Suffolk County Executive Race Heats Up

The Other Steve

Many questions continue to hound Levy months after he turned over his $4.1 million campaign war chest to Suffolk County District Attorney Thomas Spota, who said that a 16-month investigation had revealed “serious issues” with Levy’s campaign fund-raising. Until that day in March when Levy announced he wasn’t running, he practically had a lock on a third term. But then Levy did the unexpected, shocking the political world and provoking the New York Times to editorialize that “something strange and sleazy is going on in Suffolk County.” In his statement, Spota said he could have asked for Levy’s resignation, but didn’t. Why? He wouldn’t say. But he didn’t indict Levy, either. Spota just left him hanging as the lamest of lame ducks.

Meanwhile, Levy’s former friend, George Guldi, once a Suffolk County legislator, continues rattling the bars of his Riverhead jail cell after recently being convicted of insurance fraud and grand larceny. Key to the conviction was Guldi’s business associate, Ethan Ellner, now turned state witness, who was a convicted tax evader whom Levy, his old “workout buddy” and an usher at Ellner’s wedding, had recommended for $85,000 in county title-insurance work. Guldi, a Westhampton Beach attorney, has been firing off letters and legal briefs claiming that there are a “vast array of irreconcilable conflicts of interest between the District Attorney of Suffolk and Defendant George Guldi, and the witnesses and criminal defendants Ethan Ellner and County Executive Steve Levy.” Guldi accused Levy of figuratively buying himself a “Get Out of Jail Free Card” from Spota for $4.1 million.

Guldi, who’s serving a sentence of 4 to 12 years, is being held on Long Island pending the start of another trial in which he and several others are charged as being part of an $82 million mortgage fraud scheme. At the center of that prosecution supposedly stands Ellner, who’s accused Levy of trading contracts with the county for contributions to his campaign coffers—a charge that Levy and his aides have vociferously denied.

Levy began raising this huge sum of money when he was still ostensibly a Democrat but he was already paying increasing attention to former Brookhaven Town Supervisor John Jay LaValle, who’d become Suffolk County Republican chairman in 2009. LaValle persuaded Levy to switch parties in March 2010 so he could enter the GOP primary for governor. (Under party rules, however, Levy couldn’t even vote for himself because he hadn’t been a Republican long enough.) For LaValle, Levy had finally made the right move. Suffolk Democratic Chairman Rich Schaffer said that Levy’s action felt like “a punch in the gut.”

Levy’s long-time abhorrence of raising taxes and his determination to cut government spending have made him a suburban political powerhouse. But the popularity did not come free. The costs of his fiscal conservatism are coming clearer by the day. With Suffolk’s population of roughly 1.5 million, it’s larger than 11 states and, like many states, it’s not immune to the economic problems hurting the country, especially the poor and working class who depend on public services. A month ago Standard & Poor’s, the prestigious Wall Street rating agency, gave Suffolk a “negative outlook” for its $101.1 million bonding and said the county’s financial condition has “deteriorated due to ongoing weakness in economically sensitive revenues, notably sales tax” as well as the county’s worrisome use of its “rainy day” reserve funds since 2006. As of now, the county’s $2.7 billion budget for 2012 faces a $179 million shortfall, and the county’s indebtedness has doubled since 2003.

“There are some very significant structural problems that the next county executive will inherit,” said someone with direct knowledge of the county’s fiscal health who asked not to be identified. “This county executive’s solution to everything has been to cut. So a lot of the fat has been cut.”

This government insider said that Levy’s determination not to raise general operating fund taxes has accelerated the structural imbalance, or gap between recurring revenues and expenditures. “The climate is such that you can’t generate more revenue with taxes but we may have to!”

As Suffolk County treasurer, Angie Carpenter knows how much money comes in and goes out. With her campaign for county executive just getting underway, raising taxes is last on her to-do list.