"New grant to create 1,000 new jobs upstate"

By VALERIE BAUMAN, Associated Press

Last updated: 4:33 p.m., Tuesday, March 25, 2008

ALBANY -- Gov. David Paterson announced Tuesday that six grants totaling $5.5 million will help create more than 1,000 new jobs during the next three years in upstate New York.

Nearly $3.8 million of the grants was federal money and about $1.7 million came from the Empire State Development Corporation.

The state's Housing Trust Fund Corporation, created to help meet the housing needs of low income New Yorkers, approved the grants Tuesday.

Most of the new jobs will be available to low- and moderate-income New Yorkers.

The projects include:

--Green Island Power Authority Expansion in Albany County.

The Village of Green Island will receive a $750,000 grant to help the municipality's power authority expand to serve two local businesses that had considered relocating out of state because of high energy costs.

The grant maintains 120 jobs and creates 23 new ones during a three year period.

--The City of Olean in Cattaraugus County was awarded $750,000.

The grant will help Data Listing Services, LLC, create a new call center, generating 450 new jobs in the next three years.

--Montgomery County will receive $503,500.

The grant will help Power Pallet, Inc. create 65 new jobs.

The company recycles wooden pallets used in transportation and storage.

An additional $700,000 came from an Empire State Development Grant.

--The City of Lockport in Niagara County will receive $266,000.

The grant will help Niagara Produce, Inc., a retail grocery and market, expand and add 31 new jobs.

--The Town of Ticonderoga in Essex County will receive $750,000 to help build a municipal wastewater collection system.

Best Western, one of the companies that will be served by the wastewater system, is investing $5.5 million in the project and creating 19 new jobs.

The project will also retain 28 jobs.

--The Town of Erwin in Steuben County will receive $750,000 to help Sitel Corporation create a call center and generate 400 new full time jobs and 50 new part-time jobs.

An additional $1 million came from the Empire State Development grant.

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On the Net: http://www.ny.gov/governor/press

"Soares pushes travel probe - District attorney seeks public release of papers related to Spitzer flap"

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

First published: Wednesday, March 26, 2008

ALBANY -- Albany County District Attorney David Soares is asking Gov. David Paterson to let him publicly release records pertaining to last summer's travel records scandal so Soares can provide what he termed a "full airing of the events surrounding the case."

The records, which could include e-mail, notes and other correspondence involving former Gov. Eliot Spitzer and his top officials, could be released if Paterson were to waive executive privilege and grand jury secrecy surrounding information that Soares sought through subpoenas to the Spitzer administration.

"I am writing to formally request a waiver from you so that the Office of the Albany County District Attorney can fully air the relevant information uncovered during our investigation of events surrounding the release of documents from the Executive Chamber," stated the letter, dated Monday and signed by Linda Griggs, Soares' assistant district attorney.

Soares' request is the latest chapter in the ongoing, politically charged travel records scandal.

Paterson responded Tuesday by asking Attorney General Andrew Cuomo for an advisory opinion on whether he could waive executive privilege on behalf of Spitzer, who resigned March 17 amid a prostitution scandal.

Multiple agencies have been investigating an incident in which Spitzer's top advisers last June released to the Times Union records of Senate Republican Majority Leader Joseph L. Bruno's state-funded trips, which included travel on days of major political fundraisers.

Bruno charged Spitzer with spying on him, which led to two reports, one in July from Attorney General Andrew Cuomo and another from Soares in September.

Both found no illegalities although Cuomo concluded that Spitzer's aides wrongly drew State Police into the affair and misused the Freedom of Information Law by having them re-create the travel records from memory.

At least two other investigations, by the state Senate and the state Public Integrity Commission, are continuing.

Soares had initially concluded there was no wrongdoing, but reopened his investigation in October after the Public Integrity Commission advised him of that Spitzer's former communications director, Darren Dopp, may have perjured himself in a sworn statement to Cuomo's office.

The commission also alleged, Soares said in Monday's letter, "that Senior Executive Chamber employees may have coerced Mr. Dopp into signing the allegedly false statement."

Soares later gave Dopp immunity in exchange for his testimony, and this week told his attorney, Michael Koenig, that he is done with his client.

Cuomo's office issued a press statement saying that Soares wants to publicize the documents and said it is studying the matter.

When Soares requested that Paterson release the information, Charles O'Byrne, the governor's secretary, asked Cuomo for a formal opinion on whether the governor could do so.

Soares, who has said he expects to wrap up his investigation by the end of the month, had asked that Paterson respond by 5 p.m. Tuesday.

But a person familiar with the matter said lawyers for Cuomo might take several days to sort out the request.

Legal experts said Cuomo, who has requested to meet with all interested parties, including the Senate and the Public Integrity Commission, will have to deal with some hefty legal questions, because the decision could set a precedent on the limits of executive privilege and how governors deal with other governmental bodies such as prosecutors, investigatory agencies and the Legislature.

The state Senate is currently in court over whether it can subpoena documents from the governor's office for its investigation.

"There are important principles at stake that are being put to the test by an increasingly inconsequential matter," said Koenig, Dopp's lawyer.

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

"Audit: Dams' fixes delayed for years"

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

Last updated: 5:26 p.m., Tuesday, March 25, 2008

ALBANY -- The state has waited since Nelson Rockefeller's administration for the owner of a 19th-century Adirondack dam to fix safety violations, according to an audit on dam safety from the state Comptroller.

While the Rainbow Lake Dam in Franklin County, under a state repair order since 1971, is the worst offender, it is far from alone.

Two dozen dams' owners haven't obeyed repair orders for years, the report issued Tuesday found.

Ten of those dams -- including one owned by the city of Watervliet -- have unaddressed violations between 26 and 28 years old, in the era when Mario Cuomo replaced Hugh Carey as governor.

Rainbow Lake Dam, built on the North Branch Saranac River in 1875, contains a 356-acre lake.

The audit identified the owner as Jason Roberts Development Corp., although no corporation by that name is filed with the Department of State Division of Corporations.

"We have had difficulty locating the owners in this case," said DEC spokeswoman Maureen Wren.

She said the risk of failure appeared to be low, even though the state had rated the dam as "high hazard."

DEC officials, who are responsible for enforcing safety rules, told state auditors that while none of the dams in the audit are in "imminent danger of failure," they could not "quantify the level of risk to downstream residents."

In responding to state Comptroller Thomas DiNapoli, DEC blamed absent enforcement on lack of staff and budget, as well as attention to other duties including emergency flood response and dealing with requests for information under the state Freedom of Information Law.

"It is important to note that enforcement was nearly nonexistent in years past, but in the last year alone, the state issued complaints for 12 dams and entered into additional orders on consent for remedial work at 15 dams," said Wren.

"We welcome the Comptroller's report and have begun implementing many of the recommendations."

In February, DEC announced tougher dam safety draft rules requiring most owners to keep detailed safety and maintenance records, as well as pay for regular safety inspections.

The requirements were inspired in part by the July 2, 2005, collapse of Hadlock Pond dam in Washington County.

The recently rebuilt dam released a torrent of water that destroyed homes and roads in Fort Ann and spawned a rash of lawsuits from property owners, the town and the dam's builders.

Wren said the state also has increased the number of dam safety inspectors in recent years from three to 20, but could not say how long it might take to handle the backlog of overdue violations.

"The longer owners take to correct problems, the greater the deterioration and the cost of these repairs and the increased likelihood that this neglect could lead to failure at some point down the road."

"This cannot continue," said DiNapoli.

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

"Region's home prices rise despite slowdown - Realty broker says many homeowners appear to be holding off on selling during economic downturn"

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

First published: Tuesday, March 25, 2008

First-time home buyers hoping the real estate slowdown will result in lower prices are in for disappointment, at least for now: Statistics released Monday show a general rise in Capital Region single-family home prices.

Albany and Schenectady counties showed February median sale price increases of 6 percent and 4 percent, respectively, when compared with the same month a year ago.

Rensselaer County showed a 12 percent increase, according to the Greater Capital Association of Realtors Inc., a Colonie-based trade group.

Saratoga County was the exception.

The median price there fell 3 percent.

Overall, in the 11 counties covered by GCAR, the median price rose 8 percent, to $189,900.

When necessities as diverse as gasoline and groceries are costing more, perhaps pricier housing shouldn't be a surprise.

But the local rise comes as prices nationally are falling.

In fact, the National Association of Realtors reported Monday that the median existing-home price for all housing types was $195,900 in February, down 8.2 percent from a year earlier.

Also, the increase in local median prices is happening during a sharp fall in the number of homes sold.

According to GCAR, closed home sales in Albany, Schenectady, Saratoga and Rensselaer counties fell 29 percent in February, compared with a year earlier.

Laws of supply and demand suggest a price decrease should accompany such a rapid slowdown.

Yet Eric Dahl, managing broker at nonprofit Community Realty in Albany, said the inventory of quality houses on the market is also declining.

By his count, 709 homes in good or better condition were on the market in Albany County in September.

This month, the number had fallen to 590.

"I'm not seeing prices come down at all, but I am seeing what is reflected in the (GCAR) numbers, which is far fewer transactions," he said.

"I think sellers are sitting back and saying, 'This isn't a good time to sell.' "

Community Realty largely works with first-time buyers, who in recent years have faced a difficult trend: The cost of buying a house in the Capital Region has outpaced income growth.

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.

Dahl said many buyers are hoping to see that trend curbed.

And in the wake of negative national real estate news, some expect it.

"We do definitely encounter buyers who have unrealistic expectations about our local market," Dahl said.

"They think you might all of a sudden find a $200,000 home for $120,000."

Marie Bettini, president of GCAR, said first-time home buyers are now "the driving force" in the housing market here.

They're being lured into the market by low interest rates and the search for good deals.

Some seem to be buying even if they aren't finding the hoped-for bargains, Bettini said.

There was positive news Monday for the national housing market.

The National Association of Realtors said the seasonally adjusted number of existing-home sales surpassed expectations and climbed 2.9 percent in February, compared with January.

Still, when compared with February 2007, the number of existing-home sales fell 23.8 percent.

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

"$30M to help telecom firm"

By LARRY RULISON, Business writer, Albany, New York Times Union

First published: Tuesday, March 25, 2008

ALBANY -- Tech Valley Communications has received approval from state regulators to borrow up to $30 million for new projects or to refinance existing debt.

The Albany-based company sells telecommunications services such as phone and high-speed Internet access, mostly to businesses and government entities, using a super-fast fiber-optic cable network it has built throughout the region.

Since the company provides telephone service, it is regulated by the state Public Service Commission.

Last month, Tech Valley Communications asked the PSC if it could issue up to $30 million in long-term debt to be obtained from one or more banks, including TD Banknorth.

The money is expected to be used for either working capital, to expand its network and services, or to refinance existing debt.

The company said the money is needed for important projects, such as Albany County's E-911 service.

Also known as Enhanced 911, the system is an emergency telephone service for county residents and businesses that provides simplified dispatch of police, fire or ambulance.

Chief Executive Officer Kevin O'Connor said Monday he couldn't reveal any specifics of the borrowing because the deal had not been completed.

But he said the company was refinancing older debt.

"We're actually closing today or tomorrow," he said.

He did say the work the company is doing for Albany County is cutting edge.

A spokeswoman for the county confirmed the company's involvement.

"Schumer 'sold' on AMD plans for Malta site - U.S. senator says company president remains upbeat about $3.2 billion chip-fab plant"

By ERIC ANDERSON, Deputy business editor, Albany, New York Times Union

First published: Wednesday, March 26, 2008

U.S. Sen. Charles Schumer made his first visit to the Luther Forest Technology Campus Tuesday morning to tell local officials and residents he believes a $3.2 billion Advanced Micro Devices Inc. plant will be built there as planned.

"AMD has had a rough year -- five quarters -- where they've lost money," he said.

But, "AMD and most of their analysts regard this as a bump in the road."

Schumer instead focused on what's at stake in Luther Forest: a manufacturing plant that would make AMD's semiconductors -- the brains of computers and other advanced electronics -- more competitive with those of rival Intel Corp.

"'If our company has any future, it's here,' " Schumer quoted AMD CEO Hector Ruiz as telling him during a conversation on Friday.

"I'm completely sold on the fact that AMD is going to be here," Schumer added.

State Senate Majority Leader Joseph L. Bruno and U.S. Rep. Kirsten Gillibrand joined Schumer at the Tuesday morning press event at a small office building on the Luther Forest campus.

AMD has been offered state incentives worth up to $1.2 billion toward the $3.2 billion cost of the plant.

Schumer said the incentives were "worth every penny."

Still, AMD will have to finance the remaining $2 billion, which is more than half its total market value of $3.8 billion.

Steve Groseclose, AMD's director of global environment, health and safety, said after the event that financing the project was being worked on in parallel with the necessary permits and other planning work that must take place before ground can be broken.

Groseclose said it wasn't clear what impact rising prices for such construction materials as steel might have on the project's final cost.

AMD would like to be able to start construction as early as January or February 2009, he said, although the company hasn't made the final decision on whether to proceed with the project.

AMD has until July 2009 to make that decision without forfeiting the state incentives.

During his appearance Tuesday, Schumer thanked Alain Kaloyeros, who heads the College for Nanoscale Science and Engineering at the University at Albany, and Bruno, as well as former Gov. George Pataki, for their vision and support for the AMD project and development of the local semiconductor industry.

Bruno "really has been a leader in figuring this out and getting the support it needs," Schumer said.

Schumer said that while the Capital Region work force and the incentive package helped attract AMD, the combination of Albany NanoTech and IBM Corp., which has a major research presence at Albany Nanotech, gave the region a unique advantage that made the difference.

The Albany NanoTech complex, where next-generation semiconductors and their manufacturing processes are under development, also will soon be home to International Sematech, the research consortium of the world's major chipmakers.

Schumer expects construction of the AMD plant will have to begin by early next year if it's to meet its goal of producing the next generation of semiconductors by 2012.

Most of the estimated 1,200 employees will be hired locally, although a few likely will come from outside the area.

"That's why we're here, because there's a huge talent pool," said Groseclose, the AMD official.

Eric Anderson can be reached at 454-5323 or by e-mail at eanderson@timesunion.com.

"Regulator takes blame for Northern Rock"

By ROBERT BARR, Associated Press

Last updated: 8:52 a.m., Wednesday, March 26, 2008

LONDON -- Britain's financial services regulator admitted Wednesday that it had done a poor job of supervising Northern Rock, the mortgage lender which became Britain's most prominent victim of the subprime mortgage crisis.

Northern Rock was forced to turn to the government for support when its short-term lending resources dried up -- leading to a run on deposits.

The government nationalized Northern Rock in February, and the company is now undergoing reorganization.

The Financial Services Authority said an internal audit had identified four major failings regarding Northern Rock: insufficient engagement with the company resulting in no rigorous follow up to problems arising from the credit crisis; a lack of adequate oversight of Northern Rock management; insufficient resources to supervise the company; and a failure to ensure that all available risk information was properly analyzed and applied.

"The review concluded that, overall, the supervision of Northern Rock was at the extreme end of the spectrum within the firms reviewed in respect of these failings and that its supervision did not reflect the general practice of supervision of high-impact firms at the FSA," the agency said.

A union official welcomed the agency's admission of failures, but noted that around 2,000 Northern Rock employees would pay for those failures by losing their jobs.

"We are calling on the FSA to ensure that their supervision practices are strengthened so there can be no repeat of the mistakes that occurred in Northern Rock," said Graham Goddard, deputy general secretary of the Unite union, who called for a full investigation of the events leading up to the bank's near-collapse.

"This inquiry must take a broad perspective of all those involved, including the previous management of the company."

"The hard working staff at Northern Rock deserve to know what went wrong and that lessons will be learnt," Goddard said.

To improve its performance in monitoring companies such as Northern Rock, the agency said it was creating a new group of specialists to regularly review supervision.

The numbers of supervisory staff monitoring high-impact companies will increase, and the FSA said it will expand its prudential risk department.

The agency said it will also pay greater attention to the liquidity of high-impact retail companies, and be more rigorous in assessing the competence of senior management.

"It is clear from the thorough review carried out by the internal audit team that our supervision of Northern Rock in the period leading up to the market instability of late last summer was not carried out to a standard that is acceptable, although whether that would have affected the outcome in this case is impossible to judge," said Hector Sants, the agency's chief executive.

The agency did not immediately release the full text of its review, but said it would be available by the end of April.

Britain's taxpayers have so far advanced subsidies of 55 billion pounds ($110 billion) to prop up Northern Rock.

The company's new executive chairman, Ron Sandler, announced last week that he plans to reduce Northern Rock's staff of 6,500 employees by a third and to reduce its home mortgage book by half.

Sandler said he hopes to phase out government support within four years.

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On the Net:

Financial Services Authority, http://www.fsa.gov.uk

Northern Rock, http://companyinfo.northernrock.co.uk

"JPMorgan Chase to cut 300 jobs in Rochester"

Associated Press

Last updated: 6:43 p.m., Wednesday, March 26, 2008

ROCHESTER, N.Y. -- JPMorgan Chase & Co. says it will cut 300 jobs at its home equity loan processing center in Rochester's Chase Tower and combine that operation with Chase offices in Milwaukee and Phoenix.

The cuts are a result of a national downturn in Chase's home equity loan business, said E. Malcolm Wolcott Jr., president of Chase's upstate operations.

Chase employs about 950 workers at the Chase Tower in downtown Rochester and branches throughout the area.

Wolcott said the bank has contacted local business groups to help find new jobs for some of the affected employees.

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Information from: Rochester Democrat and Chronicle, http://www.democratandchronicle.com

"Government watchdogs target personal use of campaign donations"

By MICHAEL GORMLEY, Associated Press

Last updated: 6:32 p.m., Thursday, March 27, 2008

ALBANY -- Prospects look dim for lawmakers to raise their salaries this year now that Gov. David Paterson says a recession is forcing harder choices in the state budget due Tuesday.

"I don't think the state can really afford to do very much really for anyone, least of all for legislators right now because of this situation," Paterson said.

Most lawmakers will continue to muddle through, in part by falling back on millions of dollars in campaign contributions which, under the rules they wrote, can pay almost anything from Buffalo Bills tickets to a trip to Ireland, state records show.

