New York State assemblyman Alan G. Hevesi says he's the only candidate in tommorow's Democratic primary for New York City Comptroller who really wants the job. Hevesi, who unsuccessfuly sought the post in 1989, says both of his opponents, the current comptroller Elizabeth Holtzman, and former deputy mayor Herman Badillo, want the post only as a consolation prize. Holtzman, says Hevesi, is more concerned with affairs in Washington. While city comptroller, she ran for a U.S. Senate seat in 1992. Badillo, on the other hand, sought the comptroller's post after dropping out of the mayor's race.
Despite winning a critical endorsement from The New York Time, Hevesi, whose own advertisements concede his lack of name recognition, faces the tough task of convincing voters he's more adept at handling the job than his well known opponents. Polls last week showed Hevesi trailing both Holtzman and Badillo, albeit by a smaller margin than the polls were showing a month ago. A state assemblyman since 1971, Hevesi is campaigning on his competence as a lawmaker and his integrity. He has been hammering away at Holtzman for her selection of Fleet Securities as a co-manager in the city's bond syndicate after her failed senate campaign received a loan from the firm's banking affiliate.
Hevesi, who has a doctorate in public law and government from Columbia University, says if he is elected comptroller, the city will sell more bonds competitively, to remove what he calls the smell of impropriety left by Holtzman's selection of Fleet.
In an interview with Bond Buyer reporter Charles Gasparino, Hevesi explains why he thinks he will at least force a runoff in tomorrow's Democratic primary, and he spells out the changes that must take place to restore the reputation of the city comptroller's office. Q: This is your second run for comptroller. What prompted your interest when you first ran in 1989?
A: I wanted to be New York City Comptroller, particularly at a time of charter revision, when the new comptroller could remold the office. For me that meant not only maximizing its potential in financial management, but also creating a role for the comptroller as a significant policymaker in the city. With the elimination of the Board of Estimate, the comptroller now has a variety of statutory and charter mandated responsibilities in the areas of investment and financial management, auditing, and enforcement of the labor law. But there is no specific mandate or prohibition about the office's involvement in policy-making.
Q: Are your reasons different for running this time?
A: No. But I think you need a comptroller who wants to play this role. I see the office as having a potential that's unfulfilled and I think 1989, was a missed opportunity.
Q: What would an Alan Hevesi bring to the office?
A: First of all, I'd bring a new sense of mission and professionalism. Young professionals, whether they're investment bankers, auditors and accountants, investigators, should want to work for the comptroller with the same passion as young lawyers try to get jobs with U.S. Attorneys. It should be a place where a professional is respected for productivity, for performance, is rewarded both intangibly and tangibly, and not burdened with the continuous pressure to produce a political product. I think the office has been misused.
Q:Can you give me an example of misuse?
A: Sure. Elizabeth Holtzman was elected Comptroller in 1989, took office on January 1, 1990, and immediately began reorganizing the office for her race for the United States Senate in 1992. That was her singular and most important goal. She never articulated management or productivity goals or new direction for the comptroller's office. She had one purpose in mind, and that was to run for the Senate.
When she admitted this year that a large number of people in the audit bureau were no longer employed, she tried to create the impression that those reductions were required by someone else. They were not. By my count, there was a total reduction of the entire work force of the comptroller's office of 92 people in four years. The decision that 100 people fewer would be working in the audit bureau was hers entirely.
Q: Wasn't the reduction part of citywide cutbacks caused by budget problems?
A: There was no diminution of the staff of the public relations office, or the community relations office, or the political unit. And there was a near doubling of the senior managers earning over $70,000. The end result of course, just by the fewer numbers of auditors, is a near collapse of the audit function. Former comptroller Harrison J. Golden, in his worst year, produced 208 audits. Two years ago, Holtzman announced 80 audits; this past year 71; and of the 71, 22 were claims audits, not agency audits.
Q: Could you explain your criticisms of the process the city uses to select firms to sell city bonds, including the selection of Fleet Securities as an underwriter after the firm's banking affiliate gave Holtzman's Senate campaign a $450,000 loan?
A: I have been very critical of the system -- not the product -- but the system of selecting Wall Street firms to do the city's business, and the campaign contributions that may be tied to that. I have been fairly cautious about characterizing the Fleet incident because it's being investigated, and Holtzman is entitled to the same presumption of innocence as anyone else.
Q: When did you come to the conclusion that the system is flawed?
