ALBANY – The big pay boost for lawmakers and top state officials is a done deal, but for a minority of legislators a dilemma has been raised: quit their legislative jobs or their outside jobs?
It’s a situation created Monday night with publication of the final report by a state pay hike commission that gives lawmakers a 64 percent raise over the next two years but also restricts, and in some cases bans, outside income.
“It’s reflective of an attitude which is elitist and doesn’t appreciate the fact that there’s a value to individuals with real world experience working in government,’’ said Sen. Michael Ranzenhofer, an Amherst Republican.
Ranzenhofer is one of those lawmakers who, at some point in the coming year, unless something creative happens, faces the prospect of having to quit his own law firm if he wants to stay in the Senate.
On Tuesday, the senator was deriding the work of the four-person pay panel, which was composed of longtime Democratic Party insiders that awarded the pay hikes to the now-Democratic run Legislature and the Democratic-controlled statewide office holders, including Gov. Andrew M. Cuomo.
Some were privately wondering whether this wasn’t part of a plan to drive more Republicans out of Albany and put their legislative seats into the hands of Democrats.
“This is a panel made up of four New York City individuals who couldn’t be bothered coming to central or Western New York to hear from the residents who live here,’’ Ranzenhofer said of the pay panel and its brief and geographically limited public hearing schedule.
Ranzenhofer is a partner in a Western New York law firm. In 2017, he reported making between $120,000 and $200,000, mostly from the law firm, according to ethics filings. The pay panel’s report said he and others like him would have to give up that law firm income by January 2020 if they want to continue serving in the Legislature.
Is he quitting his outside job? “That I don’t know, but my plan is to fill out the term to which I was just elected,’’ said Ranzenhofer, whose next term starts Jan. 1 and runs through 2020.
The Committee on Legislative and Executive Compensation, which only recently popped up into public view, on Monday night released its report that largely confirmed what panel members said last week was their intention to give lawmakers a series of raises from their present base pay of $79,500 to $130,000 by Jan. 1, 2021. The Legislature has not had a raise since 1999.
Outside income restrictions, bans
The pay panel borrowed from a U.S. Congress model. It said Monday night that outside income cannot exceed 15 percent of the new base pay level, which come Jan. 1 will rise to $110,000. The panel said the outside income restrictions will “eliminate both the perception of and any actual conflicts amongst the membership in the two houses.’’
But the panel went further with some occupations: It banned outside income outright from jobs that have a “fiduciary” responsibility to a person or firm. That would cover an assortment of jobs, including lawyers, insurance executives, accountants, many financial sector jobs and, in the case of one Albany-area Assembly Democrat, a pharmacy owner. Unless they find some creative solution, they face an option: quit their legislative job or quit their outside job.
Assemblyman Andy Goodell, a Jamestown-area Republican, reported earning up to $50,000 in 2017 from work at his Goodell & Rankin law firm, according to public ethics filings. Goodell said he doesn’t know what he will do yet in a year when the outside income rules take effect, but he believes one thing: It takes an act of the Legislature, with agreement by the governor, to give lawmakers a pay raise. Doing so in a backdoor way via a four-person pay panel is illegal, he says.
“It’s absolutely a possibility,’’ Goodell said when asked if he might take the matter to court. If he doesn’t, it’s likely someone else will in a challenge likely to focus on the ability of an unelected panel to essentially create laws.
The pay panel also sharply boosted the pay of statewide elected officials – Gov. Andrew Cuomo will see his pay go from $179,000 presently to $250,000 in two years. Agency commissioners will also get a big pay hike, but they and the statewide officials will not be guided by the same outside income rules being imposed on lawmakers.
“From my perspective, the state Legislature throughout the history of New York was intended to be a part-time Legislature composed of citizen legislators,’’ Goodell said. He said individual expertise of lawmakers with outside businesses is constantly being called upon for guidance when laws are being considered.
“So, those unemployed other than their legislative position with no business background or private sector employment would be eligible to serve and everyone who’s a successful business person and who understands the challenge of operating in the private sector would be banned from serving unless they give up their businesses,’’ Goodell said.
