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Comptroller vs. Governor: An Old Story in New York

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Governor Cuomo (left) and Comptroller DiNapoli (center) (photo: Governor's Office/Flickr)

State Comptroller Thomas DiNapoli and Governor Andrew Cuomo have been airing public disagreement in the news media over the past several months. It is the latest chapter in a long story here in New York -- the Governor and the Comptroller sometimes agreeing but often challenging each other.

Calling out Cuomo's fiscal policies
DiNapoli's analysis of the recently-enacted State 2017-2018 budget (crafted by Cuomo and enacted through his negotiations with the Legislature) warns of fiscal risks ahead with uncertainty about the federal budget and $10.5 billion in new state bonded indebtedness. The budget, which also included a number of public policy changes, was enacted with little time for public review, DiNapoli’s report says. It also raised additional concerns about "transparency, accountability and oversight."

Early in May, the Comptroller issued an audit of the State Economic Development Corporation, the governor's economic development agency, citing it for lax reporting on key projects, particularly those that create tax-free economic development zones to encourage business development. “Too often Empire State Development Corporation is either late or not reporting on the results of economic development programs,” DiNapoli said. “We need better reporting to ensure transparency in economic development spending and to promote an informed analysis on the return of the investments state taxpayers make in these programs.” A spokesperson for the Economic Development Corporation said the Comptroller's audit "cherry-picks information" and "profoundly misrepresents our efforts."

Cuomo has called the Comptroller’s audits “opinion” and sought to undermine DiNapoli’s oversight at several turns.

DiNapoli's office signed off on the state Senate Republican majority's list of stipend payments for committee chairs, where in some cases vice chairs have received payments that typically only go to chairs. Democrats and the media have questioned some of these payments. Cuomo used the issue as an opportunity to criticize DiNapoli. "If it was not legal, the Comptroller shouldn't have done it," Cuomo said. "If it's not legal, the Comptroller should call up and say, 'Whoops, I made a mistake, I need the money back.'" A spokesperson for the Comptroller's office responded that "the comptroller's office is not a court of law" and the issue "needs to be decided by the Senate itself, or the legal system."

DiNapoli has often been critical of the Governor's spending plans. Four years ago, in 2013, he issued a report that New York's debt, counting bonds issued by public benefit corporations, amounted to $63.3 billion — about $3,253 per state resident. "We spend billions each year to repay existing debt, so fewer resources are available for more pressing needs," he said. Much of the debt has been developed by public authorities. "Taxpayers have little or no say in how much the state borrows, but they're the ones who have to foot the bill," DiNapoli continued.

The Comptroller responded to an alleged bid-rigging scandal within Cuomo’s economic development programs -- for which nine Cuomo associates and donors have been charged by federal authorities, with a trial set for October -- by proposing more oversight through his office. Cuomo has made his own proposal in response to the scandal, which does not include restoring contract approval by the Comptroller for certain types of programs.

A history of tension and balance
Established in 1797 as an appointed position, the Comptroller's position has been constitutionally based and elective since 1846. The state constitutional convention that year, recognizing the need for an independent Comptroller, made it an independent position, elected by the voters. Until the early 20th century, the position rivaled the Governor's in power, including compiling the state budget, receiving taxes, monitoring banks, and preparing financial reports. That power diminished with the reorganization and consolidation of state government, including the creation of the Division of the Budget, carried out by Governor Al Smith in the 1920s.

But the Comptroller remains the state's chief financial officer, controls payment of state funds, borrows and invests for the state, manages the state retirement fund, reports on the state's fiscal conditions, and audits both state agencies and local governments. The Comptroller's website notes that the Comptroller "is the State’s chief fiscal officer who ensures that State and local governments use taxpayer money effectively and efficiently to promote the common good."

Governors and Comptrollers usually have good working relationships. But there is a potential inherent tension in a relationship between the state's chief executive, who uses public tax dollars to initiate and administer state programs, and the state's chief fiscal watchdog, who makes sure that the state stays fiscally solvent and strong and that those tax dollars are used well.

Comptrollers have challenged Governors many times during the course of state history.

For instance, Arthur Levitt (1955-1978), the longest serving Comptroller in the state's history, criticized borrowing practices that bypassed state constitutional referendum requirements for incurring state debt. Levitt, a Democrat, was a frequent critic of Republican Governor Nelson Rockefeller (1959-1973), whose administration expanded state government and constructed the Empire State Plaza governmental complex in Albany, often relying on bonds.

