Governor Runs Against Dysfunction He Typifies

When Governor Paterson was asked Feb. 3 about his meeting with Floyd Flake regarding an endorsement a couple of days after awarding a group he leads a lucrative video lottery contract for Aqueduct Racetrack, his response had the sort of Zen-like obliviousness not much heard since Al D’Amato left public office.

As Mr. Paterson explained it to reporters, there was nothing untoward about the meeting, the nature of which he declined to discuss even though Mr. Flake had already stated its purpose. The former Assemblyman and politically powerful Queens minister had sought a meeting on an unspecified topic last summer, the Governor said, and he told him it couldn’t happen until the process for awarding the video lottery franchise was completed.

By the time they met last week, he continued, “the group was already selected. . . the issue that brought us to the meeting was separate from the Aqueduct deal.”

REVEREND FLAKE, MEET GOVERNOR FLAKY: Shortly before Governor Paterson (left) vetoed a bill prescribing legislative ethics reforms on the grounds that it didn’t go far enough, he awarded a videolottery franchise at Aqueduct Racetrack to a group headed by Rev. Floyd Flake despite questions about its bid and investors, then sought the influential ex-Assemblyman’s endorsement. No Retroactive Payoffs?

He seemed to be saying that this meant that the video lottery contract award couldn’t be construed as a legal bribe for political support if it was awarded before such support was actually received. It was logic worthy of Mr. D’Amato when he was a U.S. Senator and displayed such ethical brazenness that after Armand D’Amato was caught using his office stationery to lobby for multimillion dollar Navy contracts, the Inner Circle Show parodied Alfonse’s reaction as being, “I didn’t know Armand was my brother.”

Beyond the feigned obtuseness of the Governor’s response, he wasn’t actually being accurate. Earlier that day, Assembly Speaker Sheldon Silver, who has the power to veto the deal, pointed out that one condition he had set for whichever firm was chosen was that it couldn’t employ anyone with a criminal record. One of the partners in Mr. Flake’s group, AEG, was Darryl Greene, who the New York Post reported was convicted a decade ago of ripping off city agencies for about $500,000. He resigned his role Feb. 8.

Adding to the stench emanating from the award was the fact that AEG initially offered the state $200 million up front in its bid on the contract, while the losing finalist, Penn National Gaming, had promised $301 million. Beyond that difference (AEG ultimately increased its up-front pledge to $300 million), Penn National has demonstrated its ability to run successful video lottery operations at racetracks, unlike AEG’s operatives.

And so the Governor’s choice seemed to have been made primarily to secure the election support of an influential Queens pastor who has become a financial powerhouse because of his flexibility when it comes to endorsements: although a bastion of black Democratic politics in the borough, the Reverend Flake in the past endorsed Republican incumbents including Mayor Rudy Giuliani and Gov. George Pataki. Prior to the award, he had indicated he was seriously considering backing State Attorney General Andrew Cuomo.

There may be some political logic in Mr. Paterson’s bid for a quid pro quo, however transparent it is. But it made his veto of an ethics reform package from the State Legislature that he argued didn’t go nearly far enough seem disingenuous. And it hardly squared with the public image the Governor has pursued as someone making tough and unpopular decisions because that is what constitutes leadership at a time when the state is struggling with a budget deficit that has reached $8.2 billion. (He announced during that press conference in his Manhattan offices that a new $750-million hole had appeared due to a combination of lower-than-expected personal income tax collections and higher Medicaid use. This prompted Mr. Silver to respond that his proposed budget issued two weeks earlier couldn’t have been thought through very carefully if the deficit had grown that much so quickly.)

Sticking It to the City

And there remain serious questions about whether the tough, unpopular choices the Governor made in his budget plan are actually good ones. It’s impossible to justify cutting all revenue-sharing funds for the city— about $650 million—when no other county in the state is losing more than 5 percent of its scheduled aid. His proposed cut in education aid would also hit the city disproportionately. And so he is ignoring a cardinal principle for persuading people to accept painful cuts: that the hardship has to be shared equally if you hope to avoid rebellions.

“We have a structural imbalance—he’s not exaggerating about that,” State Sen. Diane Savino said Feb. 5. “The state has a real problem.”

On the other hand, “Reducing the city’s [revenue-sharing aid] by 100 percent, that’s not something anybody expected,” she remarked. “To zero out the city doesn’t make sense. But it’s hard to extricate the politics from the budget process, and he’s struggling to find a message that resonates with voters.”

In this case, that would appear to be upstate residents who believe much of the economic woe their region suffers from is the result of too much aid to the city.

