Court justice -- trial judges in New York's judiciary -- were uncontested, calling them "little more than ceremony."

The appeals court ordered the state to dispense with the conventions and switch to primary elections until state lawmakers come up with a new plan.

Many legal and civics groups have come out in favor of appointing judges in New York.

The high court on Wednesday reversed the lower courts.

"New York commission urges regulation of financial services to follow 'principles'"

By DAN SEYMOUR, Associated Press

Last updated: 5:53 p.m., Friday, January 18, 2008

NEW YORK -- A commission helping redraft the regulatory framework for New York's finance industry is considering placing greater emphasis on "principles" than on strictly defined rules, Gov. Eliot Spitzer said Friday.

Regulations based on broad guidelines -- such as "observe proper standards of market conduct," and "maintain adequate financial resources" -- could inject some flexibility into the arcane and Byzantine rules governing the industry now, Spitzer said.

While the governor said the move to revamp the state's regulatory system began long before last year's mortgage crisis reached a boiling point, he said the turmoil in financial markets underscores the need to modernize the system.

"There is also a premium to restoring the credibility to a regulatory framework that I think a lot of people look at and say, 'You have failed,'" he said.

Spitzer established the commission by executive order in May to issue recommendations to the state for regulatory change, aiming for regulations that can keep markets running smoothly and protect investors and consumers.

Composed of more than 40 members including bank executives, lawyers, regulators and consumer advocates, the Commission to Modernize the Regulation of Financial Services held its first meeting Friday at New York University.

A principle-based regulatory framework would more closely resemble that used in London.

Spitzer said such a system would serve as a foundation for interpreting existing laws, and urge regulators to concentrate on outcomes instead of the process.

Much of the regulatory structure overseeing the industry in New York today is a holdover from an era in which walls separated different types of finance companies, such as commercial banks, investment banks and insurers.

After those walls were broken down, the "silos" that sprouted to oversee each type of industry remained.

As a result, many companies are regulated by a number of different bodies, and sometimes different companies selling the same product are bound by different sets of rules.

Spitzer declined to discuss any timetable for the implementation of changes.

The commission's members include the chief executives of investments banks Goldman Sachs, Morgan Stanley and Merrill Lynch; insurers MetLife and AIG; and the New York Stock Exchange and the Nasdaq.

EXECUTIVE ORDER

No15: ESTABLISHING THE NEW YORK STATE COMMISSION TO MODERNIZE THE REGULATION OF FINANCIAL SERVICES

WHEREAS, New York is the financial capital of the world, home to a thriving financial services market that serves as an engine for the state economy; and

WHEREAS, the financial services sector generates by far the largest revenues of any other market sector in New York, and employs hundreds of thousands of employees throughout the state; and

WHEREAS, cutting edge technologies, creative solutions and innovative strategies are essential for financial services companies to successfully compete in the marketplace; and

WHEREAS, various financial services companies have alleged that unnecessary, burdensome and inconsistent regulation by multiple state regulators has stunted creativity and growth in many aspects of the financial services sector in New York, resulting in higher business costs and lost opportunities; and

WHEREAS, various consumer advocacy groups have alleged that New York’s regulation of financial services companies is outdated and does not adequately protect consumers; and

WHEREAS, New York’s economic outlook depends in large part on whether it can attract and retain financial services companies and remain the financial capital of the world; and

WHEREAS, global competition to attract and retain financial services companies has never been greater; and

WHEREAS, in order to remain the global leader in the sector, New York must adopt world class financial services regulations that protect consumers, and promote growth and creativity in the industry; and

WHEREAS, a comprehensive review of New York’s financial regulations is necessary to provide the state with critical information essential to improve financial regulation in the state;

NOW, THEREFORE, I, Eliot Spitzer, Governor of the State of New York, by virtue of the authority vested in me by the Constitution and the Laws of the State of New York do hereby order as follows:

1. There is hereby established the New York State Commission to Modernize the Regulation of Financial Services (“Commission”).

2. The Commission shall consist of at least 15 members appointed by the Governor, including:

(a) the Superintendent of Insurance, the Superintendent of Banks, the Secretary of State, the Chairperson of the Consumer Protection Board, and the Attorney General;

(b) the Chairs of the Senate and Assembly Insurance and Banking Committees; and

© at least six additional members appointed by the Governor, including representatives of the insurance, banking and securities industries, other business leaders and consumer groups.

The Superintendent of Insurance shall serve as the Chair of the Commission.

