New York's Comptroller Candidates Debate on MNN

new york comptroller

By Samar Khurshid for Gotham Gazette

 

New York State Comptroller Tom DiNapoli, a Democrat running for reelection as the state’s top fiscal officer, faced his three challengers on Tuesday in the first debate of the general election, hosted by Manhattan Neighborhood Network.

The four candidates offered their views on the powers and role of the state comptroller, charged with managing the state’s $207 billion public pension fund, overseeing state and local spending, auditing state contracts and the finances of hundreds of state agencies and authorities, and ensuring that New York’s debt obligations and funding needs are carefully calibrated to current and future revenue.

DiNapoli, who first took office in 2007 following the resignation of his predecessor, Alan Hevesi, amid scandal, was elected by voters in 2010 and 2014. He went unopposed in this year’s primary and is running with nominations from the Democratic Party, Working Families Party, Reform Party, Women’s Equality Party, and Independence Party -- his name will appear on all five lines on the November 6 ballot. His opponents include the Republican nominee Jonathan Trichter, who also has the Conservative Party ballot line; the Green Party’s Mark Dunlea; and Cruger Gallaudet, a Libertarian.

The debate, just over an hour long and moderated by Gotham Gazette Executive Editor Ben Max, will air on MNN and be posted to its YouTube channel on Sunday night.

It mostly saw DiNapoli defend his record against criticism from Trichter, a previously registered Democrat who switched his party registration to Republican and received the necessary Wilson-Pakula certificate to run on the party’s line this fall. The back-and-forth arguments between the two largely centered in wonky fiscal issues, some of which it would take an unaffiliated expert on state finances and constitutional powers to wade through (Gotham Gazette is working on a detailed fact check).

DiNapoli stressed that he has been a prudent steward of the pension fund and a strong, independent voice for sound fiscal practices, promoting reform and providing a steady hand both for an office previously mired in scandal and a state going through the Great Recession and its aftermath. Trichter alleged that DiNapoli has been a subpar investment manager and not a forceful enough voice for change in state budget and other fiscal practices where the comptroller has oversight.

Dunlea spent his time reliably offering up suggestions to divest the state pension from the fossil fuel industry and pushing for more accountability and transparency in the fiscal management of state authorities. Gallaudet had little to offer in terms of specific ideas, and instead repeatedly pleaded to viewers to reject the “duopoly” of the Democratic and Republican parties and to cast a ballot for the Libertarian statewide ticket. He said the comptroller race would be a good place for voters to use a “split-ticket,” presumably where they would select a Democrat (Governor Andrew Cuomo) or Republican (Marc Molinaro) in the governor’s race, in order to send a message, but also repeatedly said voters should examine Libertarian gubernatorial candidate Larry Sharpe.

DiNapoli States His Case and Defends His Record
“It’s really the office that promotes accountability and transparency in state government and local government as well,” said DiNapoli, explaining the role in his opening remarks. He also took a dig at Trichter for switching to the Republican Party, the party of President Donald Trump, and for claiming to be a financial professional though he has worked as a political operative in the past. Some of DiNapoli’s responses to Trichter, who attacked the incumbent in nearly every answer he gave, were as aggressive as most who’ve followed the typically mild-mannered comptroller’s career have heard from him.

“Unlike Jon, I have my values as a Democrat and have stuck with them all my life...If you have to sell yourself to get the nomination, I don’t think that’s the best standard to be running for office,” DiNapoli said early on.

DiNapoli touted his history of public service, as a local school board member for a decade and then 11 terms as a member of the State Assembly, where he served on the Ways and Means committee, he said. He defended being appointed to the position of comptroller by the Legislature in 2007, a move that was opposed by many newspaper editorial boards, Trichter had noted, arguing DiNapoli was unqualified for the job.

In his time as comptroller, DiNapoli said he has restored the integrity of the office, helped guide state finances through the Great Recession, and grown the pension fund to an all-time high. “That is an enviable record,” he said.