Auto insurance payments, rental cars, gasoline, auto repair and other expenses are also paid by campaign contributions that offset household or daily work expenses most people must be take from their salaries, according to the records of many lawmakers reviewed this week.

"Campaign contributions should be used for campaigns, not for lifestyle subsidies," Blair Horner of the New York Public Interest Research Group said Thursday.

"Most campaign contributions come from groups that have business before government."

"This creates an inherent conflict."

Need a dinner at one of Albany's best restaurants?

No need to tap into that taxpayer-paid per diem of $150-or-so a day for expenses for staying in Albany.

Bring some staff and friends to Jack's Oyster House and pick up the check for $310, like Republican Sen. Kenneth Lavalle's campaign did.

Bar association dues due?

Cut a check for $125, they way Democratic Assemblyman Joseph Lentol's campaign did.

Want tickets to the Buffalo Bills?

Plunk down $2,764 for them, like Democratic Sen. Bill Stachowski 's campaign did.

Need a car?

Pick out a $25,000 Chevy and pay cash, like Republican Sen. Catharine Young's campaign did.

Or pay monthly car payments, as several other lawmakers' campaign funds do.

Want to get away from it all?

Try a trip to Ireland, as Assemblyman Adam Clayton Powell's campaign did in 2007, for few euros over $2,500.

"Absolutely campaign money should be used for anything that would enhance an official's capacity as state legislators and certainly learning about Ireland and its people and its struggles ... will help our Irish brothers and sisters in our district," said the East Harlem Democrat.

The trip from Sept. 29 to Oct. 10 in 2007 was attended by many American lawmakers, many of Irish descent.

He said the trip included historic tours and a meeting with the prime minister to discuss pressing current issues.

Asked if any New York state legislation came of the trip, he said:

"I'm not sure."

"Possibly."

All of it's legal, and much of it, like NFL tickets for a team that means much to Stachowski's western New York district and a car for Young, who drives across the state from Olean to Albany, are quickly defended by lawmakers.

Lentol said the dues keep him associated with the Brooklyn Bar Association, an important constituent group, because he doesn't practice law anymore.

"There is generally not very tight regulation of them and probably for good reason," he said.

He said it's appropriate to use the funds to maintain and operate the public office, "but it should not be to improve their lifestyle or their lives."

"There should be a middle ground."

Young also said the purchase of a car is a legitimate expense.

"My senate district is one of the largest geographically and is the farthest away from Albany," she said.

"I put about 70,000 miles on my Chevy per year doing my job."

"It doesn't cost the taxpayers one dime for mileage, even though I could be reimbursed by the state."

"I'd rather save taxpayer money."

"If it's so important, then either the state or they should pay for it," Horner said.

Legislators for nearly a decade have received a base salary of $79,500, but most get leadership stipends from a few thousand dollars to tens of thousands of dollars.

Per-diem payments for living expenses in Albany can add another $15,000.

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On the Net:

NYPIRG: http://www.nypirg.org

"Lobbyists push for tax increases to offset budget shortfall"

By VALERIE BAUMAN, Associated Press

Last updated: 4:43 p.m., Thursday, March 27, 2008

ALBANY -- Lobbyists are making a last-minute push for higher taxes on millionaires and smokers as the budget deadline approaches in less than a week.

With a $4.6 billion budget deficit looming, two lobbying campaigns claim to have partial solutions to the state's financial burdens as lawmakers push to meet the April 1 deadline for a new budget.

New Yorkers for Fiscal Fairness, a coalition including the state's large public employee unions, is paying more than $100,000 for radio advertisements that argue for a tax increase for people with incomes of $1 million or more because "the wealthiest New Yorkers just aren't paying their fair share."

The ad says the only alternative would be cutting funding for hospitals, schools and colleges.

"Taxing millionaires or cutting schools and health care -- that's an easy choice," the ad says.

The heavy-handed tactic is common this time of year as lawmakers are under close scrutiny for how they craft the roughly $124 billion budget and whether they will get it done on time.

Politicians and lobbyists like to complain about budget cuts, but they are referring to cuts in budget growth, rather than spending less than last year.

Frank Mauro, of the Fiscal Policy Institute, one of the groups in the coalition supporting the tax increase, said New York has to figure out what is the least harmful way to balance the budget in a recession.

But opponents of the tax increase say the radio ads go too far.

"It crosses the boundary into the ridiculous," said E.J. McMahon, of the Empire Center for New York State Policy.

"It creates this specter of budget cuts and service cuts that just isn't there.

The Empire Center, part of the fiscally conservative Manhattan Institute, has issued a response to the coalition's ad, rejecting its arguments for increasing taxes.

McMahon advocates minimizing growth in government spending.

For instance, the center argues that the executive budget would increase school aid by $1.5 billion, or 7 percent, on top of last year's increase.

Gov. David Paterson proposed cutting $800 million from the executive budget offered earlier this year by former Gov. Eliot Spitzer before he resigned in disgrace, but it would still result in total state spending growth of 3.7 percent.

The millionaire tax has the support of the Assembly, but Paterson has said it's not the right time to raise taxes and Senate Republicans have rejected the idea entirely.

Another group pushing for a tax increase is the Center for a Tobacco Free New York.

The coalition spent $200,000 on radio advertisements and print ads that support doubling the $1.50 cigarette tax for a total $3 per-pack tax.

The ad starts with a song reminiscent of superhero cartoon themes, and a deep voice proclaiming "Most New York leaders can't bend steel with their bare hands."

"None can leap tall buildings with a single bound."

"But all can save lives with a single vote to increase the cigarette tax."

The ad argues that the increase would raise more than $480 million and prevent more than 290,000 children and teenagers from starting smoking.

Anti-smoking groups have long sought to increase the cost of buying cigarettes to deter people from the habit.

"The state can generate substantial new revenue and they'll also see a substantial decrease in health costs," said Jennifer Cucurullo, a spokeswoman for the American Cancer Society.

"This is just a money grab by the antismoking crowd," said Audrey Silk, founder of the New York City Citizens Lobbying Against Smoker Harassment.

"They're just shameless, and on top of it all, it creates nothing more than an incentive for the lucrative black market to step in."

The coalition is buying ads in all major daily newspapers outside of New York City.

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On the Net: http://www.abetterchoiceforny.org

http://www.empirecenter.org/2008/03/TaxHikeClaimFact.cfm

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

"Paterson shrugs off Spitzer scandal to bring consensus"

By MICHAEL GORMLEY, Associated Press

Last updated: 2:52 p.m., Friday, March 28, 2008

ALBANY -- Shrugging off scandal that has gripped New York's Capitol, Gov. David Paterson has against the odds come close to capturing Albany's biggest prize: An on-time state budget agreement with the Legislature.

"He's rising to the occasion," said Senate Republican leader Joseph Bruno of the new Democratic governor.

"Many times, the job makes the person."

"Look at Harry Truman," he said, referring to the vice president rose to power after President Franklin D. Roosevelt died.

"He became one of our best presidents."

Paterson, who is legally blind, has been on the job not quite two weeks after his combative former boss, Gov. Eliot Spitzer, resigned amid a prostitution investigation.

Paterson had a rocky start as he tried to negotiate a state budget in dire fiscal times by Tuesday's start of the fiscal year.

He has been dogged by questions about his private life and public spending after an extraordinary news conference on March 18 in which he acknowledged past extramarital affairs.

He denied additional affairs and said no public funds were used for a romantic rendezvous, and no record or official has proved him wrong.

Paterson had to rework Spitzer's January executive budget proposal to the Legislature as critical Wall Street and mortgage revenues plummeted.

Then he negotiated reduced spending with legislative leaders.

Bruno noted that neither Spitzer, the former attorney general, nor Paterson, the former Senate minority leader, had much experience in budgeting before becoming governor.

But where Spitzer threatened and bullied, Paterson sought compromise with respect, and humor, Bruno said.

"And David has a partner, a colleague, in me," added Bruno, who was in heated conflict with Spitzer for months.

"This is a Herculean effort by the governor," said Assembly Minority Leader James Tedisco, a Republican from Schenectady.

"I think we've done something close to a miracle."

The 2008-09 budget, if adopted by Tuesday's start of the fiscal year, is expected to increase spending 4.5 percent over the current budget and fill a nearly $5 billion deficit.

That's half of the spending increase in some recent years.

The Legislature rejected Paterson's goal of 3.7 percent growth, drawing criticism.

"They haven't even begun to tighten their belt," said E.J. McMahon of the Empire Center for New York State Policy, part of the fiscally conservative Manhattan Institute.

He said state spending has increased 43 percent in the last five years, while school districts have agreed to labor contracts unaffordable to taxpayers that require record increases in state aid each year.

Nationally, states are projected to increase spending an average 4.7 percent, according to the National Association of State Budget Officers.

New York has rarely been below the national average.

However, especially in a legislative election year, the proposed growth for the 2008-09 budget is less than Albany's usual appetite.

And the political upheaval was expected to delay the process.

"I think with the tumult of what's been going on the past few weeks, all of you and the public would understand if we took a little extra time to get the budget done," Paterson told reporters Friday.

Then he added:

"I think that the constitutional deadline is very important."

"I think it sets the standard for really what our ethics are in this process," Paterson said.

"Because you've had a bad year, because you've had a change in government, it doesn't actually mean that you get to forget about that deadline."

Paterson began the budget process in earnest Wednesday night, with uncommon one-on-one meetings with legislative leaders.

He said he wanted to meet "eyeball to eyeball" because he has found that when you tell a group of people about the need for sacrifice, they understand the concept but "they never think you're talking to them."

If the Legislature agrees to budget bills this weekend and passes them by midnight Monday night, Paterson in a drastically short time will have accomplished an on-time budget.

Spitzer didn't do that a year ago -- missing the deadline by hours while insisting it was on time.

Governors George Pataki and Mario Cuomo and their legislatures missed the deadline for 20 straight years.

The leaders agreed Thursday night to a "framework" for a $124 billion state budget that includes a $1.8 billion increase in state school aid.

That will mean school aid will be well over $20 billion and among the highest totals in the nation.

In January, Spitzer proposed a $1.4 billion increase.

"I think they are all feeling pressure to get a budget done on time," said Blair Horner of the New York Public Interest Research Group.

"It's been a terrible month, arguably the worst in New York state government history ... to some extent, it is a chance for all of them to turn the page."

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AP Writer Michael Virtanen contributed to this report from Albany.

"Prosecutor: Spitzer ordered travel records probe on Bruno"

By MICHAEL GORMLEY, Associated Press

Last updated: 6:52 p.m., Friday, March 28, 2008

ALBANY -- A criminal prosecutor said Friday that former Gov. Eliot Spitzer ordered the dirty tricks travel records scandal to discredit Senate Republican leader Joseph Bruno despite the former governor's public denials.

Albany County District Attorney P. David Soares said his second investigation of the scandal finds former Spitzer aide Darren Dopp was directly ordered by Spitzer in a profanity laced exchange to release records that could embarrass Bruno and perhaps lead him deeper into a federal investigation.

The report paints a picture of Spitzer as "spitting mad" at Bruno.

Dopp's testimony claims that Spitzer not only timed the release of the records for political advantage, but reviewed them personally at least twice and repeated called Dopp at home to check on progress of the news stories about the documents.

Dopp said Spitzer had also told him that the governor arranged for a former state police official to talk to a New York Times reporter to show there had been a long time concern over Bruno's use of state aircraft.

Afterward, Dopp recounted a conversation with a top administration lawyer in which Dopp claimed the lawyer said the administration wouldn't defend Dopp out of fear of being charged with perjury.

Soares called for no action against Spitzer or any aides.

He specifically found that Dopp didn't commit perjury.

Soares said Spitzer's denials to investigators last year conflict with Dopp's account, but Spitzer can't be charged with a crime under Soares' jurisdiction because Spitzer is no longer a public employee, according to the report.

Spitzer resigned two weeks ago after he was implicated in an investigation of a prostitution ring.

In September, Soares issued a report saying no one in the Spitzer administration acted improperly and that there was no evidence of a plot to discredit Bruno.

Two aides argued they were following orders to fulfill media requests seeking records.

Spitzer disciplined them both.

But Attorney General Andrew Cuomo found two top Spitzer aides misused state police to compile records of Bruno's use of state aircraft on days he attended Republican fundraisers and released them to a reporter.

Soares recently returned to the case, however, and further investigated Dopp's role after a statement provided for him by Spitzer administration lawyers seemed to conflict with Dopp's testimony to the state Public Integrity Commission, which is also investigating.

Dopp was questioned by Soares during the second investigation.

Friday's report said that at first, in May 2007, Spitzer just wanted to "monitor the situation" after Dopp said a reporter asked for Bruno's flight records.

Spitzer didn't want "anything to interfere with the possible ... conclusion of the legislative session," Dopp was quoted as saying in Soares' report.

But in June, when Bruno was blocking Spitzer's initiatives in the Legislature, top Spitzer aides discussed providing the flight records to "the feds" after they read in the newspaper that Bruno was being investigated by the FBI for business dealings.

Dopp said that on June 25 or June 26, governor's Secretary Rich Baum told him, "Eliot wants you to release the records."

Dopp said he went into Spitzer's office to make sure.

Dopp told investigators that he told Spitzer:

"Boss, you're OK with the release of the plane records?"

"According to Dopp, the governor replied, 'Yeah, do it,'" the Soares report said.

"Dopp asked Spitzer: 'Are you sure?'" noting Bruno would be angry.

Dopp said Spitzer then used vulgarities to describe Bruno and ordered Dopp to "shove it up his (expletive) with a red-hot poker."

"He was drinking a cup of coffee," Dopp told investigators, "as he was saying it, he was like spitting a little bit."

"He was spitting mad."

The report stated: "When asked whether he considered the governor telling him to release the records was a directive, Dopp stated that, `You couldn't mistake that based upon the words that were used.'"

After the story ran in the Albany Times Union, Spitzer sent an e-mail to Dopp:

"Will other media pick up on bruno (sic) story?"

In early July, Dopp said Spitzer told him that he had his press secretary, Christine Anderson, arrange for a former state police official to "talk to a reporter from the New York Times ... (to) confirm that (the state police) had long held concerns about Mr. Bruno's use of the aircraft."

Spitzer had suspended Dopp by this time and transferred the other aide involved, William Howard, out of the executive chamber.

Dopp would eventually leave the governor's office, after serving Spitzer for eight years as attorney general and a year as governor.

Publicly, Spitzer said he had only cursory knowledge of the reporter's request for travel records and that his aides were overzealous.

Spitzer apologized to Bruno for the aides' behavior.

Dopp's personal journal carried an August entry in which he recounted a conversation with Spitzer administration attorney David Nocenti.

Dopp said he asked Nocenti, a friend, why the administration didn't disagree with state Attorney General Cuomo's investigative report that found Dopp and Howard committed misconduct.

"We didn't want to be ambushed," Dopp recalled Nocenti telling him.

Then Dopp said Nocenti added: "He would have charged us with perjury."

The scandal led to gridlock in Albany and destroyed Spitzer's once record-high popularity.

There was no immediate comment from Spitzer's spokeswoman, Anna Cordasco.

The report reveals Spitzer's testimony last year to Soares.

Spitzer flatly denied that he directed the gathering of any documents concerning Bruno's flights and didn't order the release of any documents to the news media.

"If Dopp's testimony is credited," the report states, "then former Governor Spitzer's answers were not truthful."

"Accordingly, we intended to present these conflicting accounts to a grand jury."

That, however, was before Spitzer resigned in the prostitution scandal, eliminating Soares' jurisdiction in the case.

"Let us be clear," the report concluded, "political plotting and games are not in the best interest of New York State."

Some testimony and records still haven't been released, protected by Spitzer's executive privilege.

Cuomo told Gov. David Paterson, Spitzer's former lieutenant governor, that only a court or Spitzer can remove Spitzer's executive privilege.

Cuomo said Spitzer should relinquish his privilege "for the sake of the public's right to full disclosure and transparency."

Open government and "transparency" were Spitzer's watchwords as attorney general and candidate for governor in 2006.

"A political plot involving state police by senior state officials is a toxic brew," Cuomo said in a statement.

"In government, even a legitimate goal does not justify unscrupulous means."

"This situation also proves the old adage, 'The cover-up is worse than the crime.'"

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http://www.albanycountyda.com

"Counties warn of tax hikes, cuts in services - Leaders blast plan to reduce state aid, say property levies are already too high"

By KENNETH C. CROWE II, Staff writer, Albany, New York Times Union

First published: Saturday, March 29, 2008

ALBANY -- The state's county executives see cuts in services followed by higher county property taxes in 2009 as they confront a proposed state budget that reduces their state aid.

"Shift to local government and shaft the taxpayer," Chemung County Executive Tom Santulli termed the state's solution for balancing its 2008-09 budget.

Santulli and other county executives held a bipartisan statewide news conference call sponsored by the New York State County Executives Association on Friday to get out their message about the impact of increasing state mandated expenses combined with decreasing state financial support.

"Instead of tightening their belts at the state level and reducing their spending, they're passing it on to the local level,"' Rensselaer County Executive Kathleen Jimino said.

Jimino said Rensselaer County could see a loss of $3 million in anticipated state funding.

The county will have to look at where it can save money.

She predicted a potential 10 percent increase in county property taxes in 2009.

Albany County Executive Michael Breslin said he's looking at a lost of $3.5 million to $4 million in state support.

That, Breslin said, equates to a 4 percent to 5 percent tax hike in 2009.

Breslin said the county will have to consider cutting programs that keep the elderly out of more expensive nursing homes and support people in their efforts to get housing.

The reductions, Breslin said, will harm "the people who desperately are going to need more assistance."

While the Legislature and Gov. David Paterson negotiate a new budget, the county executives are upset that shifting costs is crushing their constituents under growing property taxes.

"We're number one for property taxes in the nation," Nassau County Executive Tom Suozzi said.

Westchester County Executive Andrew Spano labeled Wednesday's news conference in Schenectady held by Paterson and Mayor Brian U. Stratton about accepting a 2 percent reduction in state aid as a "charade."