3. A majority of the members of the Commission shall constitute a quorum, and all recommendations of the Commission shall require approval of a majority of the total members of the Commission.

4. The Commission shall conduct a comprehensive review of New York’s financial services statutes, regulations, rules and policies.

The Commission is charged with:

(a) identifying ways in which regulatory powers may be integrated, rationalized, and changed in order to promote economic innovation and protect consumers;

(b) recommending specific changes in statutes and regulations that promote competition and the growth of business, while effectively protecting both consumers and businesses from unfair or unethical practices; and

© ensuring that all statutes and regulations serve a beneficial purpose and do not impose costs higher than any benefits they provide.

5. In undertaking its review, the Commission may request documents, conduct public hearings, hear the testimony of witnesses, and take any other actions it deems necessary to carry out its functions.

6. The Commission shall issue such interim reports of its findings as it deems necessary and appropriate, and shall issue its final report and recommendations on or before June 30, 2008.

All reports shall be submitted to the Governor, the Temporary President of the Senate, the Speaker of the Assembly, the Minority Leader of the Senate and the Minority Leader of the Assembly.

7. No member of the Commission shall be disqualified from holding any public office or employment, nor shall he or she forfeit any such office or employment by virtue of his or her appointment hereunder.

Members of the Commission shall receive no compensation for their services but shall be allowed their actual and necessary expenses incurred in the performance of their functions hereunder.

All members of the Commission shall serve at the pleasure of the Governor and vacancies shall be filled in the same manner as original appointments.

8. Every agency, department, office, division or public authority of this state shall cooperate with the Commission and furnish such information and assistance as the Commission determines is reasonably necessary to accomplish its purposes.

G I V E N under my hand and the Privy Seal of the State in the City of Albany this twenty-ninth day of May in the year two thousand seven.

BY THE GOVERNOR

Secretary to the Governor

http://www.ny.gov/governor/executive_order...eorders/15.html

FOR IMMEDIATE RELEASE:

January 18, 2008

"GOVERNOR SPITZER LEADS FIRST MEETING OF COMMISSION TO MODERNIZE REGULATION OF FINANCIAL SERVICES - Commission Discusses Regulatory Reform to Help Maintain New York’s Status as World Financial Capital and Ensure the Highest Standards of Consumer Protection for New Yorkers"

Governor Eliot Spitzer today hosted the first formal meeting of the Commission to Modernize the Regulation of Financial Services, which includes heads of major financial services organizations, consumer advocates, the business community, legislators and regulators.

The commission discussed an innovative proposal to institute principles-guided regulation in New York along with other potential reforms.

New York’s financial services market has been burdened by current regulations – a litany of detailed rules that are ineffective at achieving consumer protection.

The United Kingdom and other international markets are moving to principle-based regulation, which focuses on broad guidelines.

Some companies and consumers are concerned this may mean diminished compliance with specific rules, but the new principles-guided approach preserves relevant rules, while asking regulators and companies to focus on achieving desired outcomes.

The result will be healthy markets and strong consumer protection without unneeded burdens.

The financial services industry is a bedrock of New York’s economy.

The commission will make recommendations for new laws and regulations that promote competition and business growth, while effectively protecting consumers and honest businesses from unfair or unethical practices.

By reforming burdensome and ineffective regulation, the commission's recommendations will help New York retain and enhance its status as the world's financial capital.

“Modernizing regulation of financial services is first and foremost about keeping New York the financial capital of the world,” said Governor Spitzer.

“The fact of the matter is that New York’s current regulations are out of date."

"We must have regulations that promote our essential goals: a healthy, creative competitive market for financial services, access for consumers and businesses to the services they need, and strong, effective consumer protection."

"Furthermore, my experience has demonstrated to me that proper regulations will have a positive impact on the financial market."

"We have brought together many of the best minds in the State to accomplish this task.”

After the meeting, Governor Spitzer was joined by Herbert M. Allison, Chairman, President and Chief Executive Officer, TIAA-CREF, Laurence D. Fink, Chairman and Chief Executive Officer, BlackRock, John J. Mack, Chairman and Chief Executive Officer, Morgan Stanley and Martin J. Sullivan, President and Chief Executive Officer, AIG at a press conference to discuss the work of the commission and how principles-guided regulation will lead to a focus on outcomes rather than process.

The commission will consider:

Developing “principles-guided” regulation as a unique alternative to the principles-based approach being instituted in the United Kingdom.

