Editorials of The Times
Posted November 25, 2018 9:30 p.m. EST
An Albany Raise, With Income Limits
While the $79,500 salary for members of the New York state Assembly and Senate is among the highest for legislators anywhere in the country, it is comparatively low for top talent in a costly state, especially in New York City and its suburbs. Some lawmakers seek additional income from outside jobs, which has led to conflicts of interest and, at times, corruption.
In an unusual arrangement that was part of the state budget deal approved this year, Gov. Andrew Cuomo and the Legislature created a committee to consider raises for legislators. The four-member committee — state Comptroller Thomas DiNapoli, former state Comptroller H. Carl McCall, city Comptroller Scott Stringer and former city Comptroller William Thompson Jr. — is supposed to issue its decision by Dec. 10. Unless the Legislature formally rejects it, their proposal will become law on Jan. 1.
With this small bit of Albany craftiness, state lawmakers may be able to get a raise without having to actually vote for one. Some lawmakers are reportedly lobbying for a $148,500 salary — matching the salary of the New York City Council, but about $24,000 more than required to compensate for inflation since their last raise 20 years ago.
But any raise must come hand-in-hand with genuine ethics reform. Any substantial raise needs to be accompanied by a ban on outside income — the higher salary implicitly recognizes that the position is a full-time job — and on the stipends for committee chairs known as “lulus,” which legislative leaders use to reward or punish members, consolidating power and making the lawmaking less democratic.
To see the corrupting potential of outside income, look at former Assembly Speaker Sheldon Silver, who was convicted in May on extortion and money laundering charges. Prosecutors said two real estate developers gave Silver kickbacks through a law firm for backing legislation they wanted. Prosecutors also said he directed state grants to a doctor who in turn referred cancer patients to a law firm that gave Silver some of its fees. Silver performed no legal work for the firm, Weitz & Luxenberg, but was paid for referrals to it.
Some have argued that the language that created the committee does not allow it to do anything other than increase lawmaker pay. It is worth pausing here to marvel at the hubris of lawmakers and Cuomo, who have drawn up a panel with the power to give Albany a raise, but only an ambiguous ability to enact the reforms that should accompany it. So the committee needs to be bullish in its interpretation of the law, requiring reforms as part of the deal. Otherwise, the members of this committee will be lending their own names to another specious Albany backroom deal, with taxpayers footing the bill for years to come.
If state lawmakers want to be paid as much as New York City Council members, they should be willing to act as responsibly. In 2016, city lawmakers took an open vote to increase members’ pay from $112,500, while banning most forms of outside income and lulus.
The pay committee should do one of two things: reject any pay raise unless the Legislature bans lulus and outside income before Dec. 10, or, in their final report on that day, set a pay raise along with those two bans. If lawmakers think the committee does not have the authority to do more than set pay, they can reject the report and do what they should have done to begin with, enact the changes themselves.
It is the responsibility of the committee members, people of good reputation, to do the right thing rather than playing along with Albany’s games and accommodating anything less than what New Yorkers deserve.
Good government demands fair compensation for lawmakers, but only when they earn and keep the public’s trust.
Is Exxon Conning Its Investors?
In August, a lawyer for Exxon Mobil told a state court in Manhattan that New York’s attorney general should either sue the company for misleading investors about the impact of climate change on its finances or drop the case. “They should put up or shut up,” the lawyer, Theodore Wells Jr., said of a tangled case that had dragged on for more than two years. The weary judge, Barry Ostrager, agreed. “This cannot go on interminably,” he said.
Put-up time has arrived. Late last month, Attorney General Barbara Underwood filed a fraud lawsuit against the company. Exxon responded with a 38-page brief basically denying everything. And Ostrager has set a trial date for October of next year.
Much can happen between now and then — a motion to dismiss, for instance. But the judge’s decision to allow the case to proceed could provide a rare teaching moment that allows the public to see a powerful company grappling with the kinds of choices that all legacy fossil fuel companies will surely face in a carbon-constrained world.
The case is not a rehash of the copiously documented charge that Exxon had for years subsidized climate change denialist groups even as its own scientists were acutely aware of the dangers of global warming. That charge is partly what inspired Underwood’s predecessor, Eric Schneiderman, to begin investigating the company in the first place. But Exxon has since agreed that climate change is a problem, supported the Paris agreement and invested in cleaner fuels. Nor does the suit hold the company responsible for climate change, unlike several cases against the fossil fuel industry brought by New York City and other localities seeking damages from the rise of sea levels and other consequences of a warming world. Most of these suits have been thrown out of court.
Instead, the suit is a straightforward shareholder fraud case contending that Exxon deceived investors by saying publicly that it had fully accounted for the risks of climate change while in fact deliberately minimizing and, in some cases, ignoring these risks when making its business decisions. These actions, the suit charges, inflated the company’s value by making it appear to be on firmer financial footing than it actually was.
The case is also numbingly complex, involving competing claims about arcane “proxy costs” — theoretical calculations of the expenses the company would be likely to incur when stringent government regulations kick in to limit the emissions of climate-altering compounds. The suit claims that even as Exxon assured investors that it was applying rigid accounting to operations and holdings, in practice it was not, thus avoiding painful write-downs on oil and gas reserves it might have to abandon if the true costs of regulation were taken into account. In one example, the suit charges, the company failed to apply publicly stated proxy costs to 14 oil sands projects in Alberta, Canada, leading to undercounting future regulatory expenses by $25 billion.
To all of this, Exxon has two main responses. First, it says, the attorney general misunderstands the way the company calculates and applies costs. Scott Silvestri, an Exxon spokesman, said in a statement, “The company looks forward to refuting these claims as soon as possible and getting this meritless civil lawsuit dismissed.” Second, echoing what the company has said from the beginning, it claims that the inquiry is basically a witch hunt inspired by interest groups and Schneiderman, a politically ambitious Democrat.
Given the case’s complexity and the extensive documentation assembled by both sides, we do not envy the task facing Ostrager, either in deciding the merits or in assessing stockholder damages down the road, should it come to that. Calculating the climate change liabilities that any company might incur decades into the future is anything but an exact science.
But thanks to the judge, we will have a window on the world of the old fossil fuel companies that for generations have powered the global economy but that are now held heavily culpable for climate change and its consequences. They inhabit a perilous landscape, where changing their business model will almost certainly mean giving up much of their core business. The lawsuit clearly implies that if Exxon had properly anticipated the costs of regulation and honestly applied them to its investment decisions, it might not have sunk billions into carbon-intensive projects like the Canada tar sands. Indeed, it might have used that money to build a stronger portfolio in cleaner fuels.
And so it is and will be with these companies. They can carry on, extracting coal and oil and gas from the ground, exposing the world to the ravages of climate change. They can slowly transition from these dirty fuels. Or they can aggressively adopt a different, cleaner path. That is what this case is ultimately about.
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