Mayor Bloomberg responded with a contingency plan attached to his own budget proposal that would add to the misery by slicing more than 15,000 jobs, many through layoffs, if the Paterson plan was adopted. And he aimed those cuts at the services most visible to New Yorkers: Teacher, police and fire layoffs, reductions in sanitation service. If enacted, they wouldn’t do much for the Mayor’s popularity, but unlike Mr. Paterson, he isn’t running for office this year.

And whatever voter anger was directed at the Governor would further diminish his already-minuscule chances of staving off a challenge for the Democratic nomination from Mr. Cuomo.

‘He Doesn’t Have a Shot’

One political consultant, who spoke conditioned on anonymity, said, “He doesn’t have a shot. There’s an antiincumbent fever that is more powerful than H1N1, and he’s had more stumbles than anybody. He can’t be blamed for the State Senate, but when there’s a vacuum of leadership, someone will step in and fill it.”

Mr. Paterson has tried to take advantage of the abysmal standing of the Legislature while castigating his old colleagues in the Senate for their irresponsibility. But he signed off on the deal slightly more than a year ago that gave prominent Senate positions to three of the worst characters in the body—Pedro Espada, Hiram Monserrate and Carl Kruger—in return for their backing Malcolm Smith for Majority Leader. Mr. Espada and Mr. Monserrate subsequently turned on Mr. Smith, essentially shutting down the Legislature for a month and costing him a post most people didn’t think he had the skills to handle.

Silver Shines by Comparison

There has long been an ethical question mark attached to Mr. Silver because of his of-counsel role to a leading law firm and his unwillingness to reveal his clients or his income, but the Assembly Speaker is viewed as statesmanlike alongside the other Albany political leaders. As the consultant noted wryly, “In the land of the blind, the one-eyed man is king.”

Mr. Silver likes to operate quietly, and so his recent statements eschewing his usual blandness to lance the Governor on both the video-lottery deal and the widening budget gap are noteworthy. Engaging him so publicly suggests that he not only has lost respect for him but believes he has become a liability for both the state and Democratic officials here. Mr. Silver may also have tired of Mr. Paterson’s biting criticism of legislators, which has to hurt them as Democrats try to preserve their slim majority in the Senate and the right to redraw election district lines based on the 2010 Census.

“Too many legislators are talking about [budget] restorations rather than reductions,” the Governor told reporters. “They are going to have to face reality.”

Reality for most elected officials has more to do with a single day at the polls than a budget quagmire that can always be finessed to delay the mostunpleasant consequences. And since their own chances of retaining office aren’t as grim as Mr. Paterson’s, legislators may feel they have a lot more to lose than he does if they make hard choices now.

An Odd Trip to Jersey

The perception of him as a lame duck makes it more difficult for him to persuade them to bite the bullet. But his own erratic behavior doesn’t help, either. His attempt to position himself as Gary Cooper in “High Noon” taking on the tough fight while others ran for cover got knocked off its horse last month when he was spotted in a New Jersey restaurant one Saturday afternoon with a woman said to be a family friend.

Completely innocent and strictly business, the Governor said. But she lives in Westchester and he moves between Albany and Manhattan, and so Jersey hardly seemed like a logical midpoint for a business meeting, even if traffic on the bridge was flying that day. The net result was that even if you gave him the benefit of the doubt, you wondered what exactly he was thinking.

People don’t ask the same kinds of questions about Mr. Cuomo these days. Instead they ponder how he has transformed himself from the hottempered, abrasive young man many remember even after he stepped outside his father’s shadow into someone who has let his accomplishments as Attorney General state his case for following his old man into the Governor’s Mansion.

An Imposing Gap in the Polls

The fact that Mr. Cuomo may not even declare his candidacy until early spring doesn’t seem to matter: a Quinnipiac poll released the same day as the Governor’s gloomy budget disclosure showed him 32 points ahead of Mr. Paterson, who also trailed likely Republican nominee Rick Lazio by a point. He and Mr. Lazio have both chided Mr. Cuomo to declare his position on the budget situation, but the Attorney General has said he’s just intent on doing his current job. He was able to match word with deed when he stepped forward last Thurs- day to announce a lawsuit against Bank of America and its former top executives for allegedly concealing massive losses at Merrill Lynch so that shareholders would approve a merger of the two giant financial institutions, then manipulating the Federal Government into propping up the deal with a multi-billion-dollar bailout.

Being able, in the current climate, to accuse a bank of “an enormous fraud” while suing to recoup some of its allegedly ill-gotten gains is as good as it gets when it comes to using the power of incumbency for political advantage.

Mr. Paterson, on the other hand, has to feel like the inheritor of a rotting house who has a shaky grasp of the steps needed to fix it up and a few unreliable contractors on the premises making matters worse. He knows it’s a mess, but he can’t bring himself to cut his losses and walk away.