In a February 1964 speech, Levitt assailed Rockefeller as a "pseudo pay-as-you-go governor" who through the "subterfuge" of selling authority bonds had imposed on the people of the state "a staggering burden of debt without their consent." Rockefeller responded that Levitt "is a partisan, organization Democrat, not an independent, nonpartisan, nonpolitical watchdog of the public treasury, as he likes to be projected." Levitt's motive was "to discredit the fiscal integrity and soundly solvent fiscal policies of this administration."

Levitt had a number of run-ins with Rockefeller, including lawsuits to require more detailed budget information and to open up the books of the Metropolitan Transportation Authority. Summarizing his years of working with Rockefeller, Levitt concluded, "I haven't been soft on him at all."

"As the people's auditor, I have reported factually to the people in accordance with my constitutional mandate," Levitt said. He made the office a high-profile watchdog and force for fiscal restraint and probity.

Many years earlier, in the 1830s, the state was spending money lavishly on enlarging the Erie Canal, building additional canals and providing loans and other aid to railroads, mostly by issuing state bonds.

Democratic Comptroller Azariah Flagg (1833-1839 and 1842-1847) published an alarming report in 1838, warning that the state had reached "the utmost verge of prudence" and should curtail borrowing.

But Governor William Seward, a Whig (the Whig Party was then one of New York's two most important parties, along with the Democrats), told the Legislature in 1839 that "history furnishes no parallel to the financial achievements of this state." He added that "taxation for the purposes of internal improvement is happily unnecessary," since future canal user fees would provide funds to pay off the bonds.

Seward in 1840 called for spending $4 million more each year for 10 years for canals and railroads. The Whig majority in the state Legislature kept pushing up the debt.

Comptroller Flagg's warning turned out to be warranted.

The state entered a downward fiscal spiral. Recession sparked by the Panic of 1837 cut into state revenues. Canal construction costs rose. Even Seward admitted "severe shock" at learning that canal expansion would cost twice what he had estimated. The Erie Railroad fell behind on its repayment of state loans. Selling state bonds became more difficult as nervous creditors began to worry about New York's solvency. State debt rose to $27 million in 1842, a huge sum in those days.
Comptroller Flagg warned that New York was at "the very brink of dishonor and bankruptcy" and "it is a question of solvency or insolvency."

The voters heeded Flagg's warning. They gave fiscally conservative Democrats a majority in the next Legislature. They curtailed or suspended canal work and railroad aid. With Seward's reluctant concurrence, they enacted a special tax to keep the state solvent. The debt began to decline. Creditors' confidence returned, and state securities regained the status of good investments.

The lure of higher office
Some Comptrollers have had political ambitions and used the position as a stepping-stone to higher office, occasionally another source of tension with Governors.
William L. Marcy, Comptroller 1823-1829, went on to serve as Governor, 1833-1838. Silas Wright served as Comptroller from 1829 to 1833 and Governor, 1845-1856 (in those days, governors were elected every two years). Washington Hunt, Comptroller 1849-1850, went on to become governor, 1851-1852. Lucius Robinson, Comptroller 1862 to 1865, went on to become Governor, 1877-1879.

Martin Glynn, Comptroller 1907-1908, was nominated and elected Lieutenant Governor in 1910 and became Governor when William Sulzer was impeached and removed from office in 1913. But Glynn was defeated when he ran for Governor in his own right in 1914.

Nathan L. Miller, Comptroller 1901-1903, defeated Al Smith in his campaign for reelection as Governor in 1920, running on a platform of fiscal restraint and criticizing Smith's administration for overspending. But Smith returned to oust Miller in 1922.

Millard Fillmore served in the House of Representatives before being elected Comptroller in 1847 (the first person elected rather than appointed to the office). He was nominated for Vice President in 1848, elected along with presidential nominee Zachary Taylor, and became President upon Taylor's death in 1850. He ran for President in 1852 but was defeated.

Cuomo and DiNapoli both playing appropriate roles
Comptroller DiNapoli is playing an appropriate role, in line with many of his most impressive and judicious predecessors such as Arthur Levitt and Azariah Flagg. His reports are clear and readable, his warnings measured and documented, and his custody of the state retirement fund reassuring.

On the other hand, Governor Cuomo, like Nelson Rockefeller, Al Smith, William Seward and other bold, expansionist-minded Governors before him, is inclined to use public funds for innovative programs that he sees as investments in New York's future.

The conscientious Comptroller and the proactive Governor are well-suited to their respective positions. Their views, while sometimes at odds with each other, complement each other and offer the public contrasting visions for New York's future. That is useful for public debate and, hopefully, for creation of sound state fiscal policies.

Dr. Bruce W. Dearstyne's latest book is The Spirit of New York: Defining Events in the Empire State's History, published in 2015 by SUNY Press.

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