NYC comptroller’s pension report draws fire as pro-union

By Joan Gralla

NEW YORK (Reuters) – A recent report by New York City’s comptroller showing the city can afford its pension obligations for its unionized work force has put him in direct conflict with Mayor Michael Bloomberg and sparked charges he has politicized his role as the city’s fiscal watchdog.

Comptroller John Liu, a Democrat and potential mayoral candidate, may have risked some of his credibility as a fiscal watchdog with a report that skewed the data in favor of the city’s unionized workforce, critics said.

The comptroller’s analysis shows the city can afford its workers’ pensions, undermining Mayor Michael Bloomberg warnings that pension benefits are exploding.

City comptrollers are akin to referees. Though elected, they are supposed to serve the public by analyzing budgets and conducting stringent audits of city agencies, without fear or favor.

The post is often viewed as a springboard to the mayor’s office, though the last successful candidate was Abe Beame in 1973.

Unionized workers are an important voting block in the city, and Bloomberg’s plans to close 20 fire companies and lay off about 4,000 teachers have infuriated their unions.

Hank Sheinkopf, a political strategist, said Liu might have gone too far in a bid to woo union members: “No one has done this; this is without question the most (politicized) thing done in that office for quite some time.”

Sheinkopf added: “What he is doing is telling the unions what they want to hear, telling the public everything’s fine, undercutting the mayor and the governor … and ultimately, the public will believe it or not.”

Ari Hoffnung, an assistant comptroller in Liu’s office, disagreed: “The results were designed to please nobody; the results were the results, we really approached this objectively.”

Liu’s report predicted that the amount the city contributes to pensions each year will rise to $8.3 billion in 2016 — and then slip when gauged as a percentage of spending and revenue.

Marc LaVorgna, a spokesman for Bloomberg, said the report was “riddled” with flaws. For example, Liu previously estimated the pension contributions would hit $8.3 billion in 2012 — four years earlier than the timeframe cited in his latest report.

Hoffnung explained that only the 2012 figure is an “all-in” estimate, which means it includes an extra $1 billion of costs that the mayor anticipates.

LaVorgna also criticized Liu’s report for assuming that pension benefits will not increase over the next 50 years, that the market will rebound to pre-crisis levels of investment returns, that wage increases will be very low and that there will be next to no growth in the city’s work force.

Hoffnung countered that no one can say if benefits will rise or fall over the report’s 50-year timeframe, though he noted that “most conversation today” is about reducing benefits. While the pension funds earned only about 2.5 percent in the last decade, they produced 8 percent to 9 percent over the last 30 years.

In addition, he said, the report used the same assumption for wage increases as the city’s actuary, and a more conservative assumption for growth in the size of the work force.

Some tension between the city’s mayors and comptrollers is natural; the comptroller is meant to check the mayor’s power.

“Institutionally, the way the office was structured, it’s meant to be, in a sense, in the mayor’s face,” said Doug Muzzio, a political science professor at Baruch College in New York.

“Clearly, John Liu looks like he’s running for mayor and he is using the powers of the office in a way to give him what he wants, which is name recognition and notches on his gun,” Muzzio said. (Editing by Dan Grebler)