He said the cities are still getting a 7 percent increase in aid while the counties are being squeezed financially.

Suffolk County Executive Steve Levy, president of the county executives association, said the executives would take their case to the public and warned that further actions would occur.

He wouldn't elaborate on what to expect except to say, "stay tuned."

Kenneth C. Crowe II can be reached at 454-5084 or by e-mail at kcrowe@timesunion.com.

"Spitzer targeted Bruno, DA says - In second report on Troopergate, Soares says former governor was active in release of travel records"

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

First published: Saturday, March 29, 2008

ALBANY -- Albany County District Attorney David Soares released a report late Friday concluding that former Gov. Eliot Spitzer, despite earlier denials, emphatically told subordinates to release state travel records on Senate Republican Majority Leader Joseph L. Bruno, kicking off what became known as the Troopergate scandal.

The report quotes Spitzer as telling Soares' office, when asked if he directed the release of documents concerning Bruno's travels, "If you asked me did I specifically ever address this issue, the answer is no."

But Spitzer's former communications director, Darren Dopp, said the governor told him, "yeah, do it" in an obscenity-laced conversation in which Spitzer was "spitting mad."

"If Dopp's testimony is credited, then former Gov. Spitzer's answers were not truthful," Soares said.

Bruno, saying the report shows Spitzer "was obsessed with conducting a political 'hit job' to damage me personally and politically," said Soares should have prosecuted in the case.

"This scandal was a blatant abuse of government power," Bruno said in a prepared statement.

Bruno, who is defending his party's narrow Senate majority this election year, said, "these abuses should present a concern to all New Yorkers."

"It also illustrates the importance of having checks and balances in State government and avoiding one-party rule and power."

Bruno said Soares should have prosecuted those involved.

He urged Gov. David Paterson to "take appropriate action against those involved in the plot and cover-up, and who should not continue to represent him and the Executive Chamber."

Paterson said he will review the report, known in Soares' office as "Investigation D."

Sen. George Winner, R-Elmira, who has been spearheading a Senate Investigations Committee probe of Troopergate, said Soares should have conducted a better investigation from the start, rather than having to reopen it.

"Soares had ample opportunity to conduct a thorough investigation into the Troopergate scandal, and this is the best he can do?," asked Winner, who added that there are still plenty of "unanswered questions."

Soares said he "intended to present these conflicting accounts to a grand jury."

But now that Spitzer is no longer governor, having resigned earlier this month after being implicated as a customer of a high-priced prostitution ring, a grand jury would not have the opportunity to hear arguments to remove him from an office he no longer holds, Soares said.

Soares cited other possible illegalities by Spitzer staffers but said he doubts prosecution would have been successful.

He said he granted Dopp immunity in order to get to the bottom of the matter in the public's interest.

The report is the second Soares has issued on the scandal.

The first one cleared the governor.

Soares reopened his inquiry after Herbert Teitelbaum, executive director of the state Commission on Public Integrity, told him he believed Dopp may have perjured himself.

While Dopp's testimony to the commission hasn't been made public, sources close to the investigation told the Times Union that Teitelbaum referred Dopp after he told commission members that Spitzer had ordered the release of Bruno's travel records.

The travel records scandal began unfolding last May when the Times Union and other media started asking about the use of state aircraft by top state officials.

Initially, Soares's report notes that Spitzer was concerned that releasing the information might be harmful since both the governor and Bruno had used state aircraft on trips that combined fundraising events and official business.

Spitzer initially declined Dopp's suggestions to publicize Bruno's trips, saying it would be a distraction to negotiations he had with Bruno, including a failed effort to enact sweeping campaign finance reform.

But Spitzer later changed his mind and cleared the documents for release, according to Dopp.

The Times Union, which had asked for the documents through the Freedom of Information Law, published a story July 1 that questioned Bruno's use of state helicopters and State Police escorts on several days when he had major fundraisers in New York City.

Days later, Bruno accused the governor of using police to spy on him.

On July 23, Attorney General Andrew Cuomo issued a report that found no illegality, but concluded Spitzer's inner circle had wrongly involved State Police in a political matter.

He also said it was improper for State Police to re-create Bruno's itineraries from memory.

Though Dopp was initially investigated for possible perjury and other related offenses, Soares concluded that, at worst, Dopp may have been guilty of a misdemeanor for submitting a false written statement to Cuomo.

Soares granted Dopp immunity because the public interest "would be better served by uncovering the truth."

Cuomo said most of the key figures in the Troopergate scandal have moved on, and suggested it was time to leave the matter behind.

"Let us close this ugly chapter and move forward," he said.

However, a host of loose ends remain.

Among them:

Friday's report is not a "complete analysis," according to Soares, because numerous supporting documents from the Spitzer administration are still shielded from release by executive privilege and grand jury secrecy.

Cuomo on Friday said it is up to Spitzer, not his successor, Gov. David Paterson, and the courts to unseal those documents.

Teitelbaum's referral of Dopp to Soares has left some questioning whether Teitelbaum was trying to protect the ex-governor.

"I don't know why the commission referred Darren over to the district attorney when it did, but it certainly is an interesting question that should best be addressed to the Commission," said Dopp's lawyer Michael Koenig.

Many of Spitzer's key aides who were involved in the Troopergate affair have resigned, including Policy Advisor Peter Pope, Counsel David Nocenti and Secretary Richard Baum.

William Howard, a former homeland security advisor, was transferred out of the executive chamber.

Pope, according to the report, sought to turn the matter of Bruno's use of state resources over to the state inspector general, but Nocenti and Baum dismissed the idea, even though Pope warned that not reporting it could be illegal.

Pope also asked if they should refer it to federal authorities who have been investigating Bruno's business interests, but Nocenti, Baum, and Spitzer "reacted in a more dismissive way than the previous suggestion," the report says.

The report initially says that "evidence developed which indicated that David Nocenti might have committed a crime" related to his acting as a notary, but later states "there was no viable prosecution."

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

"Analysis: Here's the pain in New York's budget crunch"

By MICHAEL GORMLEY, Associated Press

Last updated: 4:42 p.m., Saturday, March 29, 2008

ALBANY -- The 2008-09 state budget, we're told, will contain hard choices.

But the choices will be harder for some.

The reason for difficult decisions is clear:

A national recession that's all but declared, layoffs and losses on Wall Street that provide 20 percent of state revenues, and declining revenue from income, sales and other taxes tied to the economy.

Yet the proposed state budget, due Tuesday and being detailed this weekend, calls for about a 4.5 percent increase in spending, perhaps even a bit higher.

And one of the biggest pieces -- state school aid -- will still be a whopper:

A record $1.8 billion increase for state school aid already at about $20 billion, which includes among the highest per-pupil funding in the nation.

And in Albany, a "cut" almost always refers to a reduction in the planned increased in spending.

In this case, many of the cuts are Gov. David Paterson's revisions to the spending plan presented in February by former Gov. Eliot Spitzer, who resigned earlier this month when he was named in a prostitution investigation.

So, as one reporter asked of budget aides to Paterson, "Where's the pain?"

Here it is:

Smokers face up to a $1.50 per pack increase in the cigarette tax.

The state tax is already $1.50 per pack and, in New York City because of an additional local tax, it's $4.50 a pack.

That's quite a monkey on the back of a pack of cigarettes, which average $5.82 a pack.

It could add up to $200 million to $500 million for the state.

And in New York City, there's talk of adding another 50-cent tax on each pack in coming months.

For some of New York's businesses, the cost of hard times in Albany could be measured in the millions.

That's because "loophole closers" were still on the table Saturday.

Supporters say it closes corporate loopholes that have allowed big businesses to avoid some taxes.

Opponents, including the Republican-led Senate, say it's a tax, pure and simple.

But there's more pain on track.

Riders of New York City's subways and users of its tunnels and bridges could eventually see a fare increase because of Paterson's proposed trimming of the Metropolitan Transportation Authority's budget.

Paterson's 2 percent cut of many agencies across the board would take $60 million in operating aid away from the MTA.

And cities, particularly those already crushed for years under a slumping upstate economy, will see 2 percent cuts in their municipal aid.

For a city like Schenectady, a rust belt relic getting back on its feet a half-century after it was a global industrial address, the cut means $220,000.

That, however, is still a 7 percent increase over current aid.

Add to that other "revenue raisers" still on the table surrounded by lawmakers desperate for cash: Expanding the hours of the Quick Draw lottery game sometimes called "video crack"; redefining some malt beverages to light liquor and little cigars into cigarettes to snag higher tax rates; and countless other increases to user fees.

"All of this stuff is in the process," said Jeffrey Gordon, spokesman for Paterson's budget office.

"The Legislature is deliberating and determining the next steps for all of those issues."

Which is included and which isn't probably won't be known for sure until at least Sunday, when lawmakers report back to their leaders on spending and revenues for different areas of the budget proposal.

"It's part of an overall decision to introduce a series of fees and service cuts that mostly affect middle-class people," objected Assemblyman Richard Brodsky, a Westchester Democrat.

"We're prepared to act responsibly in a difficult time, but a number of us are not satisfied to single out middle-class families."

Spared an unkind cut, at this point, are New York's richest.

The Senate's Republican majority and the Democratic governor appear to have beaten back a proposal by the Assembly's Democratic majority to increase the tax temporarily on New Yorkers making over $1 million dollars.

But Assembly Speaker Sheldon Silver, a Manhattan Democrat, and some colleagues hold out for trying again, if not this weekend then later in the year when revenue forecasts are expected to be even bleaker.

But the Republican Senate might also balk at the MTA funding cut.

"We do not want to do anything that will jeopardize raising any fares for riders of the system," said Senate Transportation Committee Chairman Thomas Libous, a Broome County Republican.

No similar stand is being publicly made against the cigarette tax proposal, being fought behind the scenes by lobbyists for Philip Morris USA.

In this, the company faces the Center for a Tobacco Free New York, a coalition of health groups that has spent $200,000 on radio advertisements and print ads to support doubling the $1.50 cigarette tax for a total $3 per-pack tax.

"We're in the mix," said Russell Sciandra, of the Center for a Tobacco Free New York.

Lawmakers are considering compromises of lower tax increases.

"The impact is going to be very bad," said Dan Shanahan, chief fiscal officer of Wilson Farms Inc. with 200 convenience stores in the Buffalo, Rochester and Syracuse areas.

"There will be stores that go out of business," said the former smoker.

He argues that most smokers will still smoke, but they will evade state taxes altogether by turning to Internet purchases and untaxed sales by stores run by Indian tribes.

He said cigarette sales dropped 10 percent when the state tax last increased in 2002.

"It's a technical balance of the budget that won't produce the revenue," he said.

"I think it's easy to get away with it in Albany and downstate, but we're taking it on the chin here in central and western New York."

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Michael Gormley is the Albany, N.Y., Capitol editor for The Associated Press. He can be reached by e-mail at mgormley(at)ap.org.

"Testimony shows Spitzer ordered travel records probe on Bruno"

By MICHAEL GORMLEY, Associated Press

Last updated: 8:53 p.m., Friday, March 28, 2008

ALBANY -- A prosecutor said Friday that former Gov. Eliot Spitzer may have lied when he told investigators he wasn't involved in a plot that used a Republican rival's travel records in an effort to embarrass him, and that Spitzer could have been indicted had he not resigned in disgrace in a prostitution scandal.

Former Spitzer Communications Director Darren Dopp recounted conversations and e-mails that indicated he was directly ordered by Spitzer in a profanity laced exchange to release records that could embarrass Senate Republican leader Bruno and perhaps lead him deeper into a federal investigation, according to Albany County District Attorney P. David Soares' report.

Dopp was provided immunity for his testimony in Soares' second investigation of the 2007 scandal.

Dopp had faced a possible perjury charge because a statement released by the Spitzer administration about the scandal differed from his own testimony.

The report paints a picture of the former Democratic governor as "spitting mad" at Bruno.

Dopp's testimony claims that Spitzer not only timed the release of the records for political advantage, but reviewed them personally at least twice and repeatedly called Dopp at home to check on progress of the news stories about the documents.

Dopp said Spitzer had also told him that the governor arranged for a former state police official to talk to a New York Times reporter to show there had been a long time concern over Bruno's use of state aircraft.

Afterward, Dopp recounted a conversation with a top administration lawyer in which Dopp claimed the lawyer said the administration wouldn't defend Dopp out of fear of being charged with perjury.

Bruno calls the report proof that Spitzer lied to the public and was obsessed with a "political hit job" on the Republican leader.

"The scandal was a blatant abuse of government power."

Soares, a Democrat, called for no action against Spitzer or any aides.

He specifically found that Dopp didn't commit perjury.

Soares said Spitzer's denials to investigators last year conflict with Dopp's account, but Spitzer can't be charged with a crime under Soares' jurisdiction because Spitzer is no longer a public employee, according to the report.

Soares didn't require Spitzer or his aides to testify to a grand jury or under sworn oath, but in interviews to Soares and his investigators.

When questioned by reporters in September, when his first report found no plot or misconduct, Soares defended the choice.

He said then that if statements made in the case were later found to have been false, the public officials could face charges of obstructing justice.

Spitzer resigned two weeks ago after he was implicated in an investigation of a prostitution ring.

In September, Soares issued a report saying no one in the Spitzer administration acted improperly and that there was no evidence of a plot to discredit Bruno.

Two aides argued they were following orders to fulfill media requests seeking records.

Spitzer disciplined them both.

But Democratic Attorney General Andrew Cuomo found two top Spitzer aides misused state police to compile records of Bruno's use of state aircraft on days he attended Republican fundraisers and released them to a reporter.

Soares recently returned to the case, however, and further investigated Dopp's role after a statement provided for him by Spitzer administration lawyers seemed to conflict with Dopp's testimony to the state Public Integrity Commission, which is also investigating.

Dopp was questioned by Soares during the second investigation.

Friday's report said that at first, in May 2007, Spitzer just wanted to "monitor the situation" after Dopp said a reporter asked for Bruno's flight records.

Spitzer didn't want "anything to interfere with the possible ... conclusion of the legislative session," Dopp was quoted as saying in Soares' report.

But in June, when Bruno was blocking Spitzer's initiatives in the Legislature, top Spitzer aides discussed providing the flight records to "the feds" after they read in the newspaper that Bruno was being investigated by the FBI for business dealings.

Dopp said that on June 25 or June 26, governor's Secretary Rich Baum told him, "Eliot wants you to release the records."

Dopp said he went into Spitzer's office to make sure.

Dopp told investigators that he told Spitzer: "Boss, you're OK with the release of the plane records?"

"According to Dopp, the governor replied, `Yeah, do it,'" the Soares report said.

"Dopp asked Spitzer: 'Are you sure?'" noting Bruno would be angry.

Dopp said Spitzer then used vulgarities to describe Bruno and ordered Dopp to "shove it up his (expletive) with a red-hot poker."

"He was drinking a cup of coffee," Dopp told investigators, "as he was saying it, he was like spitting a little bit."

"He was spitting mad."

The report stated: "When asked whether he considered the governor telling him to release the records was a directive, Dopp stated that, `You couldn't mistake that based upon the words that were used.'"

After the story ran in the Albany Times Union, Spitzer sent an e-mail to Dopp: "Will other media pick up on bruno (sic) story?"

In early July, Dopp said Spitzer told him that he had his press secretary, Christine Anderson, arrange for a former state police official to "talk to a reporter from the New York Times ... (to) confirm that (the state police) had long held concerns about Mr. Bruno's use of the aircraft."

Spitzer had suspended Dopp by this time and transferred the other aide involved, William Howard, out of the executive chamber.

Dopp would eventually leave the governor's office, after serving Spitzer for eight years as attorney general and a year as governor.

Dopp had been an Associated Press reporter from 1985 to 1987.

Publicly, Spitzer said he had only cursory knowledge of the reporter's request for travel records and that his aides were overzealous.

Spitzer apologized to Bruno for the aides' behavior.

Dopp's personal journal carried an August entry in which he recounted a conversation with Spitzer administration attorney David Nocenti.

Dopp said he asked Nocenti, a friend who still works in the executive chamber, why the administration didn't disagree with state Attorney General Cuomo's investigative report that found Dopp and Howard committed misconduct.

"We didn't want to be ambushed," Dopp recalled Nocenti telling him.

Then Dopp said Nocenti added: "He would have charged us with perjury."

The scandal led to gridlock in Albany and destroyed Spitzer's once record-high popularity.

Spitzer's spokeswoman declined comment.

The report reveals Spitzer's testimony last year to Soares.

Spitzer flatly denied that he directed the gathering of any documents concerning Bruno's flights and didn't order the release of any documents to the news media.

"If Dopp's testimony is credited," the report states, "then former Governor Spitzer's answers were not truthful."

"Accordingly, we intended to present these conflicting accounts to a grand jury."

That, however, was before Spitzer resigned in the prostitution scandal, eliminating Soares' jurisdiction in the case.

"Let us be clear," the report concluded, "political plotting and games are not in the best interest of New York State. "

Some testimony and records still haven't been released, protected by Spitzer's executive privilege.

Cuomo told Gov. David Paterson, Spitzer's former lieutenant governor, that only a court or Spitzer can remove Spitzer's executive privilege.

Cuomo said Spitzer should relinquish his privilege "for the sake of the public's right to full disclosure and transparency."

Open government and "transparency" were Spitzer's watchwords as attorney general and candidate for governor in 2006.

"A political plot involving state police by senior state officials is a toxic brew," Cuomo said in a statement.

"In government, even a legitimate goal does not justify unscrupulous means."

"This situation also proves the old adage, 'The cover-up is worse than the crime.'"

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http://www.albanycountyda.com

"Hard times, hard choices threaten on-time budget"

By MICHAEL GORMLEY, Associated Press

Last updated: 7:12 p.m., Sunday, March 30, 2008

ALBANY -- Lawmakers and Gov. David Paterson, all trying to put a month of scandal behind them, are finding out just how hard the fiscal times are.

Closed-door negotiations to pass a state budget due by midnight Monday night fell dangerously behind on Sunday.

But in an effort to put talks back on track, Paterson and legislative leaders met Sunday evening and announced that they have agreement on all spending areas.

