Introduction

Thank you.

Four years ago, many people voted for Mike Bloomberg because they thought his great wealth would allow him to bring a new, innovative, incorruptible spirit to city government.

Unfortunately, he’s betrayed the reform movement.

He has opened the door for the worst business practices.  He presides over an administration where he and his minions routinely operate in secrecy, work exclusively with close allies, and put the deal ahead of the public interest.

Mike Bloomberg has let the Enron ethic invade City Hall.

I want to talk today about the need to reform our City government.  The problems are obvious:

Too many insider deals.  Special connections have bought the right to special deals.

Too many dark corners.  Too much of what happens in our City happens out of the public’s view.

Too much off-budget.  Too much of the public’s money is spent and misspent without any public oversight.

So today, I will present a three-part plan to end insider deals and secret budgets.

An attack on special connections, special favors, and backdoor spending.

It is amazing to me that in the most innovative city in the world, where people in business and the arts come up with new ideas everyday, we have so few new ideas about how government can solve problems.

I propose real solutions: legal requirements that ban insider deals, regulations that end pay to play, and laws that open up the bidding process and make our City’s budget truly transparent.

An End to Insider Deals

First, we need to end the era of insider deals.

I would ban one of the worst forms of insider abuses.  Today, I’m sending a Petition to the Conflicts of Interest Board that would legally forbid an elected official from being lobbied by their campaign consultants. I think Roberto Ramirez was right to say he wouldn’t do it, and I think the City Council Speaker, and the lobbyists who moonlight on his campaign staff, should adhere to the same standard.

The federal government’s “revolving door” law prevents individuals from jumping haphazardly between roles within an industry and the bureaucracy that regulates it.  A similar standard should be established in City law.  The rule I propose will require elected officials to recuse themselves from matters on which their campaign consultants lobby. The Conflicts Board will be required to consider it within 60 days.

We also need to ban all types of pay to play special deals.

As you know, the Mayor has set up NYC2012, the umbrella organization pushing for the Olympics.

Last year the city’s Conflicts of Interest Board issued a formal opinion allowing Deputy Mayor Dan Doctoroff and Mayor Bloomberg to raise money directly for NYC2012, something city officials usually cannot do.

Now as the New York Observer has pointed out “donors include virtually all the big names in city real estate and many major players in finance and construction. Among them are the recipients of six of the seven multimillion-dollar corporate-subsidy packages issued since Mr. Bloomberg took office, including the Hearst Corporation, Bank of America and Pfizer.”  The owner of the NY Jets gave NYC2012 a million dollars.

And, because NYC2012 is private organization, without any mandated disclosure or oversight requirements, that may just be the tip of the iceberg. One lobbyist was quoted as saying, “If a client came to me and said, ‘Look, I want to get in with this administration,’ I’d say, ‘Hey, give to the Olympics.”  

The Mayor has proposed limiting what anyone with a city contract can contribute to an elected official.  I support that.

But his plan doesn’t go far enough.  If we want to eliminate “pay for play,” we have to extend the public disclosure requirements to all public-private partnerships like NYC2012, so our City’s spending is beyond question.  There should be no scent of special favors.  Nobody should be able to say there are any secret backdoors to City Hall influence.

An End of No Bid Contracts

The second major area of reform I propose is to enforce transparency in all our City’s property dealings.

Is it any wonder people lose faith in government when individuals who are close pals with those in City Hall get great deals on City property without a real bidding process?

It’s what the Jets stadium has come to typify.  The Jets stadium on the West Side is a bad idea.  The fact they tried to do it in secret and backdoor – that is a scandal.

A budget strategy based on openness and accountability is not only the right thing to do, it pays big dividends. Let me be very clear.  Openness gained us seven times the $100 million Mike Bloomberg had wanted for the right to develop that prime waterfront site on the West Side.  Given a completely open process – devoid of the intimidation that has characterized the most recent bidding scheme – I think we could do even better.

Now if we had full openness, I believe the stadium would be built in Queens, where it makes the most sense.  The West Side land could be sold to expand housing, generating hundreds of millions for the City. And the Queens stadium could help invigorate the economy there.

The Jets are called the Jets because they played near LaGuardia. Let’s bring them home.

