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Money in Politics This Week: Moreland Commission Should Investigate Real Estate Tax Breaks

A roundup with the latest news highlighting the corrosive nature of money in New York State politics — and the need for public financing and robust campaign finance reform.

  • Syed Zaidi
August 12, 2013

Crossposted at ReformNY

The Brennan Center regularly compiles the latest news concerning the corrosive nature of money in New York State politics—and the ongoing need for public financing and robust campaign finance reform. We’ll also be linking to dispatches from around the country highlighting the national scope of this crisis. This week’s links were contributed by Syed Zaidi.

For more stories on an ongoing basis, follow the Twitter hashtag #moNeYpolitics and #fairelex.


Common Cause/NY and Fair Elections Ask Moreland Commission to Investigate Real Estate Contributions and 421-a Tax Break

 A “Moreland Monday” analysis by Common Cause/NY is raising serious questions about millions of dollars in campaign contributions from real estate and development interests in New York City. Between 2011 and July, 2013 the Real Estate Board of New York (REBNY), a trade group of 37 real estate companies, contributed over $1.7 million to Senate Republicans, $478,000 to Senate Democrats, and $249,000 to Senate Independent Democrats. In the Assembly, the Democrats received $305,000 from the group, while Republicans accepted $67,000. REBNY also takes full advantage of New York’s LLC loophole – which allows each LLC controlled by a single corporation to be treated as an individual subject to a $150,000 aggregate contribution limit. Of REBNY’s political contributions, over 73 percent have gone to state candidates outside of New York City. The return on REBNY’s political investment in Albany is clear: the 421-a property tax abatement for new residential construction continues to balloon. The cost of foregone taxes from 421-a has increased from $130 million in 2002 to $1.1 billion in fiscal year 2013 – greater than the entire annual budget for New York City’s House Preservation and Development Agency. Susan Lerner, executive director of Common Cause/NY, urged “the Moreland Commission to use the full scope of their investigatory powers to fully examine this situation and recommend policies to end this exploitation.”

Moreland Commission Subpoenas Real Estate Developers for Documents

The Moreland Commission to Investigate Public Corruption has issued subpoenas to three high profile real estate developers in an apparent effort to examine whether there is any link between their campaign donations and huge tax breaks that were granted for several luxury apartments in New York City. A state law passed this session singled out five buildings in Manhattan for lower taxes. Moreland Commission Co-Chair Kathleen Rice has stated that the commission is committed to investigating loose campaign finance laws and their relationship with the epidemic of corruption scandals that rocked Albany earlier this year. “You can say 'it’s just a couple of bad apples.’ Is it the political system itself that is the problem?,” Rice posed. The subpoenas have all been for documents thus far. No individual has been compelled to testify at this point. The New York State Board of Elections and the Joint Commission on Public Ethics have also both been asked to preserve all documents.

NYC Campaign Finance Board Disburses Public Funds for Primary Races

The New York City Campaign Finance Board (CFB) has approved the first round of public funds for 75 qualifying candidates running in citywide and city council races. As part of the matching funds program, NYC provides candidates that can raise enough small donations from constituents in their district with $6 for every $1 raised per donation up to $175. In the mayoral race, City Council Speaker Christine Quinn received $3.4 million in public funds, reflecting her large haul of small donations. Quinn was followed by Public Advocate Bill De Blasio who got $2.2 million. On the Republican side Joe Lhota, former MTA chairman, received $1.44 million. His spending limit was also increased from $6.42 million to $9.63 million reflecting heavy election spending by his primary competitor John Catsimatidis, who is self-financing his campaign. The board also denied public funds to City Comptroller John Liu’s mayoral campaign, citing “evidence of substantial non-compliance” with the law. A 139 page CFB report, to which Liu has released this response, details evidence of reporting discrepancies, insufficient documentation, and irregular means of attaining contributions by the campaign. Two former Liu campaign operatives have been convicted of scheming to route contributions through straw donors – people who contribute under their own name and get illegally reimbursed later. The CFB’s tough approach on compliance has helped prevent abuse of the City’s public funds.


