Report: NY budget has billions 'in the shadows'

ALBANY – The proposed state budget includes $2.6 billion in opaque "lump sum funds" that limits public transparency over how the taxpayers' dollars would be spent, a report claims.

Within the $142 billion budget, state lawmakers and Gov. Andrew Cuomo could have significant discretion over how state money is spent after the budget's approval, according to the report from Citizens Union, a good-government group.

"The state budget process is not known for being transparent, and the process of distributing lump sum funds after budget bills are passed is even more opaque," said Rachael Fauss, the group's director of public policy.

The report is the latest to criticize how money in the state budget can be shifted to cover deficits and fund pet projects.

A report March 6 from the state Comptroller's Office said Cuomo's budget amendments last month would shift $4.55 billion in bank settlement funds from a separate appropriation to three state agencies. The move, the report said, would give the governor greater discretion over the money.

"Several of the amendments give the executive great latitude in spending," Comptroller Thomas DiNapoli said in a statement.

Some of the proposed changes by Cuomo would impact a $1.5 billion Upstate Revitalization Fund. The money would be moved from a specific fund to three $500 million funds under the health and transportation agencies. Also, the revised proposal would focus the fund mainly on job-creation incentives — not on infrastructure needs.

Lt. Gov. Kathy Hochul wrote a letter to the state Legislature on Friday urging lawmakers to back the fund. The letter comes amid criticism that the plan would provide $500 million to the three winning regions of the state, but leave the other four who are eligible with nothing.

To address the concerns, Cuomo has revamped the program so it would be managed through the state's regional councils program and would provide no less than $90 million to each of the 10 regions of the state. The three $500 million winners would get $100 million a year for five years.

"This a bold, forward looking plan that has the potential to transform upstate New York's economy," Hochul's letter said. "This is an opportunity of a lifetime for upstate."

Cuomo has argued that if the competitive fund can be used to create permanent jobs, then upstate would have a better economy that could fund infrastructure needs.

"What the governor is proposing with his upstate agenda has a long-term focus — building an economy for upstate's future," Hochul wrote.

Still, the Citizens Union report claims that it's hard for the public to track spending the budget, particularly after the plan is approved by the Legislature. The state's fiscal year starts April 1, and legislative leaders and Cuomo are in negotiations on a final deal.

Cuomo's office disputed the report, saying about half of the $2.6 billion in lump funds would be part of the SUNY challenge grant program.

"Much of what they call discretionary is actually a defined competitive process in which the SUNY campuses make detailed proposals that are judged based on specific criteria to assure that taxpayers get the best bang for the buck," said Morris Peters, a spokesman for Cuomo's budget office.

The report also showed that lawmakers still have pots of unused earmarks for pet projects, so called pork-barrel spending. The state ended the member items in 2010, but some of the money that has been unspent still exists.

The Senate has $72 million left and the Assembly has $53 million left, the report said, and they are seeking to have the money re-appropriated in the upcoming budget.

The money has been at the heart of most scandals in state government, with lawmakers accused of getting personal benefits in exchange for giving grants to organizations. Former Assembly Speaker Sheldon Silver, D-Manhattan, was charged Jan. 22 for allegedly giving state grants to a doctor in exchange for referrals to a law firm where Silver was employed.

Cuomo has sought to stamp out the member items, but critics said it's led him to have greater control over state spending.

"The risk of corruption continues as long as decision-making on lump sum pots of funding remains in the shadows," Dick Dadey, the executive director of Citizens Union, said in a statement.

JSPECTOR@Gannett.com

Twitter: @gannettalbany