The leaders said the thousands of pages of budget bills will be printed overnight and voted on Monday, potentially in time to be completed by the midnight deadline.

"It's a mechanical problem, you're always racing against the clock in budget negotiations, but this time we're racing together against the clock," Paterson said.

Passing a difficult budget on time despite an historically tumultuous month in New York state government was seen as a prize that would draw Democrats and Republicans together for a fresh start.

They sought to craft a budget that would deal with a severe economic downturn and put behind them the scandal in which Democratic Gov. Eliot Spitzer -- who proposed the budget in January -- resigned from office two weeks ago after he was implicated in a prostitution ring.

Paterson, a well-respected and well-liked lieutenant governor and former senator, had hoped to end the rancor of the Spitzer regime and usher in bipartisan cooperation and a more open government.

A timely budget was to be the test case.

Paterson, Assembly Speaker Sheldon Silver and Senate Majority Leader Joseph Bruno wouldn't immediately release details of their agreement struck behind closed doors, despite their promises for a more open, transparent process.

They were to present details to rank-and-file lawmakers first.

In order for the measures to avoid the legally required "aging" of bills for three days to allow lawmakers and the public to review them, the governor will have to issue a "message of necessity."

That allows even complex budget bills to be voted on shortly after they land on their desks, often while they are still warm from the printer.

"We were somewhat sympathetic because of the transition in government," said Barbara Bartoletti of the League of Women Voters.

"Secrecy is not in the best interest of rank-and-file legislators or to the general public, who need to restore all kinds of faith in government and secrecy is not the way to do it."

The leaders said Sunday that spending would be $500 million less than the $124 billion budget proposal crafted by former Gov. Eliot Spitzer in February, resulting in an increase in spending of slightly less than 4.4 percent.

On Thursday night, the leaders announced a framework for a budget that would reduce spending by the same dollar amount, but they estimated then that overall spending would grow between about 4.5 percent and 4.8 percent.

Paterson, however, revealed that there would be no increase in the income tax for the New Yorkers who make $1 million a year or more.

The Legislature and Gov. Eliot Spitzer missed an on-time budget by hours last year, after a budget was passed on time the previous two years.

Before that, the budget was late 20 straight years.

A late budget creates a problem for lawmakers.

They all face re-election in the fall by a constituency that has considered a timely budget to be a minimal job requirement.

"These are very, very difficult, challenging, distressing times," said Bruno on Sunday, after a closed door meeting with Paterson and other legislative leaders.

"The choices that have to be made are very, very hard choices."

"The problem is, revenue is declining," Bruno said.

"Every day there is some new information that revenue is declining."

Still in the mix Sunday were major but controversial revenue sources of doubling of the cigarette tax to $3 per pack worth $200 million to $500 million, requiring Internet giants such as Amazon.com to collect state sales tax worth $47 million to the state, closing corporate "loopholes" for millions of dollars more in tax revenue, and myriad other increases to user fees and narrow taxes.

But despite Paterson's statement that timely budget is an ethical and a fiscal responsibility, there was more talk at the Capitol of working beyond the deadline of the start of fiscal year.

It might even be the responsible thing to do, said some.

"There's a lot at stake," said Elizabeth Lynam of the Citizens Budget Commission, an independent fiscal watchdog.

"A rush job isn't necessarily the best message."

"Officials: State budget will be late"

By MICHAEL GORMLEY, Associated Press

Last updated: 5:02 p.m., Monday, March 31, 2008

ALBANY -- A $124 billion state budget proposal due at midnight Monday won't be passed until later this week, creating the latest state budget in three years, according to Assembly and Senate officials.

The Assembly wasn't expected to vote on its first budget bills until late Monday night and all the bills won't likely be done until Wednesday, said two officials in the Democrat-controlled Assembly.

In the Republican-controlled Senate, budget bills, many of which must be approved by the Assembly first, aren't expected to be passed until Thursday or Friday, according to a Senate official.

The officials spoke on the condition of anonymity because their leaders hadn't conceded that the 2008-09 budget will be late.

However, a measure to continue paying the state work force into the new fiscal year was expected to be approved Monday night by the Legislature, a signal that the budget would be late.

The measure wouldn't have been required until Thursday.

But unlike past years when partisan disputes made budgets weeks and even months late, this year has some special circumstances.

Chief among them is that the governor who drafted the proposal in January, Eliot Spitzer, resigned March 17 after he was implicated in a prostitution investigation.

His lieutenant governor, David Paterson took over.

But he then revealed some past extramarital affairs, saying he didn't want to be blackmailed into decisions as governor.

The result was at least five days in critical budget crafting and negotiations was lost while the transition to a new administration, usually two months in the making, was reduced to days.

"I think that under the circumstances, they have been working hard to comply with the constitutional deadline," said Elizabeth Lynam of the independent Citizens Budget Commission.

"A few days isn't going to make that much difference."

There was no immediate comment from Republican Senate Majority Leader Joseph Bruno or Democratic Assembly Speaker Sheldon Silver.

If the budget is late by just a few days, there is little harm to school districts, nonprofit agencies and the many businesses that rely on state funding or services.

But the longer the budget remains open to negotiations, the worse the forecasts for revenues become and the less that can be spent.

The budget proposal being negotiated would increase spending 4.4 percent by raising some narrow taxes and fees.

Some of the possible items in the 2008-09 spending plan include a doubling of the cigarette tax to $3 a pack, no pay raise for legislators or judges, and a requirement that Internet retailers such as Amazon.com collect state sales taxes on purchases made in New York.

An on-time budget had become a kind of brass ring for Paterson and lawmakers.

They hoped agreement on a budget in dire economic times with a nearly $5 billion deficit would help put a month of unprecedented scandal behind them.

"We have a conceptual agreement, as you know, and we're just trying to keep that intact," Bruno told reporters Monday, a day of frustration and uncertainty in Albany.

He referred to the general agreement announced Sunday with Paterson and Silver, but which failed to gain quick approval by the rank-and-file.

Despite promises to make budget talks more open and transparent, legislative leaders and the new governor kept details of the 2008-09 budget secret Monday.

In Albany, such secrecy has been common when leaders feared lobbyists could unravel the vote in the Senate and Assembly.

Lobbyists, meanwhile, continued their last-ditch pitches.

On Monday, in a driving freezing rain, hundreds of prison guards rallied loudly at the Capitol steps to stop a measure that would close a medium security prison and three minimum security prisons, threatening their jobs.

The proposal by former Gov. Spitzer would save taxpayers $33.5 million a year and avoid $30 million in capital costs while the prison population drops.

The New York State Correctional Officers and Police Benevolent Association union rallied and attracted several supportive Republican senators and assemblymen who blamed the closing proposal on Spitzer, who resigned this month when he was implicated in a prostitution scandal.

"Client No. 9!" some prison guards shouted when Republicans' mentioned Spitzer, to the Republicans' delight.

It was a reference to how the former Democratic governor was identified in the federal investigation leading to his resignation this month.

The union members would find out after the television news cameras left that the proposed budget deal had already spared their jobs.

Bruno issued a press release saying the proposal excludes the closing of Camp Pharsalia in Chenango County, Camp McGregor in Saratoga County, Camp Gabriels in Franklin County and Hudson Correctional Facility in Columbia County.

The three camps are about half full, while Hudson is near capacity.

In all, 584 full- and part-time workers watch 939 inmates.

Other lobbyists seeking more school aid or the higher cigarette tax also continued to work the Capitol's halls, seeking information through the secrecy of the budget process.

Others, like Philip Morris USA, offered reporters surrogates such as convenience store chains that employ hundreds of workers to warn a cigarette tax would cut business by 10 percent.

Bruno confirmed a cigarette tax increase was proposed, but how much was secret and possibly still part of negotiations Monday afternoon.

The original proposal doubled the cigarette tax to $3 per pack.

The lack of funds for judges' raises drew fresh criticism and a threat from the state's highest judge, Chief Judge Judith Kaye.

"We will, if necessary, bring a lawsuit to resolve this crisis."

"It pains me beyond any words I can think of," Kaye said.

The last raise for state judges was in 1999.

"I don't make nearly as much today as I made 25 years ago," Kaye said.

"I'm not looking for millions of dollars in compensation."

"I know where to go if I want to earn big bucks, but I don't."

"I want to be a judge, I want to be in public service."

Her $156,000 salary is about the same as a first-year attorney gets after passing the bar exam.

Legislative officials said the following fees and taxes were also part of the proposal as of Monday:

--Some closing of corporate tax loopholes, which could cost banks and, eventually, consumers.

--$245 million in additional funding to nursing homes and hospitals that Spitzer had cut.

--A capital program that had been expected to be about $1 billion.

--A requirement that Amazon.com and other Internet retailers collect sales taxes when items are purchased.

Currently, New Yorkers are on a kind of honor system that is hard to enforce.

The difficulty of the negotiations, held behind closed doors throughout the weekend, was clear by the frustration among rank-and-file lawmakers who thought they had shed the criticism that they couldn't pass a budget on time.

It's an image that has haunted incumbents in election years, like this one.

The Legislature and Gov. Eliot Spitzer missed an on-time budget by hours last year, after a budget was passed on time the previous two years.

Before that, the budget was late 20 straight years.

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AP Writer Valerie Bauman contributed to this reporter from Albany.

"NY commission investigates probes into Spitzer scandal"

By VALERIE BAUMAN, Associated Press

Last updated: 5:33 p.m., Tuesday, April 1, 2008

ALBANY -- The state Commission of Investigation will examine previous and current probes into whether two of former Gov. Eliot Spitzer's aides tried to sabotage a political opponent with the help of the state police, agency Chairman Alfred Lerner said Tuesday.

Meanwhile, Democratic Gov. David Paterson -- who replaced Spitzer after he was connected to a prostitution ring and resigned in disgrace -- has asked Attorney General Andrew Cuomo to investigate the state police to determine whether politics has inappropriately interfered with their work.

State statute gives the Commission of Investigation broad authority to look into potential corruption, fraud and mismanagement in government.

The commission won't evaluate whether the Democratic Spitzer administration acted illegally or unethically when state police were asked to collect Senate Republican Majority Leader Joseph Bruno's travel records.

Instead, it will review investigations by Albany County District Attorney P. David Soares, state Inspector General Kristine Hamann and the state Commission on Public Integrity.

The commission's investigation could eventually branch out to other agencies that probed the scandal, including the attorney general's office.

"We are concerned that the multiplicity of investigations has been somewhat dysfunctional," said Lerner, who was appointed by former Gov. George Pataki, a Republican.

"As a result of that, we thought it would be appropriate for us to determine whether these processes could be improved."

"It's no secret that many people in this state have lost confidence in these investigations."

Spitzer has denied he directed the gathering of any documents concerning Bruno's flights and said he didn't order the release of any documents to the news media.

Last week, Soares issued a report saying Spitzer may have lied when he told investigators he wasn't involved and that Spitzer could have been indicted had he not resigned.

Darren Dopp, Spitzer's former communications director and one of the aides implicated in the plot, told Soares that Spitzer was directly involved with the release of the records.

Those new revelations seem to contradict a report Soares issued in September, saying no one in the Spitzer administration acted improperly and he found no evidence of a plot to discredit Bruno.

Hamann was also criticized for not conducting a full investigation into the matter, relying instead on information from Cuomo's office and reaching the same conclusion as the attorney general: there was misconduct, but no violation of laws.

At the time, Hamann, who was appointed by Spitzer, said going further with the investigation would create a potential conflict of interest.

The Public Integrity Commission still hasn't completed its now nine-month old investigation.

Spitzer appointed the commission's chairman, executive director and a majority of its members.

Separately, Paterson officials would not be more specific Tuesday about why the governor sought the investigation by Cuomo into the state police, first reported Tuesday by the New York Post.

"There have been complaints and anecdotal evidence of political interference into the state police," Cuomo said.

"The governor wants a state police force that is beyond reproach and is totally free of any political interference, and that's why he asked me to undertake the investigation."

Cuomo said his office will talk to people in every troop and won't limit the investigation to state police employees.

He wouldn't say who else he might interview.

"We will fully cooperate with any inquiry the attorney general may conduct into these matters," said spokesman Lt. Glenn Miner.

The State Trooper's Police Benevolent Association released a statement Tuesday discounting the likelihood that state police have been influenced politically -- a complaint Cuomo said he has heard from state lawmakers.

The PBA also rejected the notion that troopers on Spitzer's security detail were involved in the prostitution scandal that ended his political career.

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On the Net: http://www.sic.state.ny.us.

"NY judges applaud lawyer planning to sue for their raises"

By MICHAEL VIRTANEN, Associated Press

Last updated: 5:13 p.m., Tuesday, April 1, 2008

ALBANY -- Shortly after a new state budget is adopted -- for the 10th straight year without pay raises for New York judges -- a top Manhattan litigator plans to sue, claiming lawmakers and the governor have failed their constitutional obligation to preserve an independent judiciary.

Bernard Nussbaum's clients are Chief Judge Judith Kaye, et al.

At a gathering Monday of about 100 judges and others at New York State Bar Association headquarters in Albany, he got an ovation.

Seven judges have already sued.

Nussbaum, a litigation partner at Wachtell Lipton Rosen & Katz and former counsel in the Clinton White House who will handle the judges' case for free, promised to bring Democratic Assembly Speaker Sheldon Silver, Republican Senate Majority Leader Joseph Bruno and Gov. David Paterson to the witness stand.

"Let them explain the hostage-taking," he said.

Raises for judges have been tied by lawmakers to politically sensitive raises for the legislators themselves, while other state employees have had at least cost-of-living bumps.

Kaye said the judges have been "jollied along" with promises since they started pushing in 2005.

Compensation for New York's 1,250 state-level judges now ranks 49th among states, which Kaye said is "shameful" considering the enormity and complexity of their case dockets.

Most come to the bench with about 18 years of experience.

"Our state and federal constitutions provide for the critical independence of the judiciary by making clear that judicial compensation must be adequate and specifically that it cannot be diminished during a judge's term of office," Kaye told the judges.

Those salaries haven't budged in nine-and-a-half years, while inflation rose 26 percent, she said.

Pay ranges from $108,800 for full-time city court judges to Kaye's $156,000, court spokesman Gary Spencer said.

They propose raising the benchmark salary for state Supreme Court justices from $136,700 to the current level of federal trial judges at $169,300, with others rising proportionately.

That would cost about $39 million in the $124 billion proposed 2008 state budget.

It would cost roughly $145 million including retroactive pay raises to 2005, which Kaye proposed.

She held out some hope Monday lawmakers would still add funding, but that didn't immediately happen.

"So I'm not going to sue today and I'm not going to sue tomorrow, but I'm going to sue real soon."

"Everything is all ready to go."

"The complaint is ready to go," Kaye said, probably in April, adding it can go straight to trial without discovery, interrogatories or depositions.

"Nobody is going to be immune when the judiciary sues the executive and the legislature," she said.

Dan Weiller, a spokesman for Silver, said Tuesday budget negotiations were continuing, but declined further comment.

Nussbaum plans to sue in state Supreme Court in Manhattan.

In 1935, state judges had pay parity with senior partners in New York City law firms, and now they don't have pay parity with freshman associates there, he said.

Two other suits were filed by four judges in Manhattan and three in Albany earlier in state Supreme Court.

Both survived initial state challenges to dismiss claims the governor and lawmakers breached separation of powers doctrine by tying judicial raises to other issues.

Claims that their pay was illegally cut were dismissed.

Appeals from both sides are pending before courts in the Appellate Division.

Nussbaum said Tuesday he's simply waiting for word from Judge Kaye to file.

Their new argument is the judges have been discriminated against, treated unlike all other state employees.

Even the legislators get per diem payments and have outside incomes to help them keep up with the cost of living, and judges don't, he said.

"NY state spending grows in secret for powerful lobbyists"

By MICHAEL GORMLEY, Associated Press

Last updated: 4:42 p.m., Tuesday, April 1, 2008

ALBANY -- Lawmakers and Gov. David Paterson are deciding how to spend $124 billion behind closed doors this week in what good-government advocates said is a level of secrecy unmatched in years.

Lawmakers this election year are voting on bills inches thick, still warm from the printer and passed mostly unread.

Privately, legislative leaders are meeting with powerful lobbyists to restore some spending Paterson sought to curb.

And chunks of the budget may be unaffordable in a few months as revenue growth continues to plummet.

But New Yorkers who pay the tab won't know about most of the decisions until they are final.

Such secrecy is not uncommon in Albany.

It's used to keep powerful lobbyists, who double as major campaign contributors, from unraveling deals and heading off votes promised in the Senate and Assembly.

"Open government is an oxymoron in Albany," said Blair Horner of the New York Public Interest Research Group.

But he said it's hard to blame Paterson.

The Democratic governor has been on the job just two weeks since Gov. Eliot Spitzer resigned after being implicated in a prostitution scandal.

Nonetheless, he tried to reduce spending by $800 million, only to see the Legislature restore about $500 million of that in private negotiations.

"It's hard for the public to have informed opinions on legislative deliberations if virtually all of the important decisions are made behind closed doors," Horner said.

"In a democracy, process matters."

"Oh, my," exclaimed Barbara Bartoletti of the League of Women Voters when asked about the secrecy of this week's budget process.

"I haven't seen this in probably over 10 or 12 years or so."

For example, health care lobbyists issued a press release Monday night praising the health budget bill after it was passed.

But the first public briefing on the bill wasn't until Tuesday afternoon.

And the Senate-Assembly subcommittee on health whispered among themselves away from microphones for 15 minutes before announcing Monday there was too much disagreement to meet publicly.

Bartoletti said the talks and decisions are staying behind closed doors, away from the public and reporters, for a reason: Lawmakers are making promises to powerful special interests that quickly declining revenues will soon make unaffordable.

"It's all about the election year," Bartoletti said.

"They decided these are bad economic times and they are going to make their decisions ... and it is likely to fall apart in December."

This week, as the Legislature took control of the final budget process, elements of the 2008-09 spending plan that have become public include keeping some medium- and minimum-security prisons open at a cost of $30 million a year, restoring $273 million in health care funding and a record increase of $1.8 billion in school aid, all to the delight of the prison guard union, the hospital lobby and the powerful teachers' union and allied lobbyists.

