Republican legislators in New Jersey opened hearings yesterday into allegations that the Florio administration mishandled a $1.8 billion bond refunding last December.

On Monday, Assembly Republicans voted to give the Appropriations Committee, the investigating body, subpoena power to compel reluctant witnesses to appear.

Administration officials said that was unnecessary, since they had no objection to appearing,

Press reports yesterday said the Republicans plan to subpoena Robert Poll, managing partner in Lazard Freres & Co.'s municipal department. Lazard was the senior manager of the December refunding.

No subpoenas were forthcoming from the committee yesterday and no Lazard officials testified.

A spokeswoman for Lazard declined to comment on the hearings.

The hearings ended yesterday, but another day of testimony may be scheduled for later in the month, according to legislative staff members.

State Treasurer Samuel Crane, in prepared remarks. defended the administration's actions and asserted that the cost of issuing bonds in the state has dropped under Gov. Jim Florio.

In 1992, for example, underwriting fees averaged $8.18 per $1,000 of bonds issued, versus $23.39 per $1,000 of bonds in 1983, Crane said.

Crane described Florio's executive order 92. prohibiting most negotiated bond sales, as "the most aggressive reforms in the country."

Crane also attempted to dispel rumors that Lazard Freres made significant profits at the state's expense by reinvesting bond proceeds from the December refunding at below market rates.

Securities for the reinvestment account were bought at market prices from Lazard and three other firms, Crane said. The three firms were Goldman, Sachs & Co., Merrill Lynch & Co. and PaineWebber Inc.

"We have checked some of the purchase prices of the securities against published prices for those securities on that day and we found the prices consistent and fair," Crane said in his prepared remarks.

Representatives of the municipal bond industry also testified yesterday. Christopher A. Taylor, executive director of the Municipal Securities Rulemaking Board, and Gerald McBride, chairman of the Public Securities Association's municipal Securities division, appeared in Trenton to defend the industry.

They maintained that political contributions do not unduly influence politicians, but suggested fuller disclosure of contributions would eliminate the appearance of impropriety.

"PSA strongly believes that in the vast majority of state and local bond issues, political contributions made by potential bond underwriters, financial advisers, bond counsel, engineers, and others play no role in the decision of which firms an issuer chooses to participate in an offering," McBride said in prepared remarks.

"Even the appearance of impropriety can have devastating effects on public confidence in the municipal market."

McBride said that the trade group supports the MSRB's proposals on disclosure, but would like to see even more far-reaching rules.

Because the MSRB does not have jurisdiction over lawyers and some other participants in the bond underwriting process, McBride said the PSA favors broader disclosure rules that could only be promulgated by the Securities and Exchange Commission.

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