Comptroller's job: More than a financial balancing act

ALBANY - From the ethical quagmire created by his predecessor to big pension fund losses, Thomas DiNapoli has faced myriad challenges in his 3 1/2 years as state comptroller and now is in an election battle with Harry Wilson, a wealthy Wall Street financier.

DiNapoli, once a Democratic assemblyman from Great Neck Plaza, is in the fight of his life. Wilson, a Republican, has much more money in his campaign treasury for an advertising blitz before Tuesday's vote and his business experience has turned heads because the comptroller is responsible for the $125-billion state pension fund. 

Closely watched race
This year's race for comptroller has garnered more attention than those in 2006 and 2002, in part because DiNapoli's predecessor, Alan Hevesi, pleaded guilty this month to accepting nearly $1 million in gifts and campaign contributions in return for a $250 million pension fund investment.

Moreover, counties and other local governments will likely raise property taxes to pay higher pension costs because the fund's value plummeted in 2008-09 because of stock market declines.

"I've turned around an office that was under a cloud of scandal . . . integrity has been restored," DiNapoli said, referring to changes since his appointment by the legislature in February 2007 after the resignation of Hevesi, a Democrat. "My opponent doesn't understand what this office does. You don't need to shift gears at this perilous economic time."

Wilson, a retired hedge-fund manager from Scarsdale, shot back: "This state is totally screwed up financially and with my private sector experience, I think I can help. Mr. DiNapoli . . . is totally unsuited for the job."

Both candidates are described as "nice guys" by friends, some of whom are taken aback by the personal attacks on the campaign trail. Both were born into working-class families, excelled in school and advanced in their respective professions.

DiNapoli, 56, worked as an AT&T manager for 10 years after graduating from Hofstra University. His government career began in 1972 when at age 18 he ran an insurgent campaign for the Mineola school board, becoming the youngest person in state history to hold public office.

He spent 20 years in the Assembly, leading three committees and sponsoring bills to protect Long Island's Pine Barrens and require more oversight of school districts.

Wilson, 39, graduated from Harvard University, and his investment career took him to top firms such as The Blackstone Group and Goldman Sachs. Two years ago, he retired after earning enough to support his wife and four daughters for the rest of their lives.

The self-described workaholic didn't remain on the sidelines for long. Citing his experience turning around moribund companies, Wilson volunteered in January 2009 to serve on a presidential task force charged with reviving bankrupt General Motors and Chrysler.

Such a resume led Mayor Michael Bloomberg to call Wilson, "one of the country's best and brightest, and the state could significantly benefit from his restructuring skills." 

Fixing the pension system
Wilson promises to bring stability to the Common Retirement Fund by shifting investments from stocks, real estate and hedge funds to less volatile and slower growing bonds and other fixed income. Currently, 30 percent of the fund's assets are in fixed income, with 70 percent in equities.

Wilson said DiNapoli's reliance on stocks had exposed pensioners and taxpayers to stock market gyrations. The fund's value dropped 26.3 percent in 2008-09 but rose 25.9 percent last year. To recover, DiNapoli has raised contribution rates for employers.

Wilson added, "When a high-risk strategy doesn't pan out then the taxpayers are left holding the bag."

DiNapoli countered that a fixed income strategy will not produce the returns necessary to provide retiree benefits, meaning governments would have to make up the difference by hiking property taxes even higher than they already are. He cited recent plaudits for New York's pension regime continuing to be fully funded - unlike many others around the nation - from the Pew Center on the States.

"Under the guise of saying it's less risky, [Wilson] would pursue an investment strategy that makes the pension system unsustainable," said DiNapoli. "And once it is, he would replace it with a 401(k) system."

Wilson called that a misrepresentation. He supports a new pension tier for new hires that "could be a 401(k) or a hybrid, because we have to make pensions affordable."

However, he recognizes the constitution forbids benefit reductions for current employees and retirees.

The specter of a 401(k) system for government workers has enraged unions, which are dispatching money and volunteers to aid DiNapoli. Wilson "has forgotten where he came from, he doesn't care about the working man and woman," said Denis Hughes of the AFL-CIO.

Still, experts predicted sharp increases in employer contributions and property taxes, regardless of who wins. E.J. McMahon of the conservative Empire Center for New York State Policy said, "they have different plans but they're going to face the same problem: no way to get around higher pension costs for governments."

The comptroller's office also critiques the state budget, and audits local governments and state agencies.

Wilson would use audits to identify spending cuts. He then plans to lobby the governor and legislature to adopt his spending recommendations, even criticizing lawmakers in their districts.

This would undermine the comptroller's authority to objectively examine budgets and government offices, DiNapoli said. If elected, he would save money through audits of Medicaid, the Metropolitan Transportation Authority, public schools and other key spending areas.

Also on the ballot are Green Party candidate Julia A. Willebrand, of Manhattan, and Libertarian Party candidate John Gaetani, of Glenville.