Political protection for raises?
The Legislature several years ago came up with a more politically palatable way to try to get pay raises than having to directly vote on one. This pay panel approach required the commission to deliver a report by Dec. 10 stating whether lawmakers and the others were eligible for a pay hike, and to what specific levels. But critics, during hastily called recent public hearings, told the panel its work was unconstitutional. Pay raises needed to be adopted in law, not designated to an unelected body, critics say.
The panel’s recommendations – for pay levels, outside income restrictions and the dropping of many stipends for legislative committee and leadership posts – become binding on Jan. 1. The only way they can be stopped is if the Legislature returns before Dec. 31 and vetoes the pay panel’s report.
“I think the legislators need a pay raise,’’ Cuomo told a public radio station this week. He said the new pay levels will allow lawmakers to better make ends meet and “not be a martyr.’’
Regarding his own big pay hike, Cuomo said, “I’m not doing this about the money.’’ He said state agency commissioners need a pay boost because he is having a “real problem” attracting talented people to the lesser paid state government.
New York State, according to the New York Public Interest Research Group, will now have the highest paid state lawmakers and statewide elected officials in the nation.
Cuomo said the hand-wringing over the pay panel’s legal authority can be easily solved by lawmakers in 2019 when, he said, they could put into statute the outside income and stipend plans advanced by the pay commission. If it also decided to pass a separate pay increase change in law, the Legislature would have to delay seeing higher paychecks until 2021 because of language forbidding lawmakers from raising their pay during a current, two-year term.
The panel’s members were H. Carl McCall, the former state comptroller; Thomas DiNapoli, the current comptroller; Scott Stringer, the New York City comptroller; and William Thompson, a Cuomo ally and current City University of New York board chairman. All are Democrats.
One theory: Imposing stronger outside income restrictions will force some Senate Republicans to quit rather than give up their outside jobs, making it possible for Democrats to pick up those seats and grow their already considerable majority in the Senate even further.
Sen. Chris Jacobs, a Buffalo Republican and businessman, in 2017 reported earning between $241,000 and $470,000 in outside income. But Jacobs, in an email response, said he does not believe he would be affected by the outside income restrictions because much of his earnings come through “passive investment” income in various real estate ventures.
“I think having members who have work experiences outside government provides us with an important ‘real world' perspective and makes us a better legislative body. I really think full transparency on any outside income is where we should be focusing,’’ Jacobs wrote.
A number of other lawmakers, Democrats and Republicans alike, have outside income, but appear to be below the ceiling being imposed by the pay panel.
But others face real dilemmas. Republican Assemblyman Michael Norris reported earning between $110,000 and $190,000 from work related to his Clarence law firm. Under the commission’s new order, he could get a big boost in his Assembly pay but, one year from now, he’d have to end all outside income associated with his legal work. He did not return a call for comment Tuesday.
Assemblyman Stephan Hawley, a Batavia Republican, in 2017 reported making as much as $450,000 from different sources related to his insurance business. He, too, it seems would have to separate himself from that business if he wanted to continue as a state lawmaker.
Hawley said he views his legislative job as an “avocation” but that he has invested much in his insurance business, which has nine employees in downtown Batavia. Hawley voted against the measure that created the pay commission and says lawmakers are being remiss in not taking a direct vote on a pay increase.
“I have an occupation, and folks that work for me and our clients depend on me for quality service. If push came to shove, I’d have to relent and not continue as an assemblyman,’’ Hawley said if the situation does not change in 2019 and he is forced to choose between the two jobs.
Outgoing Senate Majority Leader John Flanagan, a Suffolk County Republican, said he agrees with the pay panel’s salary increase for lawmakers. But he said the panel “significantly overstepped its authority” by “severely” limiting outside income. “The committee was never tasked with making any determination on that matter and should not have made one. By doing so, they alone are deciding who is eligible to run for public office in New York and who is not,’’ Flanagan said.