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Guv's plan to curb salaries falters

New York State Gov. Andrew Cuomo, in this

New York State Gov. Andrew Cuomo, in this file photo, announced that Con Ed union workers are returning to work to help deal with storms. (Jan. 17, 2012) Credit: Newsday/J. Conrad Williams, Jr.

Criticizing what he called excessive salaries at organizations that contract with the state, Gov. Andrew M. Cuomo this year moved to limit the amount of taxpayer money that could be used to pay those salaries. But finding a way to do that has been a challenge.

Cuomo signed an executive order in January that would cap the amount of state funds that could go toward executive salaries at $199,000 at both nonprofit and for-profit organizations. It also would require that 75 percent of state money go toward services rather than administrative costs. Those rules were supposed to be in place this month, but Cuomo pushed the deadline back another month.

Officially, the administration has said more time was needed to come up with complicated rules. But pushback from nonprofits has been significant.

"The blowback after the executive order was issued was pretty strong," said Dick Dadey, executive director of the Citizens Union, a watchdog group. "There is abuse that needs to be addressed, but a one-size-fits-all solution is not the right answer."

The problem is that some of the organizations covered are large corporations that serve a vital public interest, he said.

"In order to attract the talent necessary to lead those kinds of institutions, you need to pay executives well," Dadey said. "The governor was well-intentioned, but not as fully informed as he should have been in addressing this issue."

Some of the strongest opposition has come from the health care sector, where hospital executives tend to be among the highest paid.

"If there was a hard cap, there would be such an enormous brain drain out of New York," said Kenneth Raske, president of the Greater New York Hospital Association. "There is clearly a national marketplace for these individuals and people from New York get recruited to other cities and people in New York have been recruited from other cities to come here."

In his January budget address, the governor pointed to an unnamed education services company whose chief executive made $3.2 million in salary, fringe benefits and stock options as an example of out-of-control pay.

Both the Senate and the Assembly included language regarding the compensation of service providers in the one-house budget bills they passed. However, their language was far apart. The Assembly version was very similar to that of Cuomo's executive order, which dealt with both nonprofit and for-profit service providers.

The Senate version was limited to nonprofits. It also had no hard cap, but rather said that nonprofits had to follow a procedure to ensure that salaries were comparable with those at similar organizations. Neither version made it into the final budget.

State Sen. Carl Marcellino (R-Syosset) introduced another, similar bill this month. The bill doesn't yet have a sponsor in the Democratic-led Assembly.

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