Secret Tax Reform

The U.S. Senate is seeking to reform the notoriously long and convoluted federal tax code by starting with a blank slate; eliminating all tax credits and breaks. The Senate Finance Committee, chaired by Senator Max Baucus (D-MT) and Senator Orrin Hatch (R-UT), is asking Senators to submit proposals for tax breaks they wish to keep in the code. Senators, fearful that their proposals will reveal their pet special interests, have been promised by the committee that their request will remain private until 2064. Each digital proposal will receive an ID and special encryption, prior to storage on password-protected servers. Printed copies will be kept in locked safes. Only a few privileged Senators and their aides will have access to the proposals. The lack of transparency over a process intended to bring about reform is symptomatic of a larger problem on Capitol Hill – the vast and omnipresent influence of lobbyists and campaign donors. Behind every tax break, which collectively cost the government more than $1 trillion annually, is an army of Congressmen, special interest lobbyists or powerful corporate donors. As long as our campaign finance laws remain broken, the prospect of real tax reform is likely to remain elusive.

Americans Think Corruption has Increased

The 2013 Global Corruption Barometer, a global survey of more than 114,000 people in 107 countries, by Transparency International reveals that Americans are increasingly concerned about corruption in government. Transparency International annually publishes statistics regarding citizens’ perception of corruption and bribery. Sixty percent of the respondents in the U.S. said that corruption has increased over the past two years, while only 10 percent said that it has decreased. Sixty-four percent of Americans think their government is run by a few big interests, compared to 54 percent of Canadians and 52 percent of Australians. Of the public institutions in the U.S., three-quarters of Americans regard political parties as the most corrupt, followed by the legislature, the media, and public officials. Citizens view the military, non-governmental organizations and education services as the least corrupt. Huguette Labelle, chair of Transparency International, recommends that governments should “respond with concrete action to elevate transparency and accountability.”

Fareed Zakaria: Money is Root of Problems in Washington, D.C.

Last week, Fareed Zakaria, host of CNN’s Fareed Zakaria GPS and editor-at-large for Time Magazine, reviewed the latest summer book on Washington’s ruling elite, This Town by Mark Leibovich. Zakaria argues in the Washington Post that the United States government is no longer defined by three branches but by a permanent class of lobbyists and campaign contributors. According to an Atlantic magazine report, 42 percent of retiring House members and 50 percent of Senators go on to work as lobbyists. Compare that to 1974, when only 3 percent of retiring members of Congress became lobbyists after their public careers. According to Zakaria, politicians today are not particularly greedy or venal as compared to earlier generations, but the system in which they operate has dramatically changed. The total cost of the 2010 national elections in Britain was $86 million. In the U.S. the cost was 75 times greater — $6.3 billion – for the 2012 national elections even though our population is only 5 times bigger. Harvard professor Lawrence Lessig points out that members of Congress spend an inordinate amount of time raising money, while in office. It comes as no surprise then that they also vote with keen attention to their donors’ concerns. And if we fail to change, Zakaria warns that we may soon meet the same fate as Rome.

Former State Supreme Court Justice Asks Montanans to Fight for Fair Courts

Citizens United is poised to destroy judicial impartiality, writes John C. Nelson, a retired Montana State Supreme Court Justice, in the Missoulian. Montana has a unique system of non-partisan judicial elections, an effort to maintain the impartiality and independence of the court. In June of last year, the U.S. Supreme Court struck down Montana’s Corrupt Practices Act, which banned corporate contributions to candidates and independent campaign committees. Then in September, the Ninth U.S. Circuit Court of Appeals declared Montana’s statutory ban on partisan endorsements and expenditures in judicial elections unconstitutional. A nation-wide study by the American Constitution Society for Law and Policy demonstrates that there is a significant relationship between business group expenditures on state Supreme Court races and the votes of state justices on business matters. Whether Democratic or Republican, the more campaign expenditures a justice received from business interests, the greater the likelihood that he or she would favor business interests in court cases. Nelson asks Montanans to “fight for the fundamental right to settle our legal differences in impartial courts.”

NC Successful Judicial Public Financing Program Gutted by Legislature

This year, the North Carolina legislature passed sweeping electoral changes to gut the judicial public financing program. Since 2004, the state has offered public financing to candidates running for seats on the state’s Appellate Court. To qualify for public funds, judicial candidates have to raise between $10 to $500 from at least 350 different registered voters, for a sum totaling at least $39,450. The program is financed through an optional $3 state tax check-off and a $50 surcharge on attorney’s fees to the N.C. Bar Association. The intent of the program is to ensure greater impartiality in the court’s decisions, and it is popular with North Carolinians: 68 percent of state voters favor the program, including 67 percent of Republicans. As N.C. State University professors Michael Cobb and James Zink explain in a News Observer op-ed, “An electoral system in which judges routinely court moneyed interests to fund their campaigns sends a message to the public that justice is for sale.”