Meanwhile, a proposed temporary tax on New Yorkers making $1 million a year was dropped despite the desperate need for revenue.

It also appeared on Tuesday that one proposal was determined unaffordable: It would have increased the $291 basic monthly welfare grant by $29 for a family of three.

"We're trying to get a budget done under the most difficult circumstances that I've ever experienced here as a leader or as a senator," Senate leader Joseph Bruno said.

Spokesmen for the Senate's Republican majority, the Assembly Democratic majority, and Paterson's budget office didn't respond to requests for comment on the process, which leaders promised last Thursday would be more open.

That was when Bruno and Assembly Speaker Sheldon Silver emerged from a closed-door meeting with Paterson to announce the "framework" of a $124 billion budget that increased spending about 4.5 percent -- half of some recent years' increases.

But Tuesday's deadline for adoption came and went and furtive negotiations among lawmakers continued.

"Certainly an amount of private negotiations is necessary," said E.J. McMahon of the Empire Center for New York State Policy, part of the fiscally conservative Manhattan Institute.

"But I don't think we've seen this level of secrecy at this point in the process for quite a few years."

"They live in their own world of 8 to 10 percent spending increases," McMahon said.

"So when they ratchet it down to 5 percent, they see it as a big success."

"They are on the road to failure again."

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Associated Press Writer Valerie Bauman contributed to this report from Albany.

"Budget: NYers to get discount drug card, reform of detox system"

By MICHAEL GORMLEY, Associated Press

Last updated: 6:52 p.m., Tuesday, April 1, 2008

ALBANY -- Hundreds of thousands of older New Yorkers will be eligible for a discount pharmacy card, a program to fight alcoholism will be revamped, and the cigarette tax will rise as part of the state budget being completed this week.

The new pharmacy cards will provide discounts of 30 percent off brand-name drugs and 60 percent off generic drugs.

New Yorkers who meet income qualifications and who are 50 to 64 years old, or without insurance or disabled could qualify.

The program will achieve the savings by leveraging mass buying power to get rebates and discounts for the eligible group estimated at 400,000 people.

New Yorkers whose moderate incomes qualify for the EPIC pharmaceutical program for the elderly will qualify for the new program, expected to begin this year.

"Today we took an important step forward in transforming our health care system to lower costs, increase access and invest in primary and preventive care," Gov. David Paterson said.

"I thank the Legislature for partnering with me to move the budget process forward."

The Paterson administration contests a claim of victory by hospitals and other powerful health care interests.

The hospital lobbyists say they were able to temporarily derail a multiyear effort to drive more government funding to outpatient care instead of institutions as a way to save money and improve care.

"This budget begins in earnest that essential shift, and we look forward to future policy discussions concerning how health care providers and state leaders can work together to drive the reforms necessary to effectively and efficiently provide the very best patient and resident care," said Daniel Sisto of the Healthcare Association of New York State, which represents hospitals.

Paterson administration officials say the first year of their planned transition to save Medicaid dollars by redirecting more patients away from hospital care remains intact.

The next three years of the plan, however, will be subject to review by an advisory group that will include officials from hospitals critical of the plan.

The future changes will also have to go through the Legislature, which has worked closely with the power hospital lobbyists.

"This legislation restores much-needed funding for hospitals, nursing homes, and home care and at the same time makes important reforms to make our health care system more cost-efficient and effective," said Senate Republican leader Joseph Bruno.

The health care budget also includes:

--$25 million to expand the State Children's Health Insurance Program to insure children in moderate income families.

This will help provide preventive and primary medical care to more of the 400,000 uninsured children statewide.

--Beefing up Medicaid fraud investigations to recover misappropriated funds.

--$15.6 million worth of grants and student loan forgiveness to place more physicians in needy rural and urban areas under the Doctors Across New York program.

--Shifting $170 million from hospital inpatient care to less expensive outpatient programs.

--Revenues from an increase in the tobacco tax, although the size of the increase hasn't yet been released.

The original proposal calls for a doubling of the state cigarette tax to $3 per pack, which would raise $200 million to $500 million.

--Revamping the detoxification program to help alcoholics avoid a cycle of failing in one program after another, sometimes spending as much as 150 days a year in the short-term programs.

The reforms will include more outpatient treatment, better referrals to follow-up programs, and more "observational beds" in treatment facilities that could determine what outpatient care is best.

In all, the Legislature's health care spending will restore $273 million of the reduced growth in spending that Paterson sought to deal with a $5 billion deficit and declining revenues.

That's about 75 percent of Paterson's plan.

"New investigations launched - Complexity of probes grows as State Police, watchdogs are targeted"

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

First published: Wednesday, April 2, 2008

ALBANY -- The Capitol was hit Tuesday with two new investigations of the State Police and several public integrity watchdogs.

Attorney General Andrew Cuomo, at the request of Gov. David Paterson, will investigate allegations that members of the State Police have been involved in spying on elected officials in what the governor termed "political interference."

Paterson gave Cuomo subpoena powers in probing the approximately 5,000-member force.

"Recent reported events raise questions of possible political interference with the State Police and I am determined to not only ascertain the veracity of such reports but to do everything within my power to protect and strengthen the reputation of the State Police," Paterson wrote in requesting that Cuomo conduct the probe.

"Combining politics and police work is a toxic brew," Cuomo said.

"Any questions about political interference within the State Police are a serious concern."

"Our investigation will determine whether or not this has occurred within the State Police, and if so to what extent."

At the same time, the State Commission of Investigation is probing three organizations that investigated the travel records scandal that erupted last summer when Eliot Spitzer was governor.

Targets include the state inspector general, the Commission on Public Integrity, and Albany County District Attorney David Soares' office.

"The commission is investigating the investigations."

"We are seeking to determine the efficacy of the various investigatory efforts," said SIC Chairman Alfred Lerner.

"We are concerned that the multiplicity of investigations has been somewhat dysfunctional."

In a prepared statement, Lt. Glenn Miner, a State Police spokesman, said, "We will fully cooperate with any inquiry Attorney General Andrew Cuomo may conduct into these matters."

The union representing State Police officers welcomed the inquiry, noting it has been calling for a probe of the force's top brass since 2006.

Daniel De Federicis, president of the Police Benevolent Association of New York State Troopers, said the State Police rank and file have long complained about what he termed the leadership's "entrenched culture."

They detailed concerns in a 2006 letter that contended State Police leadership botched a five-month manhunt for fugitive cop-killer Bucky Phillips.

"The PBA has absolutely no confidence in the State Police's ability to investigate itself," said the letter, which said leadership was rife with "internal turf wars."

State Police leadership got another black eye last summer when Cuomo, in his July probe of the travel records scandal, found it had gone along with requests to re-create Senate Majority Leader Joseph L. Bruno's travel records for Spitzer aides.

Spitzer last month resigned in a scandal involving a prostitution ring.

Soon after, acting State Police Superintendent Preston Felton, who was named in Cuomo's July report, also resigned.

In addition to ongoing concerns about the State Police's role in the travel records affair, Paterson said his office has received numerous complaints from political leaders that State Police improperly delved into their backgrounds or interfered in political campaigns.

By requesting that Cuomo investigate, Paterson appears to be trying to deal quickly with the complaints, similar to the way he admitted to extramarital affairs right after taking office to dispel rumors.

"The longer he stays governor and doesn't address it, the longer it's his problem," said Blair Horner, legislative director at NYPIRG.

The SIC, meanwhile, said it is looking into at least three investigatory efforts in the travel records scandal, and whether they were effective.

Each of the agencies involved has faced some degree of criticism.

Soares, for example, issued a report Friday that found Spitzer may have lied when he said he didn't know about the plan to release Bruno's travel records to the press, despite Soares' September report that found no wrongdoing by the ex-governor.

Bruno faults Soares for not prosecuting Spitzer and others involved in the case.

Sen. George Winner, R-Elmira, who heads the Senate Investigations Committee, said of Soares, "this is best he can do?"

Additionally, Inspector General Kristine Hamann drew fire last summer from Winner's committee for what it termed her failure to aggressively investigate Spitzer, whose office oversees the IG.

And the Commission on Public Integrity was privately blasted by Soares who complained that its executive director, Herbert Teitelbaum, had tried to get the district attorney to hand over testimony from former Spitzer spokesman Darren Dopp, a key witness and player in the travel records issue.

The commission is still investigating the travel records scandal.

Soares has completed his probe.

Hamann dropped hers because of a perceived conflict of interest -- she reported to a top aide involved in the scandal, Richard Baum.

The six-member SIC was created in 1952 to help root out organized crime's influence in government.

It is controlled by Republican appointees, while the Commission on Public Integrity is predominantly Democratic.

Horner said he hopes the efforts would eventually improve the way in which decision-makers are policed in New York.

"The fact that people are starting to look at this, we view as a good thing," he said.

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

Gannett News Service contributed to this report.

PLETHORA OF PROBES

Albany County District Attorney David Soares

Investigated Spitzer administration/travel records scandal

Attorney General Andrew Cuomo

Investigated Spitzer administration/travel records scandal

Investigating state police political intelligence gathering allegations

Commission on Public Integrity

Investigating Spitzer administration/travel records scandal

FBI

Investigating Senate Majority Leader Joseph Bruno/private business interests

Inspector General

Investigated Spitzer administration/travel records scandal (passed off to Cuomo)

Senate Committee on Investigations and Government Operations

Investigating Spitzer administration/travel records scandal

State Investigation Commission

Investigating investigations by Soares, Commission on Public Integrity, and Inspector General

"Top Spitzer aides leave jobs after governor's sudden fall"

By MICHAEL GORMLEY, Associated Press

Last updated: 1:46 p.m., Wednesday, April 2, 2008

ALBANY -- Several top officials in the Spitzer administration, some of whom were connected to political scandals that crippled the governor's agenda, are calling it quits, an official familiar with the internal moves said Wednesday.

William Howard, Spitzer's former public security adviser who was accused of helping orchestrate a plot to discredit Senate Republican leader Joseph Bruno, has announced his resignation.

The other officials who are leaving the executive chamber but were not criticized in investigative reports include:

Lloyd Constantine, senior adviser;

Rich Baum, the high-level adviser job titled secretary to the governor;

Marlene Turner, Spitzer's chief of staff;

Peter Pope, policy adviser;

Marty Mack, director of intergovernmental affairs;

counsel David Nocenti; and

Christine Anderson, Spitzer's former press secretary who was promoted to communications director when Darren Dopp was suspended and then resigned.

The official spoke to The Associated Press on condition of anonymity because the personnel changes have not been formally announced.

Spitzer had blamed Howard and former Communications Director Dopp for the scandal that involved using the state police to gather travel records on Bruno.

Spitzer suspended Dopp, who eventually left the state payroll to work for a powerful lobbyist.

Spitzer demoted Howard to the State Emergency Management Office, which was one of the areas he had overseen along with state police.

The staff departures come soon after Spitzer resigned last month when reports identified him as a client of a high priced prostitution ring.

Spitzer, elected in a landslide in 2006, was in office barely 14 months.

An investigative report by Albany County District Attorney P. David Soares released Friday named Nocenti, Spitzer's top lawyer, as being involved in discussions of the Bruno plot.

Bruno had accused Dopp and Howard of misusing the state police to compile records of the state's most powerful Republican's use of state aircraft on days he mixed meetings with lobbyists with attending Republican fundraisers.

Soares' report, citing Dopp's testimony, said Spitzer had a direct role in compiling and releasing the travel records, in contrast to Spitzer's oft-repeated public claims that he had no knowledge of the plot.

Spitzer's lieutenant governor, David Paterson, succeeded Spitzer on March 17.

Howard had also worked in the Republican administration of Gov. George Pataki.

His departure was first reported Wednesday by the New York Daily News.

IN NEW YORK STATE, THE "LAW" IS A GREAT BIG JOKE ....

"Investigator says NYRA violated law by hiring firm"

By MICHAEL GORMLEY, Associated Press

Last updated: 12:12 p.m., Wednesday, April 2, 2008

ALBANY -- The New York Racing Association violated state law when it hired the law firm that had served as a court-appointed monitor to help NYRA avoid a federal indictment, according to the State Investigations Commission.

The powerful commission said NYRA illegally hired the Getnick & Getnick law firm in Manhattan to a $125,000-a-month contract in 2007 without allowing competitors to bid.

The five-year contract was to help NYRA uphold business integrity standards.

"We appreciate the SIC's review of this matter," said NYRA spokesman John Lee.

He said the Getnick & Getnick contract will continue.

He also said NYRA's new franchise provides for an oversight board that would consider contracts such as this one and guide NYRA to better competitive bidding practices.

There was no immediate comment from Getnick & Getnick.

The SIC didn't call for sanctions against NYRA or the law firm.

NYRA, despite being the subject of numerous state and federal investigations into its prior management, will continue to operate the Aqueduct, Belmont and Saratoga thoroughbred tracks under a new state racing franchise.

NYRA beat out several competitors to a large degree because it threatened to sue if it lost the franchise it first won in 1955.

NYRA contended it owned the tracks.

Under the new franchise, NYRA acknowledges that the state owns the tracks.

The SIC found that other companies were qualified to handle the work given to the Getnick firm, but were shut out when NYRA awarded the contract without seeking competitive bids.

"The irony here is that had NYRA used the bidding process and concluded that Getnick & Getnick was the most qualified firm, NYRA would have had a reasonable basis for hiring the firm," Commission Chairman Alfred D. Lerner said.

"By violating state law and not having a competitive bidding process, NYRA needlessly invited doubt about the contract award's legitimacy," he said.

The contract violated state breeders' law, but state regulators weren't authorized to stop it, Lerner said.

The SIC recommends a change in the law or a change in the authority of the state Racing and Wagering Board or racing oversight board.

Under law, NYRA must submit contracts worth $250,000 or more to competitive bids to ensure the best price.

"Study touts impact of chip fab - State investment similar to one offered to AMD would be beneficial, analysis shows"

By LARRY RULISON, Business writer, Albany, New York Times Union

First published: Wednesday, April 2, 2008

COLONIE -- An Arizona company revealed a study Tuesday that shows New York's billion-dollar incentive package for Advanced Micro Devices Inc. could pay hefty dividends in new jobs, economic growth and tax revenue.

The company, Semico Research Corp., did an economic analysis of the impact that a $650 million investment by the state in a computer chip factory would have on the upstate economy.

The analysis found that the $650 million, paid out over six years, would help create 5,514 jobs, for a cost of about $117,800 per job.

When new tax revenue and goods and services created both directly and indirectly are measured, the return on the state's investment would be a whopping 466 percent after five years, the study claimed.

In the first year alone, the impact on the economy would be $377 million.

That's more than the $200 million the state would pay out in the first year.

"When you attract a manufacturing facility to your region, you bring a lot of other businesses, and you bring enterprises that spawn other businesses so it's much more than a semiconductor fab," said Sherry Gerber, a senior vice president with Semico.

AMD is planning to build a $3.2 billion computer chip factory, or chip fab, at Luther Forest Technology Campus in Saratoga County.

But Semico officials said the study did not use AMD's project as an example, although it's similar.

Instead, a generic fab with 1,160 workers was used.

AMD is planning to employ 1,465 people at Luther Forest.

National Grid, upstate New York's dominant electric and natural gas utility, paid for the study, along with the Center for Economic Growth, an economic development group based in Albany, and Mohawk Valley EDGE, a similar group in Oneida County.

National Grid would benefit greatly from the construction of a chip fab because the buildings use a tremendous amount of electricity and natural gas.

EDGE is marketing its own site in Marcy, outside Utica, for a chip fab.

AMD says the Marcy site, an undeveloped property known as the Marcy NanoCenter, came in a close second to Luther Forest for its new fab.

The Semico study was presented Tuesday afternoon at The Desmond Hotel & Conference Center in Colonie.

Semico found that construction of the fab over the first year and a half would create 1,500 laborer jobs.

Supporting businesses, such as warehousing, delivery, chemical disposal and security, would spring up to employ 435 people.

The need for more schoolteachers, police officers, restaurant workers and hotel staff would create 2,419 more jobs.

F. Michael Tucker, chief executive of CEG, said the study was done to get "verification and validation" that further investment by the state in the semiconductor industry would pay off in upstate New York.

The study also rebuts media reports that the state's $1.2 billion incentive package for AMD equals $1 million per job created.

AMD initially said the fab would employ 1,200 people, but the figure was later revised.

Semico said the average fab wafer operator -- an entry-level job -- would earn $40,000 a year, with engineers getting $75,000 and managers getting $110,000.

While 70 percent of the wafer operators would be hired from the local work force, up to 80 percent of the engineers and 70 percent of the managers initially hired would have to be recruited from outside the region, the study found.

Semico officials also said a chip fab in upstate New York would have other benefits, such as lifting real estate prices 15 percent over two to three years.

"It's a boost to the local real estate market," said Semico President Jim Feldhan.

"It's certainly good for the local homeowner."

Larry Rulison can be reached at 454-5504 or by e-mail at lrulison@timesunion.com.

Future jobs

Semico Research Corp. estimates $650 million in state aid for an upstate computer chip factory will help create 5,514 jobs.

Here is the breakdown:

Construction staff: 1,500

Fab workers: 1,160

Outside fab support: 435

Support industry and local business jobs: 2,419

Cost per job: About $117,800

Source: Semico Research Corp.

"Port aims for ethanol project - Alternative energy plant is commission's pick for site; plan faces hurdles"

By ERIC ANDERSON, Deputy business editor, Albany, New York Times Union

First published: Tuesday, April 1, 2008

ALBANY -- An ethanol production plant costing up to $350 million and capable of producing 165 million gallons of the corn-based fuel annually is planned for 18 mostly vacant acres at the Port of Albany.

The project was selected from among four submitted to the Albany Port District Commission, which has been seeking proposals for the land that would also make use of port facilities.

The developer, Albany Renewable Energy LLC, would bring in 60 million bushels of corn annually -- about what is produced in all of New York state -- from regional and Midwest farmers.

At the port, it would be turned into the ethanol and 500,000 tons of distillers grain, a byproduct that could then be used for cattle feed.