The new method provides the benefits of a principles-based approach, while preserving the positive elements of current regulation.

Under the principles-guided approach, the principles act as guidance for interpreting existing regulations and statutes, and as key objectives for developing any future regulation.

The principles guide the regulator to focus on outcomes, rather than the rules in and of themselves.

Having a single state regulator for all financial services.

Similar products should not be treated differently if they are sold by different types of companies.

Instituting a risk-based approach to regulation.

Examinations of financial services companies should focus on what is important and what really makes a difference.

Eliminating out-of-date rules that are unnecessarily burdensome.

Senator Hugh T. Farley, Chair of the Banking Committee said:

“New York remains the center of the global financial universe."

"In order to maintain our leadership, we must balance the need to encourage innovation and competition with our responsibility to ensure safety, soundness, and consumer protections."

"This commission provides the opportunity for our finest thinkers to help guide financial regulation in the new millennium.”

Senator James L. Seward, Chair of Insurance Committee said:

“The financial services industry is a key component of the economy of New York State and the nation."

"I believe that it is important that we continue to review ways to ensure the most effective and efficient regulation of the financial services industry in New York State."

"I am hopeful that the deliberations of the commission will help to ensure that New York State continues to be a leader in the regulation of insurance and financial services.”

Assemblyman Joseph D. Morelle, Chair of the Insurance Committee said:

“Principles-based regulatory reform will establish the foundation for a more market-responsive and prosperous financial sector while at the same time providing the ethical guidelines and consumer protection the public requires."

"Our current rules-based approach places us at a disadvantage in terms of more progressive overseas markets."

"In order to maintain New York's primacy in the financial world, a prudent change of approach is needed now.”

Assemblyman Darryl Towns, Chair of the Committee on Banks said:

“I look forward to serving on the commission and working together with the financial services community to improve the regulatory framework governing this vital industry so that New York can retain its status as the world financial capital, and ultimately, so that we can provide our consumers with quality, innovative financial services.”

Insurance Superintendent Eric Dinallo, the Chair of the Commission to Modernize the Regulation of Financial Services, said:

“The benefit of state regulation is that states can be the laboratory for developing best practices."

"We want to offer New York as a national model of how to regulate financial services.”

Richard. H. Neiman, Superintendent of Banks for New York State, said:

“We see this as the perfect time to reevaluate our regulatory models, to ensure they are calibrated to respond to the emerging challenges of an increasingly global marketplace."

"The Banking Department is well underway with a top-to-bottom review of the banking law, to identify further opportunities to reform.”

Commission Executive Director Scott Rothstein said:

“We are proposing that the commission consider recommending a unique approach to regulation in New York--a principles-guided regime."

"This is a way to focus on outcomes within the existing regulatory framework."

"The principles serve to help the interpretation of rules and guide creation of new rules."

"We can thus move to greater focus on outcomes, without sacrificing certainty for the industry or consumer protection.”

Martin J. Sullivan, President and CEO of American International Group, Inc., said:

“We are grateful for the opportunity to participate in this important and promising initiative."

"We look forward to helping ensure that the commission achieves its goal of streamlining the regulation of New York’s financial services sector in a way that enhances the industry’s ability to compete globally and better serve its customers.”

Herbert Allison, Chief Executive Officer of TIAA-CREF said:

“I commend Governor Spitzer for creating this commission to comprehensively review New York State’s approach to regulating its financial industry, and look forward to constructive discussions among commission members in the months to come.”

"If conceived and implemented properly, steps to modernize regulations could better protect the public’s interest and enhance New York’s position in the increasingly competitive global market for financial services.”

Hector Sants, the Chief Executive Officer of the Financial Services Authority of the United Kingdom, spoke to the commission about how his agency, the sole regulator for all financial services in the U.K., is transitioning from rules-based to principles-based regulation.

Since the commission was announced, its staff has been meeting with members one-on-one to discuss their views on the key issues.

This extensive review ensured that the first formal meeting was a more productive gathering.

The work of the commission will now be conducted through working groups by industry: insurance, banking and securities, and by topics such as principles-guided regulation, a single state regulator, registration and licensing, and how to manage the difference between regulation required for transactions with individual investors as opposed to among large institutions.

The meeting was held at New York University’s Helen and Martin Kimmel Center for University Life in the Rosenthal Pavilion.

http://www.ny.gov/governor/press/0118081.html

FROM THE DEPARTMENT OF HAVEN'T WE BEEN HERE BEFORE?