Trichter pitched himself as a candidate who would take a “fiscally pragmatic” approach to the comptroller’s office, banking on his credentials as a public finance expert with years of experience in the private sector as he critiqued DiNapoli’s management of state finances over the last decade-plus. He said DiNapoli had only created an average 6 percent growth over 11 years for the state pension fund, though his target was 7.5 percent, a gulf of $65 billion that he accused DiNapoli of extracting through taxation from municipalities. “The state comptroller has siphoned off local tax dollars ten times more than localities around the country have for their own public pension problems and underperformance,” he said.

Trichter said he would invest the pension fund in passive index funds such as the S&P 500 -- which mirror the rise and fall of the larger market -- and move away from investing in hedge funds and private equity, managers of which he said have received more than $6 billion in fees from DiNapoli’s office since 2007. “He’s paid $6 billion to hedge funds for underperformance,” Trichter alleged.

DiNapoli, in his defense, repeatedly accused Trichter of issuing misleading arguments and outright falsehoods, noting that the state pension fund grew by $100 billion under his tenure, that state pensions are funded up to 98 percent, with a diversified portfolio mitigating risk, and that the state weathered the storm of the recession. He also said New York’s outlook has been more conservative, with a new target of 7 percent growth for the pension system.

“To put all of our money in index funds would be totally irresponsible, to put all your eggs in one basket,” DiNapoli said, noting that hedge funds performed better when markets crashed during the recession, balancing out the poorer performance of public equity funds. “If we did learn anything from the global financial crisis, you have to be diversified.”

Dunlea, who co-founded the New York Public Interest Research Group (NYPIRG), a good government group, and the Fiscal Policy Institute, a nonprofit think tank, said the pension fund would be $22 billion richer if the comptroller had divested it from fossil fuels ten years ago, even as he praised DiNapoli for divesting from the private prison industry and taking some steps in the direction of fossil fuel divestment.

“When the world is saying an industry has to end, that’s not a wise financial investment to continue somewhere between $6 to $11 billion,” Dunlea said of fossil fuel companies and the state pension fund.

DiNapoli insisted that simple divestment would not solve a problem as large and daunting as climate change and that the comptroller could more effectively push for environmental friendly corporate policies from within the room, as an activist shareholder in major fossil fuel companies.

He touted a $7 billion investment allocation in sustainability initiatives through the state pension fund and insisted that short of broad societal transition away from reliance on fossil fuels, the industry continues to provide a safe return on investment. “Climate’s a big issue and just selling stock in fossil fuel companies is not gonna solve it,” he said. When asked by the moderator if his argument was that fossil fuel companies continued to be a good investment, DiNapoli said “[W]e have to go through a societal change and for now, in the short run, we still are making money from the oil and gas stocks.”

“I don’t like the concept of being the sole trustee,” of the pension fund, said Gallaudet. He said he would urge the state Legislature to create a board to oversee the pension fund rather than have it in the hands of the comptroller alone. DiNapoli sought to demystify the comptroller’s role by noting he is not there making all the investment decisions by himself, far from it, he pointed to his bevvy of internal employees and “advisory committees.”

Audit Power
On the audit powers of the comptroller that allow the office to conduct oversight of state agencies and contracts and public authority spending, the candidates showed some disagreement.

“I think we need to be more aggressive about examining pay-to-play contracts,” said Dunlea, insisting that the comptroller needs to pay extra attention to individuals and entities that make large campaign contributions to elected officials and have business before the state. In particular, he pledged to closely examine local social services departments to ensure that needy people get the benefits they are entitled to receive.

Gallaudet simply said he would use the comptroller’s audit power to “reduce the scope of government,” though he did not elaborate how.