A: When I discovered that Ms. Holtzman raised over $1 million in the last four years from Wall Street. Close to 80% of her campaign contributions come from this single source. Second, the discretion that is granted her [in choosing underwriters] is an aberration from the norm in state statute because the local finance law requires municipalities to competitively bid their debt.
Q: There is a bill that circulates in Albany every year that extends the city's authority to negotiate bond deals. Have you voted against this bill?
A: No, I voted for it. But this year, I put in my own bill to change the system.
Q: Essentially, your hill would require the city to issue bonds competitively except under special circumstance, such as when it issues variable-rate debt. In the past, however, you have voted in favor of the city's renewing its negotiated sale authority despite opposition from Senate Republicans. Why the change?
A: This is called consciousness-raising. First, I was not alert to the problem. The bill to sell bonds through negotiation was part of a routine package of bills giving greater discretion and authority to the city as a follow-up to the fiscal crisis. Historically, these bills were not debated. They were called extenders. And I never focused on it. I even voted for that extender this year. At the same time, I voted for my bill because I didn't have an agreement on my bill in the state Senate. I'd rather that there was discretion than a mandate that every issue be competitively bid.
Q: The state Senate voted against the bill because of a clause that forced firms to competitively bid on bonds with minority firms. Wasn't it unrealistic to think the Republicans in the state Senate would agree to those terms?
A: The reason I wouldn't drop that clause is that to do so would be double-dealing the minority legislators and women legislators who advocated the provision until I have their sign-off. Now we're out of session. We go back in September and I can raise this discussion.
Q: If you get elected comptroller, will you implement your competitive bidding proposal?
A: If I get elected, I can ask the legislature to move on the bill and negotiate a compromise. I have the discretion under the extender as Comptroller to restructure the system in the way the bill requires without passing the bill. if I'm comptroller, I'll move in that direction, working with the Wall Street firms to set the circumstances and conditions.
Q: Doesn't Mayor David Dinkins have a say in whether the city will issue the lion's share of its debt competitively? So far, the mayor's finance staff has been against competitive bidding. They say it costs the city money.
A: The Mayor's not going to fight with me on this issue. During the debate on this subject, the guy who hit me hardest when I first proposed the competitive bidding was (deputy mayor for finance) Barry Sullivan. He called me up on the phone when the bill was moving and he said, "Look, I can't go as far as going to an operating presumption of competitive bidding with exceptions." What's the difference? The city can do this in a way that no one is hurt, and it's better for the city.
Q: Do you think a bill on competitive bidding will generate support on Wall Street? Will the firms work with you?
A: Sure they will. It's in their own interest to work with the comptroller and set up a system that works for them.
Q: Holtzman recently fought hard to save the city's Standard & Poor's bond rating by emphasizing that the current administration would take steps to balance its budget. Your other Democratic opponent Herman Badillo said he would have emphasized that the city budget is unbalanced. How would you handle the situation?
A: The answer is that your own credibility requires you to characterize the budget accurately. If it is out of balance, you should stick with the facts. What I would do if I was called before the credit agency is to offer a plan of reform that would result in a balanced budget and work towards keeping the credit rating as high as possible. I'm not in the job of injuring the city. I'm here to help the city. it costs millions of dollars to have our credit rating downgraded.
Q: Badillo says he is the best candidate for the position in large part because he is an accountant and understands budgets.
A: How many CPAs are financial advisors in the sale of city debt? How many CPAs review contracts? How many CPAs are involved in procurement policy, and how many CPAs are investigators and enforce the labor law? CPAs are wonderful professionals, many of whom are hired by a comptroller, but to my knowledge, no comptroller that I know of has been a CPA. It's one of the sub-specialties. Now if Herman is out of work next year, and I'm the comptroller, if he's interested in a job in the audit bureau, I'm sure I would talk to him.
Q: Despite strong endorsements from several ranking Democrats, you still trail in the polls. Do you think your message is getting out?
A: The consensus is that there's probably going to be a runoff after Tuesday's Democratic primary. I'm an academic. I don't want to mislead myself. But I'm out in the streets. I'm shaking 30,000 hands and I get Strangers pointing to me now after my television Commercials. I'm sitting in a booth in a diner, and people say ~Oh, my God. that's Hevesi.' My name recognition has been dramatically improved. We have the best campaign, the widest coalition, the best field operation, and enough resources to do what we have to do on television. So I have a shot to win. I think I'm going to win.