Testimony of Chairman Alan Greenspan - Private-sector refinancing of the large hedge fund, Long-Term Capital Management Before the Committee on Banking and Financial Services, U.S. House of Representatives"

October 1, 1998

Mr. Chairman and other members of the Committee, I thank you for this opportunity to report on the Federal Reserve's role in facilitating the private-sector refinancing of the large hedge fund, Long-Term Capital Management (LTCM).

In my remarks this morning, I will attempt to put into some perspective the events of the past few weeks and discuss some questions of importance to public policy makers that they raise.

The Federal Reserve Bank of New York's efforts were designed solely to enhance the probability of an orderly private-sector adjustment, not to dictate the path that adjustment would take.

As President McDonough just related, no Federal Reserve funds were put at risk, no promises were made by the Federal Reserve, and no individual firms were pressured to participate.

Officials of the Federal Reserve Bank of New York facilitated discussions in which the private parties arrived at an agreement that both served their mutual self interest and avoided possible serious market dislocations.

Financial market participants were already unsettled by recent global events.

Had the failure of LTCM triggered the seizing up of markets, substantial damage could have been inflicted on many market participants, including some not directly involved with the firm, and could have potentially impaired the economies of many nations, including our own.

With credit spreads already elevated and the market prices of risky assets under considerable downward pressure, Federal Reserve officials moved more quickly to provide their good offices to help resolve the affairs of LTCM than would have been the case in more normal times.

In effect, the threshold of action was lowered by the knowledge that markets had recently become fragile.

Moreover, our sense was that the consequences of a fire sale triggered by cross-default clauses, should LTCM fail on some of its obligations, risked a severe drying up of market liquidity.

The plight of LTCM might scarcely have caused a ripple in financial markets or among federal regulators 18 months ago--but in current circumstances it was judged to warrant attention.

What is remarkable is not this episode, but the relative absence of such examples over the past five years.

Dynamic markets periodically engender large defaults.

Events of the Past Few Weeks

LTCM is a hedge fund, or a mutual fund that is structured to avoid regulation by limiting its clientele to a small number of highly sophisticated, very wealthy individuals and that seeks high rates of return by investing and trading in a variety of financial instruments.

Since its founding in 1994, LTCM has had a prominent position in the community of hedge funds, in part because of its assemblage of talent in pricing and trading financial instruments, as well as its large initial capital stake.

In its first few years of business, it earned an enviable reputation by racking up a string of above-normal returns for its investors.

LTCM appears principally to have garnered those returns by making judgments on interest rate spreads and the volatilities of market prices.

In its search for high return, LTCM levered its capital through securities repurchase contracts and derivatives transactions, relying on sophisticated mathematical models of behavior to guide those transactions.

As long as the configuration of returns generally mimicked their historical patterns, LTCM's mathematical models of asset pricing could be used to ferret out temporary market price anomalies.

Their trading both closed such price gaps and earned an extra bit of return on capital for them.

But it is the nature of the competitive process driving financial innovation that such techniques would be emulated, making it ever more difficult to find market anomalies that provided shareholders with a high return.

Indeed, the very efficiencies that LTCM and its competitors brought to the overall financial system gradually reduced the opportunities for above-normal profits.

Indeed, LTCM acknowledged this when returning $2-3/4 billion of capital to investors at the end of 1997.

To counter these diminishing opportunities, LTCM apparently reached further for return over time by employing more leverage and increasing its exposure to risk, a strategy that was destined to fail.

Unfortunately for its shareholders, LTCM chose this exposure just as financial market uncertainty and investor risk aversion began to rise rapidly around the world.

In that environment--so at variance with the experience built into its models--LTCM's embrace of risk on a large scale produced stunning losses.

As we now know, by the end of August the firm had lost half its capital base.

And as September unfolded, the bleeding continued.

The firm, however, apparently did not unwind its positions significantly.

In our dynamic market economy, investors and traders, at times, make misjudgments.

When market prices and interest rates adjust promptly to evidence of such mistakes, their consequences are generally felt mostly by the perpetrators and, thus, rarely cumulate to pose significant problems for the financial system as a whole.

Indeed, the operation of an effective market economy necessitates that investment funds committed to capital projects that do not accurately reflect consumer and business preferences should incur losses and ultimately be liquidated.

What value is left needs to be redirected to profitable uses--those that more accurately reflect market preferences.

By such winnowing of inefficiencies, productivity is enhanced and standards of livings expand over time.

