Q: How do you feel about gaining the nomination the way you did?

A: This is nothing that I expected, and to be very frank about it, I was disappointed, disappointed at what happened at the Republican convention. I'm very upset about what happened to John Faso. He's a decent guy and he had a competitor in George Marlin, who's a very decent guy. Unfortunately, politics is a deadly game. I don't think that John Faso would have won. I think Marlin would have gotten the Conservative line, Faso would have gotten the Republican line. They would have split the vote and that would have assured Carl McCall of a victory.

Q: Why do you think that you will be a better comptroller than Carl McCall, considering you did not want the job in the first place?

A: Because I am truly independent. I'm not exactly embraced by the Republicans. I don't owe anything to anyone. I do have a constituency I care about, and that's the taxpayers in the state. When I look at the political landscape, I worry about the people who represent the backbone of this tax structure. [They] are facing very difficult days ahead unless there is a watchdog who's careful about the expenditure of their moneys.

Q: If you were to boil it down, where have you found fault with McCall's leadership as comptroller?

A: First, there has not been one instance of a management audit anywhere in the state. These audits are something that the comptroller in New York is not only allowed to engage in, but should engage in on a regular basis. If you can demonstrate that the agencies in this state are not working effectively, and I think you can demonstrate that, then there should be some prescriptions involved. Carl McCall also has not really looked at investments in New York State that would help the New York economy. By and large, the state's investments have not led to a significant rate of return or growth in the New York economy. The third thing that worries me is the politicization of that office.

Q: In what ways has he politicized the office?

A: The appointment of Percy Sutton to his pension review committee is one thing that worries me. I mean, Percy Sutton owns a radio station [WLIB] that is the official voice of anti-Semitism in New York. McCall has also talked about creating a fund for South Africa. Now I happened to be thrilled by Mandela's leadership in South Africa, but the point of the matter is that this is not the time to be investing in South Africa. It's not even the time to be making that kind of proposal. And then there's the firing of the New York City auditors during last year's mayoral campaign. They were not political people. Their role was to engage in appropriate analysis of the city's budget. I believe they were fired in large part because their audits would have embarrassed [former Mayor] David Dinkins at a time when he was running for reelection.

Q: You say you want to invest pension funds to develop entrepreneurial activity in New York State. But are you at that point engaging in some risk with the pensioners' benefits?

A: I don't think so. I'm not saying let's engage in risky investments. I'm saying let's see where we can maximize those investments, get the highest possible accruals, and at the same time do something that will benefit the citizens of New York.

Q: Would you use your power as comptroller to force better state budgeting?

A: The comptroller is involved in the post-audit, that is, an examination of the budget. He doesn't have to sign the budget if he doesn't really feel it is a truly balanced budget. You and I know that many of those budgets have not been truly balanced. I think the comptroller has the responsibility to put his name to that document only when it truly represents a balanced budget.

Q: Do you think this budget is balanced?

A: I have very real reservations about this budget, very real reservations. Let me give you a couple of concerns. If in fact there is a surplus, I think the first obligation of anyone in government is to return that Surplus to the citizens of this state. [The legislature passed and the governor signed] a three-phase tax return plan to lower the personal income tax in this state. You have not seen the third phase of that plan put into effect. Again, if there is a surplus, it seems to me that the governor has the responsibility to act on the legislative plan he put into effect.

Q: One of the issues that has received little attention this year has been the growth of the state budget. Do you think the budget is growing too fast?

A: I think there are far too many expenditures in this budget. In fiscal 1995, we have seen the size of the budget increase by roughly 7.2%. With inflation at about 3%, that means the state is spending about 2.5 times the rate of inflation. That is precisely the ratio we lived with during the entire 1980s, and that is one of the reasons why the state is in the financial doldrums. Welfare spending comprises 38% of the new budget, or roughly $29 billion. Maybe some of that is justified, but where are the welfare reform proposals that you've seen in other states?

Q: What do you think about the comptroller's plan to repay the pension system following the recent court of appeals ruling?

A: According to the McCall-Cuomo plan, the state is going to be paying back that money over a period of time, starting in a couple years. That decision doesn't strike me as at all valid for the pensioners. Maybe they'll get their money, maybe they won't. It's put out into the distant future.

Q: McCall would say that to immediately repay the pension system would hurt the state economy.

A: Well, where was the voice who said we shouldn't be taking money out of the pension fund to close the budget gap in the first place? See, the problem I have with McCall and the problem that I have with Mario Cuomo is that they're not saying what should be said by leaders of government. The goal in New York at the moment is how do you close the budget gap using pension funds, state insurance funds, one-shot sale of bonds. You don't really have anyone that's blowing the whistle.

Q: The comptroller was very much involved in creating state debt reform, which among other things is designed to lower the state's borrowing costs. What's your take on this plan?

A: I think that McCall should be commended for looking into this issue. But I think there is far too much in the way of politics in the new debt control plan. The plan may change the borrowing procedures, but it also gives the governor sufficient latitude to issue debt. There are great political ramifications associated with this plan. The bonding authorities and the underwriters aren't exactly unhappy about this plan because it provides them with paper.

Q: How do you think the current proposal stacks up against the one Cuomo made earlier in the year?

A: That was a pretty tough document. In fact, I was impressed. The current plan is a much more liberal plan than the one that Cuomo proposed January, and I think again you have to ask yourself, why is this a more liberal plan? One illustration of this is that the outstanding debt is not subsumed into the total as was the case in the original plan.

Why is the McCall approach more liberal? Only one reason. It's a question of political reality. It is largely based on what you have to do in order to satisfy the political factions that exist. The problem in this state is that politics play the overriding role. Lost in this analysis is what is in the best interests of the taxpayers of this state: How do you generate revenues in the future? How do you keep people in New York? How do you allow for an economy to succeed?

Q: AND A:

Not too long ago, Prof. Herbert London of New York University said he would make a better governor than Mario M. Cuomo. London now says he will make a better comptroller than H. Carl McCall.

London underwent his change of heart after New York State Republicans met to decide who will face Cuomo in this year's gubernatorial election -- and didn't choose London.

After winning a surprisingly strong 20% of the vote as the Conservative Party candidate for governor in 1990, London spent four years working to win over public opinion and Republican leaders.

He did well with some of the party faithful, but not with New York's most important Republican. U.S. Sen. Alfonse D'Amato threw his weigh behind state Sen. George Pataki, who came away with the nomination.

Then, in an unusual turn of events, D'Amato and the Republican bosses thought of a way to rally Republicans and Conservatives behind Pataki's candidacy: a joint ticket with the nomination for comptroller going to London.

This was not an easy decision for London. He had already said that he would settle of nothing but governor, and in any case Assemblyman John Faso had been campaigning for the comptroller's slot since 1990.

But in the end London accepted. "What happened here," he said," created unity, so the Conservatives and Republicans could come together in the person of one candidate."

London has wasted little time shifting his sights from Cuomo to McCall. For example, London argues that since the state legislature made McCall comptroller, he is not well placed to serve as a watchdog over finances. The lawmakers selected McCall in early 1993 to fill out the unexpired term of Edward V. Regan.

London also plans to question McCall's "politicized" appointments to advisory panels, McCall's plan to help the state repay its pension system following a recent court ruling, and the firing of auditors who had been critical of the budget of McCall's friend and political ally, former New York City Mayor David N. Dinkins.

London told staff reporter Charles Gasparino why he believes that unseating McCall in this year's election is just as important for the taxpayers of the state as defeating Cuomo.

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