Budget Practice Trips Quinn, a Backer of Openness
In her evolution from a campus activist nicknamed Mad Dog to the first female speaker of the City Council and a likely candidate for mayor, Christine C. Quinn has taken care to project an image of reform and an openness about the workings of government.
Since taking office in 2006, Ms. Quinn has devised a more public system for reporting pork-barrel spending and has muscled tough new restrictions on lobbyists through a resistant Council.
But Ms. Quinn, facing her first significant embarrassment as speaker, has spent much of the last 48 hours trying to explain how the Council ran what many government experts have called a strange and even disturbing system for stashing away taxpayer dollars. For years, the Council budgeted millions of dollars for dozens of fictitious community organizations and used the money later for grants to favored neighborhood groups.
The Citizens Budget Commission, an independent watchdog organization, was bluntly critical of the practice on Friday: “There is no excuse for fictional items in a budget,” the commission said in a statement. “All elected officials bear responsibility for the budgets that they adopt, and Speaker Quinn, in particular, should be held accountable for the City Council’s fiscal practices.”
Ms. Quinn, despite her reputation as a focused manager with an understanding of the levers of city government, has said she knew nothing of the unorthodox budgeting practice. She and her staff have gone to great lengths to show that she had tried to put an end to it but was stymied by staffers she forced out.
For the moment, no one has stepped forward to contradict her account, and there is no evidence that anything about the system was illegal or that any money was misspent. Mayor Michael R. Bloomberg has expressed confidence in her, calling her “the most honest person I know.”
But Ms. Quinn’s defense hinges largely on her assertion that when she learned about the practice she immediately ordered it to cease, only to learn that her staff disobeyed her and carried it on for several more months.
“There were meetings, there were oral conversations,” Ms. Quinn, a Manhattan Democrat, said Thursday. “There were many people in the numerous meetings with myself and the finance staff during the budget process, with many people in the room who can confirm that.”
On Friday, however, when Ms. Quinn’s office was asked to produce some of the “many people” who could confirm it, only her chief of staff stepped forward, saying he had remembered her noting in one meeting that they would no longer use the reserve system.
And numerous former and current City Council officials said Ms. Quinn had during her tenure taken an unusually active role in overseeing the budget, leaving them wondering how she could not have known or, if she had truly objected to the practice, authoritatively ended it.
“It’s an off-line extra budget slush fund within the city’s budget, and it’s used at the discretion of the speaker,” said Dick Dadey, executive director of the Citizens Union, who joined Ms. Quinn to overhaul the lobbying rules and is now calling for all future Council appropriations to be monitored by an outside agency. “Given the speaker’s drive to create more transparency about the Council’s own budget and member items, it would have been appropriate to go public with this bad practice even if it did shine a bad light on the Council.”
Indeed, the revelations have been particularly troubling for Ms. Quinn, consultants said, in part because she has made open government a mantra of her tenure as speaker.
“She’s no Eliot Spitzer,” said Kellyanne Conway, a Republican political consultant, “but we have a very recent example in the governor’s precipitous fall from grace that the more you crusade as someone having a transparent budget, open to the public, governing according to ethics, then the higher those accountability standards will be.”
Councilman Tony Avella, who has pushed for more disclosure in Council spending practices and is also planning a run for mayor, asked Attorney General Andrew M. Cuomo in a letter sent Friday to investigate the practice.
Ms. Quinn declined to comment on the matter Friday. Whether she will be able to survive and pursue higher office, analysts said, will depend on the results of the current investigations into Council finances by the United States attorney’s office and the City Department of Investigation. But already, she has suffered some damage.
“It’s a lose-lose situation,” said Douglas A. Muzzio, a professor at the Baruch College School of Public Affairs who once worked for the Council. “Either she knew what was going on and condoned it or she thought she had taken care of it but didn’t. If I’m running against her, I’m saying, she can’t keep track of her office, how can she keep track of a $60 billion budget?”
Ms. Quinn, who worked for five years as chief of staff to Thomas K. Duane, a former councilman, before winning a Council seat in 1999, said she had been vaguely aware that money was put aside in some sort of reserve accounts before becoming speaker in January 2006. But she maintained that it was not until the spring of 2007, well into her second budget cycle as speaker, that she learned that money was being parked in reserve accounts known as holding codes.
She said she made it clear in a series of budget meetings and conversations with her staff that the practice was to stop. But last fall, she said, she learned that not only was the practice continuing but that the money was being parked in accounts named for fictitious groups.
On Friday, Ms. Quinn’s staff was pressed to produce people who were in the meetings and who could corroborate the speaker’s account. By late afternoon, however, only Charles Meara, the chief of staff, came forward, saying in a statement that he had “attended several meetings with Council Speaker Quinn, members of the City Council Finance Division and other senior staff regarding the city budget.”
“At one of those meetings,” the statement continued, “I clearly recall Speaker Quinn stating that we will no longer use holding codes to keep reserve funds.”
James McShane, Ms. Quinn’s communications director, said late Friday they could not provide other people to confirm the speaker’s account at this time.
It would be inappropriate “to comment further on who attended the meetings,” he said, given the ongoing investigation.
A person close to the speaker who said they were not authorized to speak about the matter, said Thursday that Ms. Quinn forced out two of her top finance staffers, Michael Keogh and Staci Emanuel, after the discovery of the problems.
Attempts to reach Ms. Emanuel were unsuccessful, and Mr. Keogh, now with Bolton-St. Johns, a lobbying and consulting firm, has not responded to several requests for comment.
But Norman Adler, president of Bolton-St. Johns, sharply denied accounts that Mr. Keogh was pushed out. He had been pressing Mr. Keogh to join his firm for a year and half, he said, but was told that he was committed to stay with Ms. Quinn through the end of the budget cycle, and then had some unrelated issues that prevented him from moving over sooner. Mr. Keogh submitted his resignation letter on Jan. 3 — about six months after the budget for the 2008 fiscal year was completed.
“I aggressively recruited this guy,” Mr. Adler said. “He’s one of the most talented people in government.”
Ms. Quinn has also stressed in her defense that the use of fictitious groups to hold money in reserve dates back to her predecessors, Peter F. Vallone Sr. and Gifford Miller, a claim that records and former staff members under those speakers confirmed.