Financial markets operate efficiently only when participants can commit to transactions with reasonable confidence that the risk of nonpayment can be rationally judged and compensated for.

Effective and seasoned markets pass this test almost all of the time.

On rare occasions, they do not.

Fear, whether irrational or otherwise, grips participants and they unthinkingly disengage from risky assets in favor of those providing safety and liquidity.

The subtle distinctions that investors make, so critical to the effective operation of financial markets, are abandoned.

Assets, good and bad, are dumped indiscriminately in circumstances of high uncertainty and fear that are not conducive to planning and investment.

Such circumstances, were they generalized and persistent, would be wholly inconsistent with the functioning of sophisticated economies supported by long-term capital investment.

Quickly unwinding a complicated portfolio that contains exposure to all manner of risks, such as that of LTCM, in such market conditions amounts to conducting a fire sale.

The prices received in a time of stress do not reflect longer-run potential, adding to the losses incurred.

Of course, a fire sale that transfers wealth from one set of sophisticated market players to another, without any impact on the financial system overall, should not be a concern for the central bank.

Moreover, creditors should reasonably be expected to put some weight on the possibility of a large market swing when making their risk assessments.

Indeed, when we examine banks we expect them to have systems in place that take account of outsized market moves.

However, a fire sale may be sufficiently intense and widespread that it seriously distorts markets and elevates uncertainty enough to impair the overall functioning of the economy.

Sophisticated economic systems cannot thrive in such an atmosphere. 1

The scale and scope of LTCM's operations, which encompassed many markets, maturities, and currencies and often relied on instruments that were thinly traded and had prices that were not continuously quoted, made it exceptionally difficult to predict the broader ramifications of attempting to close out its positions precipitately.

That its mistakes should be unwound and losses incurred was never open to question.

How they should be unwound and when those losses incurred so as to foster the continued smooth operation of financial markets was much more difficult to assess.

The price gyrations that would have evolved from a fire sale would have reflected fear-driven judgments that could only impair effective market functioning and generate losses for innocent bystanders.

While the principle that fire sales undermine the effective functioning of markets may be clear, deciding when a potential market disruption rises to a level of seriousness warranting central bank involvement is among the most difficult judgments that ever confronts a central banker.

In situations like this, there is no reason for central bank involvement unless there is a substantial probability that a fire sale would result in severe, widespread, and prolonged disruptions to financial market activity.

It was the judgment of officials at the Federal Reserve Bank of New York, who were monitoring the situation on an ongoing basis, that the act of unwinding LTCM's portfolio in a forced liqudiation would not only have a significant distorting impact on market prices but also in the process could produce large losses, or worse, for a number of creditors and counterparties, and for other market participants who were not directly involved with LTCM.

In that environment, it was the FRBNY's judgment that it was to the advantage of all parties--including the creditors and other market participants--to engender if at all possible an orderly resolution rather than let the firm go into disorderly fire-sale liquidation following a set of cascading cross defaults.

As President McDonough has detailed, officers of the Federal Reserve Bank of New York contacted a number of creditors and asked if there were alternatives to forcing the firm into bankruptcy.

At the same time, FRBNY officers informed some of their colleagues at the Federal Reserve Board, the Treasury, and other financial regulators of their ongoing activities.

The troubles of LTCM were not a complete surprise to its counterparties.

After all, LTCM's earlier statements regarding its August losses were well known, and sophisticated counterparties understood the difficulties in closing out large losing positions.

In addition, the commercial banks among its creditors had already begun taking normal precautionary measures associated with exposure to counterparties whose condition is deteriorating.

Still, creditors as a whole most likely underestimated the size and scope of the market bets that LTCM was undertaking, an issue that is currently under review.

On September 23, the private sector parties arrived at an agreement providing a capital infusion of about $3-1/2 billion in return for substantially diluting existing shareholders' stake in LTCM.

Control of the firm passed from the current management to a committee determined from the outside by the new investors.

Those investors intend to shrink LTCM's portfolio so as to reduce risk of loss and return the remaining capital to the investors as soon as practicable.

I do not rule out the possibility that the new owners of what is left of LTCM may decide to keep part of it in business.

That is their judgment to make.

This agreement was not a government bailout, in that Federal Reserve funds were neither provided nor ever even suggested.

Agreements were not forced upon unwilling market participants.

Creditors and counterparties calculated that LTCM and, accordingly, their claims, would be worth more over time if the liquidation of LTCM's portfolio was orderly as opposed to being subject to a fire sale.

