NYC Slush Funds
Come Under Scrutiny

New York City mayor Michael Bloomberg and the city council speaker may have soiled their image as advocates of transparent government as they scramble to explain how millions of dollars were allocated to fake organizations.

Speaker Christine Quinn said the council has appropriated about $17 million since 2001 to bogus groups as a way to set aside city money for future use. The amount included in the city budget has grown over the years -- last year $4.5 million was hidden this way of more than $50 billion.

Quinn, a likely Democratic mayoral candidate next year, said the practice of setting aside what she called ''reserve funds'' dates back at least 20 years and spans the terms of several council speakers. The use of bogus organizations dates to 2001, she told reporters Thursday after the story was first reported in the New York Post.

She said she first learned of the maneuver last spring while working on the fiscal 2008 budget. She ordered an end to the practice but said her staff did not listen to her and did it anyway, until a few months ago when the council was pulling together information at the request of federal and city investigators looking into a broader matter related to council finances.

''It's something that I believe is completely inappropriate and should not have gone on and will no longer go on,'' Quinn said.

Asked Thursday about the practice of concealing money in the city budget, Bloomberg said he was not aware it was going on and said he would not have signed budgets if he'd known they included fake appropriations.

The two highest-ranking members of the council's finance division have left their jobs. Quinn did not comment directly on other potential repercussions for staff who did not follow her orders.

The issue could complicate Quinn's political future of Quinn, who is in her third year as speaker of the 51-member city council. She is also the first woman to hold the post and the first openly gay speaker.

Her tenure in City Hall has been noted for the way it changed the tone between the speaker's office and the mayor, a political relationship that historically is characterized by high drama and animosity.

She and Bloomberg have worked closely on many legislative projects, including their recent attempts to make government transparent and accountable to New Yorkers. (AP)