The plant also might produce cellulosic ethanol from such plant matter as switchgrass and wood chips.

The plant faces two hurdles.

Financing could be a challenge, given the tightening of credit and the rising cost of corn, said Ed Stahl, president and founding partner of Huntersville, N.C.-based BioPro Resources, which is the project's developer.

But he said ethanol more closely tracks the price of oil, which has also climbed sharply.

And Stahl said obtaining the necessary permits could take six to 12 months.

The project could be built in phases, he said, and the first phase could produce as little as 55 million gallons annually and cost $120 million.

Expanding to the full 165 million gallons would take somewhat more land than the 18 acres the port is leasing, but Port District Commission Chairman Robert Cross said adjacent land has been identified for expansion.

The land would be leased for at least $20,000 per acre per year, with a minimum term of 20 years, yielding at least $7.2 million in revenue, Cross said.

The agreement hasn't been finalized.

The project is in an Empire Zone, which provides tax breaks and other incentives.

Monday's decision by the commission allows the developer to line up financing and permits.

Construction would create up to 400 jobs, Cross said, while the plant would employ 50 to 60 full-time workers making an average of $60,000 annually.

The plant's ethanol output would fill up to 350 barges a year.

The port also expects to collect dockage and wharfage fees, while loading and unloading would create demand for additional port workers, Cross said.

And the plant could consume as much as 900 million gallons of water annually, producing additional revenue for the city of Albany, said Cross, who is also the city's water commissioner.

The proposal selected Monday was one of two for ethanol facilities.

Albany Biofuels Inc. submitted a competing proposal for a plant that would have produced 50 million gallons of corn-based ethanol and another 5 million gallons of cellulosic ethanol, using plant material.

"I wish those guys a lot of luck."

"We came late to the party," said Christian King, a partner in the Albany Biofuels effort.

That project would have cost an estimated $80 million to $120 million.

King, who also owns Colonie-based KNC Holdings, which distributes ethanol-blended fuels and operates service stations, said Albany Biofuels would seek to build its project elsewhere in the Albany area.

Stahl, the developer of the successful proposal, said the presence of a deep water port and rail lines owned by CSX Transportation and CP Rail proved attractive.

The ethanol could be loaded onto barges for shipment to East Coast fuel terminals, where it would be blended with gasoline.

Ethanol produced inland must be loaded onto rail cars for shipment to terminals, or transferred from rail cars to barges, something that's now done at the port.

"The ability to avoid some of the transportation expense, (with) the proximity to your end user" was an another attraction Albany offered, Stahl said.

Anderson can be reached at 454-5323 or by e-mail at eanderson@timesunion.com.

Corn on the Hudson

Here's a look at the proposed Port of Albany ethanol production plant:

COST: Up to $350 million

OUTPUT: 165 million gallons of ethanol a year, when fully built

EMPLOYMENT: 50 to 60 full-time workers

CORN CONSUMPTION: 60 million bushels per year

WATER CONSUMPTION: Up to 900 million gallons per year

BYPRODUCT: 500,000 tons of distillers grain for cattle feed annually

Source: Albany Port District Commission

"Public funds fuel for ethanol plant - Empire Zone aid, tax breaks, other incentives likely to boost facility"

By ERIC ANDERSON, Deputy business editor, Albany, New York Times Union

First published: Wednesday, April 2, 2008

COLONIE -- The ethanol production plant to be built by Albany Renewable Energy LLC at the Port of Albany likely will receive public support from a number of sources.

The project, which could cost up to $350 million when fully built, would be eligible for tax credits of 8 percent to 10 percent on building and equipment costs because of its location in an Empire Zone.

It also could receive tax credits for each employee it hires, said Megan Daly, deputy planning commissioner for the city of Albany and a member of the Albany Port District Commission.

The commission on Monday selected the project for development on 18 acres available for lease at the port.

The developer, BioPro Resources of Huntersville, N.C., which will build the plant for Albany Renewable of Elkhorn, Neb., also could get a break on sales tax when purchasing construction materials for the plant.

And the plant could receive a break on utility costs.

It would need 8 to 12 megawatts of electric capacity to operate at a production rate of 110 million gallons of ethanol annually.

Other incentives also might be available from state agencies.

The New York State Energy Research and Development Authority has funding for innovative biomass projects, said spokeswoman Colleen Ryan.

And Empire State Development Corp. would "welcome the opportunity to work with this company to bring the project to fruition," said spokeswoman Pat Pitts.

Ed Stahl, president of BioPro, said Tuesday afternoon that he didn't yet know how much of the $350 million investment might come from grants and other public assistance.

"We will certainly be exploring every opportunity to enhance the long-term viability, including state incentives, absolutely," he said.

Meanwhile, the group that proposed a competing ethanol project for the site said it will now focus on developing the nation's first commercial-scale cellulosic ethanol plant elsewhere in the Capital Region.

Christian King, a partner in Albany Biofuels, and owner of Colonie-based KNC Holdings, which distributes ethanol-blended fuels and operates service stations, said his group is looking at three sites for a plant that would make ethanol from wood chips, switchgrass or other plant material.

Two of the sites are on the Albany side of the Hudson River; the other is on the Rensselaer side.

The plant would be capable of producing 5 million gallons of cellulosic ethanol a year, and would use technology that's now being successfully used in a 1.5 million-gallon plant in Wyoming, he said.

Albany Biofuels wants to have a site chosen by May 1, with necessary permits in hand by Sept. 1.

"The quickest, best-case scenario" would have the plant in operation by August 2009, King said.

The partners would need state and federal assistance to cover about half the estimated $20 million to $25 million cost of the project, King said.

Stahl, the developer for Albany Renewables, estimates it will take six to 12 months to secure necessary permits, and 12 to 18 months for plant construction, putting the earliest possible completion date for that plant at September 2009.

Eric Anderson can be reached at 454-5323 or by e-mail at eanderson@timesunion.com.

"Corn hits $6 a bushel on tight supplies"

By STEVENSON JACOBS, Associated Press

Last updated: 7:02 p.m., Thursday, April 3, 2008

NEW YORK -- Corn prices jumped to a record $6 a bushel Thursday, driven up by an expected supply shortfall that will only add to Americans' growing grocery bill and further squeeze struggling ethanol producers.

Corn prices have shot up nearly 30 percent this year amid dwindling stockpiles and surging demand for the grain used to feed livestock and make alternative fuels including ethanol.

Prices are poised to go even higher after the U.S. government this week predicted that American farmers -- the world's biggest corn producers -- will plant sharply less of the crop in 2008 compared to last year.

"It's a demand-driven market and we may not be planting enough acres to supply demand, so that adds to the bullishness of corn," said Elaine Kub, a grains analyst with DTN in Omaha, Neb.

Corn for the most actively traded May contract rose 4.25 cents to settle at $6 a bushel on the Chicago Board of Trade, after earlier rising to $6.025 a bushel -- a new all-time high.

Worldwide demand for corn to feed livestock and to make biofuel is putting enormous pressure on global supply.

And with the U.S. expected to plant less corn, the supply shortage will only worsen.

The U.S. Department of Agriculture projected that farmers will plant 86 million acres of corn in 2008, an 8 percent drop from last year.

Moreover, cold, wet weather in parts of the U.S. corn belt may force farmers to delay spring planting, potentially sending prices even higher.

While corn growers are reaping record profits, U.S. consumers can expect even higher grocery bills -- especially for meat and pork -- as livestock producers are forced to pass on higher animal feed costs and thin their herd size.

"Higher corn prices is going to affect meat prices."

"If you're feeding with $6 corn, you'll definitely have some (cost) pressure," Kub said.

In addition, corn and corn syrup are used in an array of products, meaning the price of everything from candy to soft drinks will eventually go up, analysts say.

It's the latest dose of bad news for U.S. consumers, who are already struggling with higher food costs from record increases in the price of wheat, soybeans and other agriculture products.

Another loser in higher corn costs is ethanol producers, who are struggling to squeeze out gains as corn's record-setting run outpaces the price of ethanol, currently at around $2.50 a gallon.

"For years, corn was cheap and fermentation processes for ethanol production came to completely dominate the biofuel industry in North America," Michael Jackson, president and chairman of Vancouver-based ethanol maker Syntec Biofuel, said this week.

"Now, with corn prices well over $5 a bushel, corn ethanol economics have gone out the window."

The nation's 147 ethanol plants now have the capacity to produce 8.5 billion gallons of fuel a year, according to the Renewable Fuels Association.

Corn is the basic feedstock for most of the plants and about 20 percent of last year's 13 billion bushel corn crop was consumed by ethanol production.

That percentage is expected to increase to 30 percent for the next crop year, which ends Aug. 31, 2009, according to Terry Francl, a senior economist for the American Farm Bureau Federation.

There are still plans to build or expand another 61 plants, which will add about 5.1 billion gallons of capacity.

However, as corn prices have climbed over the past year or so, construction of several plants has been halted or delayed, shaving about 500 million gallons worth of capacity off the original figure, according to Broadpoint Capital analyst Ron Oster.

At least one facility, the Alchem plant in Grafton, N.D., shut down late last year because of high prices.

A new plant hasn't broken ground over the past couple of quarters, Oster said, and while producers can have positive gross margins with ethanol at $2.50 a gallon and corn at $6 a bushel, that doesn't mean companies are profitable.

"Bottom line earnings are near break-even or modestly below break-even," he said.

Looking ahead, only the strongest ethanol producers will survive in an era of ever-rising corn prices, said Soleil Securities analyst Ian Horowitz.

"There are going to be some particular companies that definitely have the balance sheet and efficiencies that will be able to eke out a positive return in this kind of environment," Horowitz said.

"And then there will be others that will suffer at the hands of $6 corn."

------

Associated Press Business Writer Lauren LaCapra contributed to this report.

"Spitzer's embattled NY inspector general resigns"

By MICHAEL GORMLEY, Associated Press

Last updated: 5:32 p.m., Thursday, April 3, 2008

ALBANY -- State Inspector General Kristine Hamann, who was appointed by former Gov. Eliot Spitzer and was criticized for her two investigations into his administration, has resigned.

Her spokesman, Stephen DelGiacco, said Hamann submitted her resignation Thursday and it will be effective April 10.

Her one-page letter said she was honored to serve and proud of her accomplishments in just over a year in office.

But Hamann's biggest investigations drew severe criticism by the Senate's Republican majority that was in open conflict with Democratic Gov. Spitzer and his administration.

Republicans faulted her for her investigation of Spitzer when his top aides were accused of plotting to discredit Senate Republican leader Joseph Bruno.

Her July 2007 report on the scandal involving the use of state police to compile travel records on Bruno was a one-page letter that said she concurred with Attorney General Andrew Cuomo, who found no laws were broken but that aides had acted inappropriately.

She said she determined in her investigation that she had a conflict of interest because her boss, then-Secretary to the Governor Rich Baum, was one of the Spitzer officials who had internal conversations about the case.

Hamann reported to Baum, who recently left the executive chamber.

In February, Hamann also faced scrutiny for her 10-month investigation of a former Spitzer energy policy adviser who was accused of threatening the job of a Republican-appointee on the independent Public Service Commission.

Her investigation found no conclusive proof that Spitzer energy adviser Steven Mitnick threatened the job of state Public Service Commission member Cheryl Buley or tried to force her to vote for Spitzer policies.

Buley had said Mitnick threatened her job last year to make room for a Spitzer appointment.

Bruno had no comment, said spokesman Mark Hansen.

Bruno and Senate Republicans have questioned Hamann's investigations and whether she was independent from the governor.

The Inspector General's office is responsible for detecting and investigating allegations of corruption, fraud, criminal activity, conflicts of interest and abuse involving state agencies, departments, commissions and authorities headed by appointees of the governor.

Not all of her investigations were contentious.

In December, she found New York City Police Department's crime lab cut corners analyzing evidence and submitted results in drug cases without having done the required tests in 2002.

In September she found that while thousands of people waited years for affordable apartments in New York City, the agency that regulates low-cost housing allowed ineligible renters to move into the projects.

And on Wednesday, she reported that a former state employee certified more than 200 unqualified crane operators even though they failed the practical exam.

Gov. David Paterson, who succeeded Spitzer last week after he was implicated in a prostitution investigation, is expected to replace Hamann in the $145,000-a-year job.

The governor accepted the resignation and thanked Hamann for her service, said Errol Cockfield, the governor's spokesman.

Dennis E. Martin, special deputy to the inspector general, was named acting inspector general.

Hamann spent 30 years in the Manhattan district attorney's office.

She served as executive assistant district attorney to Robert Morgenthau since 1998, leading the development of procedures for DNA testing and the creation of a child advocacy center.

Before that, she headed the office's criminal court trial division and headed training efforts for three years and worked briefly in the district attorney's office when Spitzer worked there.

"Lawmakers set Friday goal for finishing state budget"

By VALERIE BAUMAN, Associated Press

Last updated: 6:52 p.m., Thursday, April 3, 2008

ALBANY -- The state budget will include a $29.6 million increase in aid for cities to help New Yorkers struggling with local property taxes, Senate Majority Leader Joseph Bruno said Thursday.

"Despite the fact that we faced a budget gap of over $4.6 billion, providing additional aid to cities was a priority in this budget," Bruno said.

The state Senate is also expected to reject a "car tax" proposed in the executive budget that would have permanently raised the motor vehicle law enforcement fee from $5 to $20.

Instead, they're proposing extending the current fee of $5 for one year only.

The Senate also is expected to reject a nearly $5 million plan to expand broadband Internet access in New York.

Senate Republicans say they support making broadband available to more people, but the additional money isn't urgently needed because $5 million that previously had been allotted for that purpose was just released last month.

After two weeks of negotiations, lawmakers are still trying to agree on the $124 billion state budget plan, which was due Tuesday.

The Senate and Assembly hoped to complete the budget by late Friday, but they haven't agreed on a number or difficult areas including education.

The Senate passed a bill Thursday that would require judges to sentence repeat violent felons to life in prison without the possibility of parole after three offenses.

The Assembly did not immediately return calls about budget measures passed by the Senate.

"Residents fret over Colonie red ink"

By JORDAN CARLEO-EVANGELIST, Staff writer, Albany, new York Times Union

Last updated: 11:51 p.m., Thursday, April 3, 2008

COLONIE - The town faces a sixth-month deadline to start reforming its finances or it could default on millions in financial obligations, officials told a packed meeting of residents Thursday night.

The spillover crowd of more than 150 heard Supervisor Paula Mahan and town fiscal advisor Robert Sikora lay out a 10-year plan they said can help the town avoid that disaster, which would almost certainly herald the arrival of a state control board.

A key component is deficit financing state-sanctioned borrowing to reduce the deficit and improve the town's credit rating so it can extend some $16 million in short-term obligations in October, or convert them to longer-term bonds.

"The nightmare scenario is we come into Oct. 3, we can't roll over that $16 million, then what are we going to do?"

"You don't have too many options," said Sikora, president of Munistat Services, a municipal advisory firm.

As soon as next week, the Democrat-controlled Town Board could ask the state Legislature for permission to pursue deficit financing, at which point the state Comptroller's office would decide how much the town could borrow.

After that, the town would have to submit quarterly reports and its annual budgets to the state for approval.

Thursday was the public's first chance to question town officials at length about Colonie's $18 million deficit as well as their plan to climb out of it.

The meeting lacked the rancor that has marred previous discussions of Colonie's fiscal decline.

Jack Tabner, a longtime resident and attorney, questioned the wisdom of incurring more interest costs now with the deficit financing when some of the money, such as that needed to close the landfill, won't come due for years.

Michael DeMartino, an attorney who ran as a Republican for Town Board, likened the measure to "robbing Peter to pay Paul" and also questioned the soundness of the advice.

Loudonville resident Larry Farbstein, like many, wanted to know how the town planned to balance its budgets without a substantial tax increase.

Mahan, a Democrat, said her staff is looking at options ranging from slashing the capital budget by 50 percent this year, gradually increasing employee healthcare contributions, consolidating services and reviewing outdated contracts.

A tax increase is an option, Mahan said, declining to speculate about the potential size but said the goal is to spread it over several years to mute its impact.

But raising taxes, she said, will not alone solve the problem.

"I don't think anyone would want to live in the town of Colonie, that's how high they would have to be," Mahan said.

Democrats and Republicans praised the large turnout and the spirit of the meeting.

For some, it was their first trip to Town Hall in years.

Garry Boomhower questioned why the town bought 57 acres on the Mohawk River last year if it was so strapped for cash.

Town officials said residents wanted green space.

"We thought everything was going so well for 36 years," he said later, "there was no need to be here."

"Pawn or planner? Competing claims in NY lawmaker's bribe trial"

Associated Press

Last updated: 6:22 a.m., Friday, April 4, 2008

NEW YORK -- A state lawmaker accused of taking bribes was guilty of nothing but naivete in dealing with a developer bent on luring her into an illicit bargain, her lawyer says.

But prosecutors say state Assemblywoman Diane Gordon knew exactly what she was doing: trying to get her dream home for $1 in exchange for helping the builder get rights to some city-owned land.

Closing arguments began Thursday in Gordon's trial.

The Brooklyn legislator, who was re-elected after her 2006 indictment, faces a maximum prison term of 5 to 15 years if convicted of second-degree bribe-receiving.

On videotapes played earlier in the trial, Gordon described the home she wanted to developer Ranjan Batheja, told him he could "make it happen" and suggested, "One hand washes the other."

Batheja, who was working with authorities in hopes of improving his lot in an unrelated legal case, secretly recorded his conversations with the legislator.

Gordon ultimately called off the deal, and Batheja didn't get picked to develop the city property he sought.

Gordon's lawyer said the assemblywoman was manipulated by authorities and their informant, saying Batheja "hunted her down" to try to seal the agreement.

"My client was naive."

"There is some evidence that maybe she thought it was a legitimate transaction," attorney Danielle Eaddy said.

Brooklyn Assistant District Attorney Michel Spanakos said Gordon was specific and deliberate in her discussions with the developer and eventually became reluctant only out of fear of getting caught.

"Ms. Gordon was committing crimes directly related to the abuse of her public office month after month after month," Spanakos said.