And with markets currently volatile and investors skittish, putting a special premium on the timely resolution of LTCM's problems seemed entirely appropriate as a matter of public policy.

Of course, any time that there is public involvement that softens the blow of private-sector losses--even as obliquely as in this episode--the issue of moral hazard arises.

Any action by the government that prevents some of the negative consequences to the private sector of the mistakes it makes raises the threshold of risks market participants will presumably subsequently choose to take.

Over time, economic efficiency will be impaired as some uneconomic investments are undertaken under the implicit assumption that possible losses may be borne by the government.

But is much moral hazard created by aborting fire sales?

To be sure, investors wiped out in a fire sale will clearly be less risk prone than if their mistakes were unwound in a more orderly fashion.

But is the broader market well served if the resulting fear and other irrational judgments govern the degree of risk participants are subsequently willing to incur?

Risk taking is a necessary condition for wealth creation.

The optimum degree of risk aversion should be governed by rational judgments about the market place, not the fear flowing from fire sales.

The Federal Reserve provided its good offices to LTCM's creditors, not to protect LTCM's investors, creditors, or managers from loss, but to avoid the distortions to market processes caused by a fire-sale liquidation and the consequent spreading of those distortions through contagion.

To be sure, this may well work to reduce the ultimate losses to the original owners of LTCM, but that was a byproduct, perhaps unfortunate, of the process.

I should add that, in order to keep incentives working in their favor, the creditors of LTCM apparently also understood the importance of some cushioning of the losses to the owners and managers of the firm.

The private creditors and counterparties in the rescue package chose to preserve a sliver of equity for the original owners--one tenth--so that some of the management would have an incentive to stay with the firm to assist in the liquidation of the portfolio.

Regrettably, the creditors felt that, given the complexity of market bets woven into a bewildering arrray of financial contracts, working with the existing management would be far easier than starting from scratch.

Some Questions for Policy Makers

Without doubt, extensive study will be required to put the events of the past few weeks into proper perspective.

As a member of the President's Working Group on Financial Markets, I support Secretary Rubin's call for a special study on the public policy implications of hedge funds.

While the affairs of LTCM are by no means settled, I would like to pose some tentative questions that may have to be addressed.

First, how much dependence should be placed on financial modeling, which, for all its sophistication, can get too far ahead of human judgment?

This decade is strewn with examples of bright people who thought they had built a better mousetrap that could consistently extract an abnormal return from financial markets.

Some succeed for a time.

But while there may occasionally be misconfigurations among market prices that allow abnormal returns, they do not persist.

Indeed, efforts to take advantage of such misalignments force prices into better alignment and are soon emulated by competitors, further narrowing, or eliminating, any gaps.

No matter how skillful the trading scheme, over the long haul, abnormal returns are sustained only through abnormal exposure to risk.

Second, what steps could counterparties have taken to ensure that they had properly estimated their exposure, particularly in markets that are volatile?

To an important degree, the creditors of LTCM were induced to infuse capital into the firm because they failed to stress test their counterparty exposures adequately and therefore underestimated the size of the uncollateralized exposure that they could face in volatile and illiquid markets.

In part, this also reflected an underappreciation of the volume and nature of the risks LTCM had undertaken and its relative size in the overall market.

By failing to make those determinations, its fellow market participants failed to put an adequate brake on LTCM's use of leverage.

To be sure, sometimes decisions are based on judgments about the soundness of borrowers that are accepted from third parties or, possibly in this case, that are founded on the impressive qualifications of LTCM's principals.

In some cases, such truncated risk appraisals may be accurate, but they are not a substitute for a rigorous analysis by the lender of the borrower's overall credit worthiness and risk profile.

Third, in this regard what lessons are there for bank regulators?

Domestic commercial bank exposure to LTCM included both direct lending and acting as counterparties to the firm in derivatives contracts.

A preliminary review of bank dealings with LTCM suggests that the banks have collateral adequate to cover most of their current mark-to-market exposures with LTCM.

The unexpected surge in risk aversion and the dramatic opening up of interest rate spreads in August obviously caught LTCM wrong footed.

Counterparties, including banks, continued to collect collateral for marks to market.

What they were not collateralized against was the losses that might have occurred when prices moved even further and market liquidity dried up in a fire sale.

Supervisors of banks and security firms must assess whether current procedures regarding stress testing and counterparty assessment could have been improved to enable counterparties to take steps to insulate themselves better from LTCM's debacle.

More important will be the assessment of whether those procedures are adequate for the future.