Trichter said the audit power is “one of the more powerful roles of the office,” as he critiqued DiNapoli for failing to use it appropriately. For instance, he alleged DiNapoli had repeatedly audited the Metropolitan Transportation Authority (MTA) but failed to unearth its many fiscal troubles even as the subway system has slid into disrepair and its capital funding needs ballooned to nearly $40 billion. “He’s the one Albany politician responsible for finding out what’s wrong with our infrastructure at the MTA before things start to break,” Trichter said, pointing to dozens of comptroller audits of the MTA that he said were outpaced by one New York Times reporter, though he also cited think tanks Citizens Budget Commission and The Manhattan Institute.

DiNapoli, however, insisted he has been a responsible and effective watchdog, including on the MTA. Dismissing Trichter’s criticisms as “crazy notions,” he said he had repeatedly raised the alarm about the MTA, including on its antiquated and failing signal system, and that his office has conducted robust audits of state agencies. “The strength of our audits is the credibility of the work that we do, and in many cases, we’ve effectuated change…We’ve saved taxpayers money through our audit work,” DiNapoli said.

State Budget Oversight
On state budget oversight responsibility, DiNapoli sought to portray the comptroller’s powers as limited, though he acknowledged he has a bully pulpit to advocate for more transparency and accountability. New York State’s budget process is notoriously opaque, and the annual spending document is invariably hashed out in the dead of night, with little public review, by the so-called “three men in a room” -- the governor, the Assembly speaker and Senate majority leader -- with a variety of gimmicks, hidden aspects, and unspecified, lump sum appropriations.

“Our role is one of lending a voice,” DiNapoli said. “And what we’ve tried to do with our budget reports, and what we’ll continue to do, is not only focus on the short term but on the long term.” He issued a note of caution about growing budget gaps in the years ahead, insufficient rainy day funds, and the heavy reliance on lump sums that hide the true purpose of spending. “Ultimately, it is the responsibility of the Legislature and the governor to make sure that these issues are addressed.”

Dunlea promised to more aggressively pursue budget oversight, pushing for reforms also backed by DiNapoli that give the comptroller more power over state contracting. He also said the comptroller should push harder on tax fairness and crack down on “out of control” debt incurred by public authorities.

“It is within the comptroller’s authority to refuse certifying the budget every year,” Trichter insisted, arguing that under the state constitution, the comptroller can leverage that certification power over the state budget to push for reforms. Though what Trichter is suggesting has never been tested, he believes it would hold up under the precedent set by the 1971 case of Posner v. Levitt in which the New York State Supreme Court’s appellate division ruled that the Comptroller “may have standing to test the validity of the budget, but he is not obliged to do so,” and could not be compelled.

DiNapoli has denied that interpretation. “[H]e’s making things up as he goes along,” he said of Trichter. “The comptroller has no authority to certify the budget. There is no statutory constitutional authority to do that. You can’t make up law.”

“If you’re gonna try to assert an authority that you don’t have, well all you’re gonna do is gum up the works and create more gridlock than you have already,” he added. “You’re gonna end up in court.”

Cross-Examination
The candidates were also given a chance to ask a question of one other candidate, which Trichter and Dunlea unsurprisingly used to question Dinapoli, who is seen as a prohibitive favorite to win reelection.  

Trichter accused DiNapoli of participating in secretive payments to silence the women who were victims of sexual harassment by former Assembly Member Vito Lopez and asked if he would apologize. Dunlea pushed him on how he would avoid conflicts of interest in the future, pointing to a recent news report that showed the former Chief Investment Officer of the state pension fund, Vicki Fuller, joining the board of a company in which the state pension fund was invested.

In both cases, DiNapoli denied the accusation. He insisted that the comptroller’s office put in more accountability measures following the Lopez scandal, and that he had no say in negotiating the payments made to Lopez’s victims, nor were the submissions for those payments made to his office for approval clearly identified as related to sexual harassment. He said that his office certifies thousands of payment requests from the Legislature and indicated the settlements hadn’t appeared abnormal. “Women were victimized. They were entitled to some justice and entitled to compensation,” DiNapoli said. “That was the agreement. We made sure that they were paid. There was no secret payment...and in the aftermath of what happened with the Lopez situation, we did institute changes, more transparency, more accountability...and of course we’ve all evolved governmentally on this issue.”