"Lawmakers edge closer to sealing state budget"

By VALERIE BAUMAN, Associated Press

Last updated: 11:02 p.m., Thursday, April 3, 2008

ALBANY -- The state budget will include a $29.6 million increase in aid for cities to help New Yorkers struggling with local property taxes, Senate Majority Leader Joseph Bruno said Thursday.

"Despite the fact that we faced a budget gap of over $4.6 billion, providing additional aid to cities was a priority in this budget," Bruno said.

Dan Weiller, a spokesman for Assembly Speaker Sheldon Silver, confirmed that the city aid would be included in the new budget.

Both Assembly Democrats and Senate Republicans pushed for more aid for cities than was proposed in the executive budget.

Gov. David Paterson, who took office after former Gov. Eliot Spitzer was linked to a prostitution ring and resigned in disgrace, had previously proposed cutting city aid growth by 2 percent.

The Assembly and Senate have agreed to restore that cut in growth and add another $29.6 million.

After two weeks of negotiations, lawmakers are still trying to agree on the $124 billion state spending plan, which was due Tuesday.

The Senate did not go back into session Thursday to address other pressing budget issues, including transportation and education.

The Assembly had a majority conference about New York City Mayor Michael Bloomberg's plan to charge drivers extra tolls in congested parts of Manhattan, but nothing was resolved and they didn't go into session Thursday.

Silver said he still needs to hear from about 40 Assembly members on the so-called "congestion pricing" issue and no decision would be made at least until Monday.

Silver, Bruno and Gov. David Paterson met privately Thursday evening, but it was unclear what issues they were discussing.

The state Senate is also expected at some point to reject a "car tax" proposed in the executive budget that would have permanently raised the motor vehicle law enforcement fee from $5 to $20.

Instead, they're proposing extending the current fee of $5 for one year only.

The Senate also is expected to reject a nearly $5 million plan to expand broadband Internet access in New York.

Senate Republicans say they support making broadband available to more people, but the additional money isn't urgently needed because $5 million that previously had been allotted for that purpose was just released last month.

'Misconduct cited in crane testing - State worker accused of giving certifications to operators who failed"

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

First published: Thursday, April 3, 2008

ALBANY -- Misconduct by a Department of Labor employee led to the improper certification of more than 200 crane operators between 1985 and 2000, an investigation by the state Inspector General found.

In a 32-page report released Wednesday, the Inspector General said Frank Fazzio, a 60-year-old safety and health program manager who still works for the department, granted certification to people who had failed a crane-operation examination.

Why he did so remains unclear.

The investigation does not claim the longtime department employee and one-time member of the Crane Operating Examining Board received kickbacks or other benefits.

Fazzio could not be reached for comment Wednesday.

The investigation also found that officials at the Labor Department were told of Fazzio's conduct but did nothing to correct it.

The report says that in 2002, Martha Waldman, head of the licensing and certification unit, discovered nearly 45 crane operators had received a failing grade on their examination but had nevertheless received certification.

Waldman says she passed the information on to her supervisor, Anthony Germano, the department's health and safety director, but no action was taken, according to the report.

The report says Germano denies he was made aware of Fazzio's conduct.

Leo Rosales, spokesman for the Labor Department, said Germano no longer works there.

Rosales said the agency has taken corrective action since becoming aware of Inspector General Kristine Hamann's investigation in November.

It immediately removed Fazzio from the crane board and suspended 197 crane operator certifications, he said.

As of today, 75 of the suspended operators have retaken the test, but just 38 have passed.

Rosales also said "appropriate disciplinary action" will be taken against Fazzio.

Last month in Manhattan, a crane crashed into an apartment building and killed four people.

Stephen DelGiacco, a spokesman for the Inspector General, said the office has no evidence that improper certifications by Fazzio led to crane-related accidents.

The report found Fazzio also issued himself both a crane operator's certificate and a blaster's certificate, allowing him "to supervise or perform the preparation for and detonation of any blast."

He was not qualified for either certification, the report says.

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

"$3,000 in fake taxi rides alleged"

By JAY JOCHNOWITZ, State editor, Albany, New York Times Union

First published: Friday, April 4, 2008

ALBANY -- A Health Department assistant director whose job included disciplining other employees for misconduct billed the state for more than $3,000 in taxi rides she never took, the state Inspector General's Office said Thursday.

The office said Luella Kelley, 62, assistant director in the Bureau of Employee Relations and Staff Development, had been filing expenses since 1995 for taxi fares from her home to the Amtrak station even though she drove her car.

The charges ran upwards of $30.

Had she billed for mileage, the cost would have averaged $9.

According to the inspector general, Kelley charged the state for "taxi fare in lieu of mileage" and when asked about it responded, "I was never told that I couldn't or shouldn't do that."

Health Department policy states that an employee traveling on state business can bill only for actual expenses, the inspector general noted.

Kelley also billed for her parking at the train station and for meals "to which she was not entitled," the state says.

Kelley, who has been with the state for 40 years and earns $87,000 annually, has been temporarily reassigned while the Health Department weighs disciplinary action.

The inspector general also faulted the Health Department's travel unit staff for failing "to follow proper procedures and to detect the inappropriate expense claims."

The agency is reviewing its internal controls, has installed an electronic travel reimbursement system, is going back through past claims of taxi expenses and will perform audits.

The inspector general also recommended training so that people traveling on state business know the reimbursement rules.

"Hamann quits amid criticism - Inspector general to resign after fallout from Spitzer, travel scandals"

By IRENE JAY LIU, Capitol bureau, Albany, New York Times Union

First published: Friday, April 4, 2008

ALBANY -- State Inspector General Kristine Hamann, who had been brought in by Gov. Eliot Spitzer to be the state's internal watchdog, became the latest official to resign after being embroiled for months in the travel records scandal.

Hamann submitted her resignation Thursday, effective April 10.

Hamann made no reference to the controversies surrounding her or Spitzer, saying that her office "has achieved a substantial record of accomplishment of which I am most proud."

In a terse statement through spokesman Errol Cockfield, Gov. David Paterson "thanked Ms. Hamman (sic) for her service to the State of New York."

The governor has asked Dennis E. Martin to serve as acting inspector general until he makes a permanent appointment.

Martin currently is special deputy to the inspector general.

Hamann, who became inspector general in February 2007, came under fire from Republicans who faulted her for not completing her investigation of last summer's travel records scandal.

Hamann said there was a conflict of interest because the probe involved her direct supervisor, Richard Baum, who was Spitzer's secretary.

Hamann concurred, however, with Attorney General Andrew Cuomo's July 2007 report on the matter.

Hamann and other Spitzer officials have been under increasing pressure to leave office since Spitzer's resignation last month amid a prostitution scandal.

Sen. George Winner, R-Elmira, repeated his criticism of Hamann for shutting down the inspector general investigation.

He again called for legislation that would remove the office from investigations that present a conflict of interest and hand them to the attorney general.

Winner added that he looks forward to reviewing the findings of a probe by the State Commission of Investigation, which is investigating the investigations by Albany County District Attorney David Soares, the inspector general and the State Commission on Public Integrity into the travel records scandal.

The attorney general's investigation will not be in the commission's investigation.

When asked whether Hamann resigned because of the probe, office spokeswoman Kate Gurnett replied, "No."

"We actually welcome that investigation."

"$250M give and take in budget - State to borrow money for Aqueduct racino, then get it back as 'one shot' revenue"

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

First published: Friday, April 4, 2008

ALBANY -- Budget negotiators have come up with a $250 million "one shot" by giving a video slot operator at Aqueduct the money to build a racino in exchange for getting the money back to help pay for this year's budget, a government official said Thursday.

Legislative leaders and Gov. David Paterson also discussed ways to split up $1.1 billion for economic development projects, including funds for the Advanced Micro Devices project in Saratoga County, according a person briefed on the plan.

But details of the projects were being kept mostly under wraps.

Lawmakers grew testy as they, like most members of the public, have been kept in the dark on the week-long negotiations on the $124 billion budget.

Legislators also suffered their first pay period without a paycheck.

The money is being withheld under state law because the budget is late.

The deadline was April 1.

On the Aqueduct VLT facility, budget planners agreed the state should borrow $250 million that would be paid back over 30 years.

The video slots would produce an estimated $300 million in gambling revenues annually for education spending.

The Aqueduct VLT operator would have to pay the state $250 million as a fee by March 31, 2009, the official said.

The arrangement allows the state to plug a hole in the budget.

Former Gov. Eliot Spitzer had proposed a $250 million franchise fee from the operator of a VLT parlor at Belmont, but Assembly Democrats refused to allow the gambling hall at the Nassau County track.

Two development teams, Capital Play LLC and SL Green, are competing for the Aqueduct development rights.

Neither has indicated that the rights for Aqueduct are worth as much as the rights for Belmont, so the budgeting plan may hit some snags.

Spokesmen for Gov. David Paterson would not confirm the arrangement, expected to be inserted in a budget bill.

Although some observers say the plan amounts to a fiscal gimmick, Sen. John Sabini, D-Queens, a member of the Racing and Wagering Committee, said he likes it.

"If it gets Aqueduct moving and we get the money back, it's alright with me," he said.

When the deal will be voted on is unclear.

Negotiations on several elements of the budget were still incomplete Thursday, a week after Paterson, Assembly Speaker Sheldon Silver and Senate Majority Leader Joseph L. Bruno announced their agreement on a $124 billion budget framework.

With talks going on in secret, the Assembly canceled its session Thursday because budget bills were not ready for action.

The Senate postponed its session until late evening.

Even budget bills that have been passed were missing key ingredients.

For instance, both chambers passed a public protection bill late Wednesday.

But none of the local assistance money -- typically filling numerous pages of such legislation -- was included in the measure.

"The only thing worse than negotiating a budget in secret is having a week of secret negotiations and no budget," Sen. Martin Connor, D-Brooklyn, said.

Besides budget delays, leaders in both chambers were weighing what to do about Mayor Michael Bloomberg's congestion pricing legislation, which Paterson and Bruno strongly support but many lawmakers in the New York City metropolitan and suburban area dislike.

Lawmakers suspected that the measure, which calls for charging motorists $8 to enter much of Manhattan during weekday work hours, lacks the support needed for leaders to allow a vote on the floor.

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

"A distaste for budget pork - Paterson laments what he terms lawmakers' unwillingness to rein in spending on pet projects"

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

First published: Saturday, April 5, 2008

A frustrated Gov. David Paterson blasted the Legislature Friday for ignoring the state's economic slide even as he agreed to spend at least $45 million on lawmakers' pet projects this year.

As lawmakers began passing a pork-laden economic development budget of more than $13.5 billion, Paterson told reporters that no matter how he tries to keep spending in check, legislators push for more.

"I don't like this process very much," said Paterson.

"What I found in the last week was that the process is actually very ordinary, very much like Albany has been in the past."

Despite the extraordinary circumstances this year, with an ailing economy and Paterson taking office March 17 after Eliot Spitzer's resignation, lawmakers are acting as if there's nothing different, the governor complained, adding he'd pushed for an on-time budget in hopes of sending a message to the public.

With the $124 billion budget being passed slowly and in pieces, Paterson said he wants to keep lawmakers here over the weekend to finish a budget deal.

Assembly and Senate members are expected to remain in Albany or be on call.

Senate Majority Leader Joseph L. Bruno said a quick resolution may not be at hand.

"If we don't reconcile what we are discussing, we're going to be here for awhile, and I'm afraid it's going to be a long while," Bruno said, suggesting that tax and borrowing issues remain unresolved.

Assembly Speaker Sheldon Silver, D-Manhattan, maintained that the Legislature took the unusual step of not adding new funds this year for member items because of the tight times.

Instead, the budget will allow new member item spending by "sweeping" unused dollars from the member item accounts of past years, he said.

That will result in $45 million in new expenditures using previously appropriated funds.

Assemblyman James Hayes, the ranking Republican on the Ways and Means Committee, noted that the budget also includes a commitment of $40 million in new member item money for the next fiscal year.

"The revenue budget that's coming I'm almost certain will be a crushing blow to people in this state when we go to pay for this budget," Hayes said.

Typically, the Assembly and Senate add $170 million for member items each fiscal year and split the money 50/50.

The Assembly uses a chunk of its funds for programs while the Senate tends to use most of its money for groups in members' districts.

Both chambers have used the funds in some questionable ways in the past.

The only other time that new money wasn't put into the state budget for member item spending was after the 9/11 attacks devastated the state's economy.

The unused member item funds could have been used for something other than community projects, some lawmakers noted.

That's what became of $125 million in the Environmental Protection Fund.

It was swept and used for other operating needs.

"I would rather there be no member items or capital projects in the budget," said Assemblywoman Teresa Sayward, R-Willsboro.

She was among several members who voiced with the relative lack of progress finishing a $124 billion budget this week.

"We have property taxpayers having trouble buying fuel for heating, and I'm getting $154 per day standing here talking ..."

"It's a travesty."

Sayward has about $100,000 in member items in the budget, for things such as thermal imaging equipment for some small fire departments and funds to help school children get to Fort Ticonderoga for history field trips.

Sen. Dale Volker, R-Depew, said the member item spending represents a fraction of the budget and does a lot of good.

"One way you help the economy is you put that money with some groups," he said.

Spitzer's $1 billion upstate economic revitalization program is obviously being reshaped.

He planned to borrow for 60 percent of it and use cash for the rest.

However, the economic development budget has just $40 million in cash for it.

Hayes said he's worried about a massive borrowing bill coming up.

A source familiar with the plan said $1.1 billion in capital projects are being negotiated.

While Spitzer's initial budget came in with a 5.1 percent spending increase, Paterson said he proposed a 3.7 percent hike, knowing it would probably be negotiated to 4.5 percent.

The trouble is, as things stand, "we have a built-in $3.6 billion budget deficit next year," even with a balanced budget this year, Paterson said.

Also Friday, Bruno announced that the budget will reverse a 50 percent cut in the local share of video slot revenues proposed by Spitzer for next year.

Saratoga Springs and Saratoga County reap about $5 million from VLTs.

The budget will include a 2-percent cut, Bruno said.

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

"High prices take toll on optimism - Siena survey of state's metro areas shows sharp decline in consumer confidence index"

By ERIC ANDERSON, Deputy business editor, Albany, New York Times Union

First published: Thursday, April 3, 2008

COLONIE -- The Siena Research Institute is calling it a collapse.

The latest measure of consumer confidence has produced readings that are 20 to 30 points below year-earlier levels.

And the institute's founding director is blaming everything from energy prices to Eliot Spitzer.

"The first quarter of '08 saw not only high energy prices, a continuing housing slump, little job creation, simultaneous recession and inflation, (and) the Bear Stearns fall, but also an unprecedented political scandal in New York," said Douglas Lonnstrom.

If there were any bright spots in the report released Wednesday, they came in the convergence of readings across the state's metropolitan areas, which Lonnstrom interpreted as a "potential economic bottom."

"It's really a sobering set of figures," said Don Levy, director of the institute.

He, too, called the convergence a "silver lining" that may indicate things won't get worse.

The quarterly survey, launched following the Sept. 11 terror attacks, measures consumer confidence across the state's major metropolitan areas.

The survey gauges both how consumers feel about the current situation, and how they view the future.

Combined, they produce an overall figure.

The index seeks to measure consumers' willingness to spend; consumer spending makes up two-thirds of the nation's overall economic activity.

"It's very clear that consumer spending is slowing," said Hugh Johnson, chairman and chief investment officer of Johnson Illington Advisors in Albany.

He too cited energy prices and the decline in housing prices as factors.

"I don't see any sign that the slowdown in the national and state economy is at a turning point," Johnson said.

"I do see signs that say we may reach a turning point in the not-too-distant future," citing recent improvements in the financial markets as one leading indicator.

Still, higher prices for food and energy are forcing households to cut spending in other areas.

"People are having to make choices, to reallocate their budgets," said Tony Riccardi, a private economist in Albany.

Riccardi talked of an Italian takeout restaurant in Guilderland that was struggling with a doubling of cheese prices and significantly higher prices for flour.

"Every single time you drive past a gas station, you see that 3 at the top of the sign," said Ted Potrikus, executive vice president of the Retail Council of New York State.

"It is an incessant reminder that everything costs more."

"Every consumer has to make a lot of decisions on where to spend money."

Jean Gagnon of Plaza Travel in Latham said customers no longer are opting for larger rental cars when planning trips.

"They don't want to pay the fuel cost," she said.

Consumers also are paying more when they travel, as airlines boost fees for pets and unaccompanied children to cover higher energy prices, Gagnon said.

Delta has doubled the fee to escort unaccompanied children to $100 each way.

And several carriers now charge $25 to check a second bag.

A separate section of the Siena survey measured consumers' buying plans for major purchases, and may offer some encouragement to retailers.

In the Capital Region, buying plans increased for vehicles, computers, homes and major home improvements, although fewer respondents said they planned to buy furniture, compared with the previous quarter.

The uptick for vehicles didn't come soon enough for Haynes Ford in Hoosick, however.

The dealership closed two weeks ago.

Ford's declining market share has led to a consolidation of dealerships, said company spokeswoman Marisa Bradley.

Eric Anderson can be reached at 454-5323 or by e-mail at eanderson@timesunion.com.

"Serving state's energy needs - Power plant siting bill, planning funds, pipelines discussed"

By LARRY RULISON, Business writer, Albany, New York Times Union

First published: Thursday, April 3, 2008

ALBANY -- The governor's deputy secretary of energy is optimistic the Legislature can pass both a power plant siting law and an energy planning bill this year.

Paul DeCotis' comments came Tuesday the annual energy update breakfast sponsored by the Energy Association of New York State and the Northeast Gas Association, two energy trade groups.

The event was held at the Fort Orange Club.

For years, the Legislature has been wrangling over a new power plant siting bill that would provide a fast-track state review for badly needed new electric generation in the state.

A previous law, known as Article 10, expired in 2003.

Legislators have been unable to reach a compromise on a new law, however, with Democrats wanting to exclude some fuel types such as coal and nuclear.

There also is talk in the Legislature of passing a bill to fund a $2 million energy plan that would help drive energy policy in the state -- and perhaps clarify issues that have been holding up a new siting law.