But this is an area in which much work has been ongoing.

During the fourth quarter of 1997 and the first quarter of 1998, supervision staff of the Federal Reserve Bank of New York and the Board met with managers at several major New York banking institutions to discuss their current relationships with hedge funds, updating a similar study conducted 3-1/2 years earlier.

Fourth, does the fact that investors have lost most of their capital and creditors may take some losses on their exposure to LTCM call for direct regulation of hedge funds?

It is questionable whether hedge funds can be effectively directly regulated in the United States alone.

While their financial clout may be large, hedge funds' physical presence is small.

Given the amazing communication capabilities available virtually around the globe, trades can be initiated from almost any location.

Indeed, most hedge funds are only a short step from cyberspace.

Any direct U.S. regulations restricting their flexibility will doubtless induce the more aggressive funds to emigrate from under our jurisdiction.

The best we can do in my judgment is what we do today: Regulate them indirectly through the regulation of the sources of their funds.

We are thus able to monitor far better hedge funds' activity, especially as they influence U.S financial markets.

If the funds move abroad, our oversight will diminish.

In the first line of risk defense, if I may put it that way, are hedge funds' lenders and counterparties.

Commercial and investment banks especially have the analytic skills to judge the degree of risk to which the funds are exposed.

Their self interest has, with few exceptions but including the one we are discussing today, controlled the risk posed by hedge funds.

Banking supervisors are the second line of risk defense in their examination of lending procedures for safety and soundness.

We neither try, nor should we endeavor, to micro-manage bank lending activity.

We have nonetheless built up significant capabilities in evaluating the complex lending practices in OTC derivatives markets and hedge funds.

If, somehow, hedge funds were barred worldwide, the American financial system would lose the benefits conveyed by their efforts, including arbitraging price differentials away.

The resulting loss in efficiency and contribution to financial value added and the nation's standard of living would be a high price to pay--to my mind, too high a price.

Fifth, how much weight should concerns about moral hazard be given when designing mechanisms for governmental regulation of markets?

By way of example, we should note that were banks required by the market, or their regulator, to hold 40 percent capital against assets as they did after the Civil War, there would, of course, be far less moral hazard and far fewer instances of fire-sale market disruptions.

At the same time, far fewer banks would be profitable, the degree of financial intermediation less, capital would be more costly, and the level of output and standards of living decidely lower.

Our current economy, with its wide financial safety net, fiat money, and highly leveraged financial institutions, has been a conscious choice of the American people since the 1930s.

We do not have the choice of accepting the benefits of the current system without its costs.

Conclusion

For so long as there have been financial markets, participants have had on occasion to weigh the costs and, especially, the externalities associated with fire-sale liquidations of troubled entities against short-term assistance to tide the firms over for a time.

It was such a balancing of near-term costs and longer-term benefits that presumably led J.P. Morgan to convene the leading bankers of his age--both commercial and investment--in his library in 1907 to address the severe panic of that year.

Such episodes were recognized as among those rare occasions when otherwise highly effective markets seize up and temporary ad hoc responses were required.

The convening of LTCM investors and lenders last week at the Federal Reserve Bank of New York could be viewed in that long tradition.

It should similarly be viewed as a rare occasion, warranted because of the potential for serious disruptions to markets.

We must also remain mindful where to draw the line at which public-sector involvement ends.

The efforts last week were limited to facilitating a private-sector agreement and had no implications for Federal Reserve resources or policies.

Footnotes

1 At the same time, not all fire sales are without merit.

The Resolution Trust Corporation earlier this decade chose to offer commercial real estate in what might be termed a fire sale because it was the only way an otherwise seized-up market could be galvanized.

Some level of market prices had to be established--even if below "intrinsic" or longer-run value in order to re-establish a two-way market.

This was a special case.

http://www.federalreserve.gov/boarddocs/te...ny/19981001.htm

"Northern Rock - Politics of a crisis"

Wednesday September 19, 2007

The Guardian

There were easily more TV crews out looking for queues at Northern Rock yesterday than actual queues.

As they opened for trade, only four branches had lines outside - and they were small.

The number of phone calls to the bank was a tenth of what it had been on Monday.

Even the website seemed to be working.

So the panic appears to be over.

Alistair Darling's last-resort guarantee of all deposits with the Rock has calmed customers down.

But what toll has a dramatic U-turn in policy, made after a long weekend of confusion, taken on the chancellor and his government?

There can be no doubt that this episode has caused some political damage.