One of my first acts as Mayor will be to demand that every City property put on the market be sold in open bidding consistent with the project’s public purpose and the community’s needs. No more secret deals.

And now that the MTA has received bids on the rights to develop Hudson Yards, we should take immediate steps to guarantee openness and accountability going forward.  This week I’ve called for all the documents from the bids to be made public on the Internet, for the City and State Comptrollers to do a real evaluation of the worth of the bids, and for the folks reviewing these bids to have no connection to the 2012 committee or to City Hall which has orchestrated the Jets bid. The people of New York City have a right to know that this is a fair and open process and the winner had the best bid. No more, no less.

The principle of open and accountable government keeps taking a beating. As reported in the Village Voice, Newsday, and the Daily News, the City has repeatedly entered into deals forged without competitive bidding that ended up favoring close allies of City Hall. This time it is a “tri-party” agreement the City did with a major donor to its Olympic 2012 fund in the Bronx. The deal is loaded with benefits for the developer, including waiving the mortgage recording tax worth $12 million and a $32.5 million city guaranteed loan.  This part of the City may need to be developed, but it should be done in an open and fair way, not with special deals that raise questions about whether only political allies need apply.  If you look at this chart from Newsday, you can see all the special favors given this insider developer.

The rule in New York City government should be that all transactions are open and accountable. Period.

If we institute the real reforms I’ve described  – rules to block pay to play, and require public property be put up for real open bidding with real disclosure – we will have two thirds of a new reform process.

The Beginning of Truly Open Budgets

The next piece of the puzzle is to make our budgets truly open, so the public can examine them.

A lot of people were upset when the mayor and the City Council raised property taxes 18.5%.  They should be outraged that the City loses $1.5 billion annually because the most property owned by New York State and affiliated authorities has been taken “off budget,” and therefore isn’t subject to the City’s property tax.

Let me give you one key example of “off budget” expenditures that are costing our City terribly.

Funds that are not collected because of tax exemptions are called "tax expenditures."  But the term is not accurate because it sounds as though it involves the active spending of tax dollars. But these tax dollars are not being collected in the first place. There is no budget process here.  These costs occur "off-budget." As the non-profit, non-partisan City Project’s State of Distress report notes, these funds “do not appear as expense items anywhere in the city's budget and are therefore not subject to the public scrutiny or accountability of the formal budget process.”

Let me read you from the conclusion of the State of Distress report: “remarkably, the total amount of specific sources of city revenues lost through all categories of property tax exemption – officially referred to as “tax expenditures,”…is not reported in any official city document.”

Guess what? Without any accountability and in less than 30 years, we went from taxing almost 67% of the City’s real estate to taxing just over 40%. We lost almost one third of the City’s property taxes.

The state government owns almost 1,000 properties in New York City and pays taxes on only 12 of them.  One commentator has rightly called the State’s compensation to us, “token.” We do not get our fair share of tax money back from Albany, and then to add insult to injury, we give them huge tax breaks.

Let’s be clear, that’s not money the average working person is avoiding paying – those are insider deals that protect the state and state controlled public authorities. If you fully taxed all of them, you could save the City at least $1.5 billion.

I would do that – but I would first make the whole process transparent. We should have a budget process that includes the real cost of letting properties go untaxed.

These three principles: a ban on insider deals and all pay to play, a requirement that all property be sold in open bidding, and a truly open budget process are the right things to do.

This starts closing the back door to City Hall.  These reforms offer sunlight instead of the old backroom deals.

These reforms aren’t just the right thing to do.  They save real money – more than $1.5 billion without even counting the savings we would accrue by ensuring that City property was sold through open bids.  That’s more than enough to cover next year’s budget deficit.  Incidentally, it would also be enough to construct an Olympic Stadium on the West Side – or two in Queens.

In coming weeks, I will be talking about how I think we should spend these savings.  But right now I hope we start a debate about doing the government’s business in a better more open way.

It’s true I am not the candidate of well connected developers or the political insiders who want to control patronage. I never have been, I never will be.

But there is something more powerful than being an insider – there are a lot more outsiders than insiders. And together, we will bring a new era of open government to New York City.

Thank you.