But DeCotis said he is hopeful a siting law can get passed regardless of a planning bill.

"I think that can happen independent of a planning process," he said.

At the same breakfast, Northeast Gas Association President Thomas Kiley highlighted four new natural gas pipeline projects in the state -- totaling $1 billion in investment -- that will help to increase supplies.

New York produces only 5 percent of the natural gas it uses, and the energy supply is in greater demand -- especially as it is used more as fuel in power plants.

Demand has pushed up natural gas prices, pinching consumers and businesses.

The biggest project is the Millennium pipeline that will help bring natural gas from Canada to the New York City area.

A $600 million section from the Southern Tier to Rockland County is expected to be completed by November.

Patrick Curran, executive director of the Energy Association of New York State, said after the breakfast the new supply flowing into the state would likely have a positive impact on pricing, although he couldn't give exact figures.

"It can only help," he said.

"'Troopergate' scandal figure put on paid leave"

First published: Sunday, April 6, 2008

ALBANY -- Daniel Wiese, State Power Authority inspector general, has been put on paid leave.

Power Authority spokeswoman Christine Pritchard declined further comment on Wiese's indefinite leave, citing an investigation.

Wiese, a former state trooper, was named in Albany County District Attorney P. David Soares' report on so-called "Troopergate," Spitzer administration disclosures of state aircraft use by rival politician and Senate Majority Leader Joseph L. Bruno.

Reports were gathered by State Police.

Soares brought no criminal charges but concluded Spitzer may have lied about his own plotting.

Attorney General Andrew Cuomo, asked by Gov. David Paterson last week, began a new investigation.

-- Associated Press

"AMD lowers sales outlook, plans job cuts"

By JORDAN ROBERTSON, Associated Press

Last updated: 7:12 p.m., Monday, April 7, 2008

SAN FRANCISCO -- Battered by product delays and acquisition costs, beleaguered chip maker Advanced Micro Devices Inc. said Monday that it will jettison 10 percent of its work force and warned investors that first-quarter sales were lower than expected across all business lines.

The Sunnyvale-based company's job cuts, which amount to more than 1,800 workers out of 18,600 worldwide, were expected.

But the sales miss surprised Wall Street.

Analysts polled by Thomson Financial were expecting AMD to ring up $1.61 billion in sales; the company says sales for the three months ended March 29 were closer to $1.5 billion, a 15 percent drop from the year-ago period.

AMD shares fell 14 cents, or 2 percent, to $6.20 in after-hours trading.

The stock had risen 11 cents to close at $6.34 before the layoffs and sales warning were released.

AMD has fallen on hard times as it confronts intensifying competition from Intel Corp., the world's largest semiconductor company, and tries to digest the $5.6 billion acquisition of graphics chip maker ATI Technologies Inc., which AMD recently said is worth about 30 percent less than when it was acquired.

AMD views the acquisition as a key way to attack Intel and incorporate better graphics capabilities into its chips.

Graphics are now a key battleground for chip makers as more and more Internet surfing involves video and as the graphics requirements for computer games are heightened.

Lengthy product delays for its new Opteron server chip, a product critical to the company's financial recovery, also hurt AMD's competitiveness.

Technical glitches pushed back the chip's full release for months after the official launch in September.

Intel has endured its own financial hardships as a result of the battle with AMD, whose restructuring is the latest in a series of aggressive cost-cutting maneuvers by both the No. 1 and No. 2 makers of microprocessors, which act as the brains of personal computers.

Last year, Santa Clara-based Intel cut about 10,500 jobs, or about 10 percent of its work force, in a move to save about $3 billion annually.

The restructuring was triggered by Intel's sharply sliding profits, the result of losing customers to AMD and furiously cutting prices to keep older chips competitive.

AMD's losses in 2007 were staggering, capping a brutal two-year stretch in which the company's market value plunged from more than $20 billion to $3.84 billion today.

In 2007, AMD lost $3.38 billion, $2 billion of which were non-cash charges.

Revenues were $6 billion.

The stock has fallen from over $40 a share in early 2006.

"AMD cuts follow Intel restructuring"

By JORDAN ROBERTSON, Associated Press

Last updated: 1:03 a.m., Tuesday, April 8, 2008

SAN FRANCISCO -- Advanced Micro Devices Inc.'s plans to jettison 10 percent of its work force are the latest sign that the seesaw battle between semiconductor rivals Intel Corp. and AMD has taken its toll on both companies.

AMD said Monday that its job cuts, which will amount to more than 1,600 workers out of 16,800 worldwide, are slated to start later this month and finish by September.

The cuts were widely expected as the slumping chip maker has been battered by product delays and burdened by heavy acquisition costs.

The Sunnyvale-based company also warned investors that first-quarter sales were lower than expected across all business lines, a miss that surprised Wall Street.

Sales for the three months ended March 29 came in at about $1.5 billion, a 15 percent drop from the year-ago period and short of the $1.61 billion that analysts polled by Thomson Financial were anticipating.

The company is scheduled to report its full quarterly results April 17.

AMD shares fell 18 cents, or nearly 3 percent, to $6.16 in after-hours trading.

The stock had risen 11 cents to close at $6.34 before the layoffs and sales warning were announced.

The news comes as momentum in the notoriously volatile semiconductor industry has turned for the moment against AMD, whose own momentum just a couple of years ago was a major factor in a major restructuring by Intel.

AMD had not been a player in the lucrative server market until the company launched its first Opteron chip in 2003.

Armed with the energy-efficient chip, AMD stole away valuable market share from Intel and eventually captured about a quarter of the worldwide server market.

The competition hurt Intel, whose profits slid sharply, the result of losing customers to AMD and furiously cutting prices to keep older chips competitive.

In 2006, Santa Clara-based Intel said it was cutting about 10,500 jobs, or about 10 percent of its work force, in a move to save about $3 billion annually.

But now it's AMD that's fallen on hard times as it confronts intensifying competition from Intel, which has regained some lost market share with a powerful line of new chips and has lowered its costs with a new manufacturing process.

Meanwhile, some of AMD's most important products are viewed as out-of-date.

Lengthy product delays for AMD's new Opteron server chip, a product critical to the company's financial recovery, have hurt its competitiveness.

Technical glitches pushed back the chip's full release for months after the official launch in September.

AMD is also struggling to digest its $5.6 billion acquisition of graphics chip maker ATI Technologies Inc., which AMD recently said is worth about 30 percent less than when it was acquired.

AMD views the acquisition as a key way to attack Intel and incorporate better graphics capabilities into its chips.

Graphics are now a key battleground for chip makers as more and more Internet surfing involves video and as the graphics requirements for computer games are heightened.

AMD's losses in 2007 were staggering, capping a brutal two-year stretch in which the company's market value plunged from more than $20 billion to $3.84 billion today.

In 2007, AMD lost $3.38 billion, $2 billion of which were non-cash charges.

Revenues were $6 billion.

The stock has fallen from more than $40 a share in early 2006.

"7 charged in NY Mercantile probe"

By SAMUEL MAULL, Associated Press

Last updated: 6:52 p.m., Tuesday, April 8, 2008

NEW YORK -- Seven people are charged in a probe of illegal trading at the New York Mercantile Exchange -- including a former board member who has pleaded guilty in exchange for five months in jail, authorities said Tuesday.

Steven J. Karvellas pleaded guilty to violating New York's general business law and tampering with physical evidence.

Besides the jail time, he will receive five years of probation and must pay $850,000 in fines and legal costs.

Three other people already have pleaded guilty for participating in fraudulent commodities trading; another three have been arrested and their cases are pending.

Karvellas, who could have gotten up to four years in prison on either of the charges, was scheduled to be sentenced Sept. 9.

From 1990 until this year, Karvellas was a floor broker who traded at the exchange.

Authorities said he owned two Manhattan-based companies: Steven J. Karvellas and Co., a natural gas trading company, and Commercial Brokerage Corp.

Court papers say Karvellas was on the exchange's board of directors from 1996 to 2000.

He also served as chairman of the exchange's Adjudication and Compliance Review Committee from 2000 to 2003.

As part of his plea deal, Karvellas admitted he delayed customer orders to buy or sell natural gas contracts while watching the direction in which the market was moving, prosecutors said.

If the market moved in a direction that made the order profitable, Karvellas took the contract for himself, prosecutors said.

They said customer orders would be executed later at a less favorable price or not at all.

Manhattan District Attorney Robert Morgenthau and Gregory Mocek, director of enforcement of the Commodity Futures Trading Commission, announced the charges in a news conference.

Neither would estimate the total value of futures contracts that Karvellas traded.

Morgenthau said Karvellas' methods allowed him "to engage in risk-free investing for his own account and deprived his customers of the profits they would have realized had he made the trades properly."

Because Karvellas had been a member of the NYMEX compliance committee, Morgenthau said, "You've got the fox in the chicken house."

"Here was a guy who was supposed to watch out for fraud."

Mocek said the CFTC is self-regulating and always on the lookout for fraud.

Once Karvellas' illegal activity was discovered, he said, the CFTC took it very seriously because he had been a high-ranking member of the exchange.

The illegal activity occurred between September 2002 and May 2003.

"NY Legislature agrees to spending deal"

Associated Press

Last updated: 7:02 p.m., Tuesday, April 8, 2008

ALBANY -- Officials say the Senate and Assembly have tentative agreement on spending bills in a $124 billion state budget scheduled to be approved Wednesday.

The budget proposal would increase spending 4.5 percent and include $1.1 billion in capital projects statewide and about $1 billion worth of increases in narrow taxes, such as the cigarette tax, and fees.

Holding up a vote on the spending bills is a legislative proposal pushed by one of Albany's most powerful lobbyists: The New York State United Teachers union.

The measure that still requires final approval would set parameters for granting tenure to school teachers.

"Agency pay is all over map - Salaries among the state's transportation administrators have little to do with a department's size or its responsibilities"

By CATHY WOODRUFF, Staff writer, Albany, New York Times Union

First published: Tuesday, April 8, 2008

ALBANY -- If state Transportation Commissioner Astrid Glynn gets a hankering for a raise, she might apply for Michael Fleischer's job as executive director over at the Thruway Authority.

Fleischer's job at the Thruway, an agency with less than one-third the staff and a far smaller fraction of the infrastructure that Glynn oversees at the Department of Transportation, pays $165,709 a year.

That's nearly $30,000 more than the $136,000 transportation commissioner's salary set by state law.

The job as director of canals at the Canal Corp., a still-smaller agency that operates a 524-mile upstate waterway system, also might hold some appeal.

Director Carmella Mantello's salary there is $141,566.

The disparity illustrates an irregular patchwork of salaries and benefits at New York's major transportation agencies, most of which are governed by boards of directors that operate independently from the rest of state government.

The Times Union acquired records for the top earners at DOT, the Thruway Authority and other agencies through requests submitted under the state's Freedom of Information Law and reviews of other public records.

The records show that salaries at the highest staff levels hold little relationship to the scope of responsibility, size or function of the agency.

Glynn stands out as the only transportation chief executive who cannot claim the highest salary on her staff -- or even a paycheck among the Top 10.

Her annual pay ranks 19th at DOT, behind several regional directors, the department's chief attorney, chief engineer and chief information officer, and her executive deputy, among others.

She makes more than $12,000 less than DOT employees in the top salary tier, which is $148,433 for regional directors and a few others.

But without action by the state Legislature and the governor, neither Glynn nor other department commissioners within Gov. David Paterson's administration have a prayer of seeing a raise.

Their salaries are set in state law and have been unchanged since 1999.

Assemblyman Richard Brodsky, a Westchester County Democrat who chairs the Assembly Committee on Corporations, Authorities and Commissions, said compensation for chief agency executives throughout state government deserves an impartial outside review.

"It's a consistent problem that the salaries for heads of state agencies have not kept up with what the market is," he said, noting that many are paid less than some of those they hire and supervise.

At the same time, pay levels for chief executives at New York's transportation authorities, where compensation is decided by independent boards of directors, are all over the map.

"The statutory limitations at the Department of Transportation have artificially kept the salaries down," he said.

"The salary levels need to be looked at by outsiders in an intelligent way and not as part of any game-playing or name-calling," he said.

Compensation for other top executives among the transportation agencies also is inconsistent.

At the Thruway Authority, the only agency with responsibility resembling DOT's for upstate roads and bridges, eight of the top managers have higher base salaries than anyone at DOT.

Salaries at DOT top out under $149,000.

At the Thruway Authority, the chief attorney, chief financial officer, director of information technology, chief engineer, director of maintenance and operations and one division director all make more.

Fleischer's chief of staff nears the highest salary tier at the Thruway, with regular pay just under $144,000 a year.

In addition, Thruway administrators qualify for thousands more each year if they take few sick days or choose to exchange vacation time for cash, a benefit not available at DOT.

"It's important to note that many of the authority's executive staff members act on behalf of both the authority and the (Canal) Corporation, therefore essentially doing their respective jobs for both organizations," said Thruway spokeswoman Sarah Kampf.

"The majority of these people do wear two hats."

She said salaries for some top employees reflect long tenure at the Thruway.

She also said the overall rate of pay increases at the authority, including contracts negotiated with unionized employees, has been less over the past decade than that for state workers in other agencies.

A Paterson spokeswoman did not have an immediate response to Brodsky's suggestion, as the governor, legislators and their staffs continued work on a new budget for the fiscal year that started on April 1.

"We're working on the budget right now."

"That's the main focus," said Jennifer Givner.

Cathy Woodruff can be reached at 454-5093 or by e-mail at cwoodruff@timesunion.com.

"Taking tax cap's measure - Panel examining possible limits on growth of state levy hears from skeptics"

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

First published: Tuesday, April 8, 2008

COLONIE -- To cap or not to cap.

That will be one of the biggest decisions that a property tax study commission headed by former gubernatorial candidate and Nassau County Executive Tom Suozzi makes next month.

And the battle lines on that issue are starting to emerge.

On Monday, during an informational meeting on the Commission on Property Tax's progress, attendees heard some arguments against a tax cap, which has been touted as a way to reduce property taxes in the state, tops in the nation.

A tax cap would place a limit on how much property taxes could increase annually.

While the idea is popular with taxpayers and some politicians, school officials and teachers unions worry that it would create unrealistic limits on spending.

Caps have caused problems in other states, some participants said.

For instance, Colorado's tax cap, instituted in 1992, led to referendums against the practice, said Leif Engstrom, program manager for the Capital District Regional Planning Commission.

He was among the approximately 30 people who showed up to learn what the tax commission was doing and to offer input.

And Morris Peters, a state Division of Budget examiner who hosted the meeting at The Crossings of Colonie's town park meeting hall, said California's Proposition 13 let that state's schools "fall apart," due to its sharp limits on revenue.

That cap was passed in 1978.

Peters, though, said a 1980 tax cap in Massachusetts limiting local levies, or the amount of money a tax can generate, has worked.

With opinions both for and against a state-mandated tax cap, the issue is emerging as a key part of the commission's work.

Some politicians have suggested that a hard cap will be difficult to pass, given the powerful political players like teachers unions that worry a cap could hurt school funding.

But others said much of the impetus for the commission came amid calls for an immediate tax cap.

Rather than pushing for that, former Gov. Eliot Spitzer instead appointed the commission.

Attendees at Monday's meeting said New York's many local governments -- some 1,500 cities, towns and villages in 62 counties -- could do a lot to increase efficiency and lower costs.

Berne town Supervisor Kevin Crosier, for example, said he saved more than 30 percent on oil, bottled water and uniforms by combining purchasing with Albany County, which was buying goods from the same supplier.

But Crosier said he tried unsuccessfully to get his Town Board to consider merging snow plowing duties with the county.

And Shenendehowa school Superintendent Oliver Robinson said some of the state's more than 700 school systems should consider making joint bids for services like health insurance, which could provide bargaining leverage.

"Let's regionalize some of these things," he said.

Other suggestions included ending some of the hundreds of property tax exemptions that exist in the state, including for church-owned property, or placing more reliance on sources such as sales taxes or other revenues to fund the schools.

Ultimately, however, the commission, which is supposed to give Gov. David Paterson a preliminary report on May 22, will have to grapple with whether it wants to recommend a property tax cap.

And whether a tax cap gets enough support may be up to Paterson, said Edmund J. McMahon, director of the Manhattan Institute's Empire Center for New York State Policy.

"He needs to come out at some point and make it clear that what he hopes to see is a real tax cap," said McMahon.

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

"NY moves to edge 26 companies out of tax-break program"

Associated Press

Last updated: 4:23 p.m., Tuesday, April 8, 2008

ALBANY -- New York officials are moving to push 26 companies out of a program that gives tax breaks in exchange for promises to create or retain jobs.

The Empire State Development Corp. -- New York's economic development arm -- says the companies have fallen far short of the jobs or investment projections made in return for Empire Zone benefits.

The $500 million-a-year program has long been criticized as ineffective and state officials last summer vowed reforms.

Officials say nearly 2,400 of the 9,800 companies in the program failed to meet even 60 percent of promised job creation.

The 26 being pushed out of the program are among 171 that provided the least economic return for their tax benefits and didn't explain why when asked.

"Poll finds voters ambivalent about Gov. Paterson's performance"

Associated Press

Last updated: 6:32 p.m., Wednesday, April 9, 2008

THE ISSUE: Gov. David Paterson's first weeks in office. Paterson took over March 17 after former Gov. Eliot Spitzer resigned amid a prostitution scandal.

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THE NUMBERS

Voters rate the job Paterson is doing as:

Unsure, 32 percent

Good, 31 percent

Fair, 25 percent

Poor, 8 percent

Excellent, 4 percent

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OF INTEREST: Three-quarters of registered voters do not think Paterson's admission of extramarital affairs and past drug use will affect his ability to do his job.

Fewer than half think he's changing the way things work in Albany for the better.

Fifty-six percent would like Paterson to run for re-election.

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The WNBC/Marist Poll of 576 registered voters in New York was conducted by telephone on April 3-4 and has a margin of sampling error of plus or minus 4 percentage points.

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COMPLETE RESULTS: http://www.maristpoll.marist.edu/