And DiNapoli pushed back against the alleged conflict of interest, noting that the pension fund is invested broadly in hundreds of companies, that investments were made on the merit and that the former CIO is barred under state law from doing any business with the pension fund for two years. He said that the bulk of the company’s debt that the pension fund purchased three years ago was quite unlikely to have influenced where Fuller landed after retiring from the comptroller’s office this summer.

DiNapoli used his own question to give Gallaudet more time to say anything he wanted, and Gallaudet asked Trichter to explain how he could justify voters backing him given DiNapoli’s strong chances of winning, which gave Trichter another minute to reiterate his case.

Managing State Debt and Federal Tax Reforms
DiNapoli has repeatedly flagged that there is too much governmental debt in New York, for the state government as well as local governments and authorities. On managing such debt, there seemed to be at least some area of agreement among the comptroller candidates on the ends if not the means. Dunlea said again that he would rein in public authorities and make their workings more transparent. Gallaudet conceded, “I have no silver bullet, no easy answers on how to tackle this issue.”

Trichter, however, insisted, “I do have a silver bullet or a magic solution to all of this.” He said the state should end so-called “backdoor borrowing” or incurring debt without getting approval from voters, which is otherwise required by the state constitution and often happens through the public authorities.

“The comptroller has signed off on $32 billion in backdoor debt since he’s been in office in 2007,” Trichter said. “If he refused to sign off on backdoor debt, he could unilaterally end the practice once and for all and institute his own debt policy. This is something he absolutely has the authority to do.” He also noted that DiNapoli himself has supported a constitutional amendment to end backdoor debt.

Yet again, DiNapoli said Trichter was being misleading. “You can’t create authority or powers that you don’t have...It is not our authority, nor should it be our role, to just stop the debt that happens in the state,” he said, while also insisting that his office had reduced negotiated debt where it could do so.

There was little clarity on what the comptroller candidates would recommend or do about the federal tax overhaul passed by the Republican-led Congress and signed by President Trump at the end of 2017 -- reforms that Governor Cuomo and some in both major parties have decried as harmful to New Yorkers. Trichter said the office could not do anything about it and DiNapoli seemed to feel the same even as he praised Cuomo and the state Legislature for attempting to create a workaround for state taxpayers suffering from the reduction in the deductibility of state and local taxes (SALT), though those attempts may not pan out, he noted.

Lightning Round of Questions
In a brief lightning round, there was no unanimity among the candidates. All of them except Trichter supported extending the state’s soon-to-expire “millionaires tax” on income as well as a $15 minimum wage (Dunlea said it should be $20); Trichter was the only one opposed to the state passing a single-payer health care law, though DiNapoli said it should be federally funded.

Trichter had no answer on whether congestion pricing should be enacted to raise funds for mass transit while Dunlea and DiNapoli supported it (Gallaudet just said he wasn’t opposed). Dunlea and DiNapoli said they want the state’s fracking ban to continue, while Gallaudet and Trichter said fracking should be allowed.

All of the candidates favored holding state government hearings on sexual harassment in the public and private sectors, though Gallaudet said he wasn’t sure about the issue. He also had no opinion on scrapping the much-critiqued Joint Commission on Public Ethics, the state ethics entity often seen as too close to state power brokers, while the other three said they would like to see it replaced with a more independent body.

They all agreed on one lightning round question: closing the loophole in state campaign finance law that allows limited liability companies, which often have opaque ownership, to circumvent individual contribution limits, though Trichter added that it should apply to labor unions as well.

DiNapoli has committed to one other debate, being hosted by NY1 at the end of the month.

 

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