What began as private-sector plight - one bank's shortage of funds - ballooned into an embarrassment for the government because it failed to respond decisively with sufficient speed.

Indeed it was often painfully apparent just how new Mr Darling is to his job.

Even yesterday afternoon, a day after the chancellor's announcement, there was confusion over the extent of his guarantee, or even whether it would be enshrined in law.

Some officials admitted they just did not know.

This really has been government on the hoof: not only is the ink not dry on this policy - whole chunks of it are yet to be written.

Despite appearances, ministers and officials' actions have been reasonably consistent.

Mervyn King, the head of the Bank of England, made it clear there would be no support for financiers who had behaved foolishly - but he would look out for signs of damage to the wider economy.

Northern Rock was a panic that threatened to become an all-out crisis, and so officials intervened.

Yet such subtle argument is lost on most lay people, who merely see backpedalling.

That disconnect between technocrats and the public has been a feature of this turmoil.

There were the fine distinctions between "solvency" and "liquidity"; and references to those lining up outside branches of Northern Rock as "irrational".

Hector Sants, the chief executive of the Financial Services Authority, declared yesterday:

"The system has worked."

Such a claim could only have been made from a tower in Canary Wharf; for everyone else from Newcastle to north London's Golders Green, the UK resembled Buenos Aires in the middle of a bank run - with more orderly queues.

A financial crisis, a government in disarray - and an open goal for the opposition.

But it is one the other parties have not yet hit, at least according to today's Guardian/ICM poll.

Conducted largely over the past weekend, when the Northern Rock story was gathering momentum, it shows Labour ahead of the Conservatives by eight points - the biggest lead since David Cameron took his party's helm.

This poll could be an aberration, or reflect voters' desire for stability during a crisis: Hilaire Belloc's principle of "always keep a-hold of Nurse / for fear of finding something worse".

Alternatively, it could reflect the reality that on matters of financial regulation there is little between the two main parties.

The last Conservative proposal in the area came from John Redwood, whose big idea was to scrap all red tape on mortgages - this amid a crisis caused by lax lending.

Like Labour, the main opposition party thinks that the City must be left to its own devices.

In 1992 there was a similar cross-party consensus on the ERM - that is, until Black Wednesday.

Whether the lesser crisis at Northern Rock will shake up economic thinking in the same way remains to be seen.

But a debate on banking regulation - especially transparency - is overdue.

The Liberal Democrats are best placed to lead it.

Over many years their Treasury spokesman, Vince Cable, has warned about the dangers of financiers using complex financial instruments that few fully understand.

The other parties must give some thought to his proposal that, especially when the good times roll, regulators need to enforce traditional discipline.

Related articles

18.09.2007: Banking panic forces ministers to intervene
18.09.2007: Darling throws out rules to end turmoil
18.09.2007: Northern Rock - the view from Newcastle
18.09.2007: Queues grow as weekend of worry takes toll
18.09.2007: Leader: A government rocked
18.09.2007: Analysts point to HSBC as possible buyer
18.09.2007: A&L denies problems after shares plunge
18.09.2007: Rock run finds Bank and Darling off the pace
17.09.2007: Northern Rock shares in freefall
View from the queue: savers bail out
In pictures: customers besiege the bank
17.09.2007: Beleaguered bank could be broken up
17.09.2007: Leader: Financial markets
17.09.2007: Letters: Panic on the high street
17.09.2007: FSA denies online savers were shut out
17.09.2007: Were watchdogs caught napping?
15.09.2007: Savers besiege bank
15.09.2007: Banking shares suffer on contagion fears
15.09.2007: Late-night meeting that threw lifeline
15.09.2007: The view from the streets
15.09.2007: Leader: Northern exposure
15.09.2007: Testing time for the Bank's independence
15.09.2007: Case study: Bankruptcy looming
14.09.2007: Northern Rock shares plunge 30%
14.09.2007: Shockwaves hit financial markets
14.09.2007: Anxious customers queue on street
14.09.2007: Larry Elliott: 1973 all over again?
14.09.2007: Analysts: it won't go bust
14.09.2007: Bank of England in dramatic intervention
14.09.2007: Explained: the compensation scheme
14.09.2007: Crisis of confidence could engulf banking
14.09.2007: Q&A: What does this mean for you?
14.09.2007: What next for Northern Rock customers?
14.09.2007: Analysis: Nils Pratley

http://www.guardian.co.uk/leaders/story/0,,2172018,00.html