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Attorney General Hopefuls Spar Over Pension, Budget In First Candidate Forum

Tuesday, June 22, 2010

WNYC

For the first time since the New York State Democratic Party convention, all five Democrats hoping to replace Attorney General Cuomo faced off yesterday. At a candidate forum hosted by City Hall News, each member of the crowded field eagerly tried to pop out of the pack by stressing their version of how best to restore voter confidence in government.

Nassau County District Attorney Kathleen Rice's off-the-cuff assessment of the future of the state's public pensions raised her profile. "We do not have a system here in New York State that can support the pension obligations going forward," said Rice.

Rice, who's widely reported as Attorney General Cuomo's favorite, did not stick around after the forum to answer questions from reporters.

Westchester Assemblyman Richard Brodsky was more like the unofficial master of ceremonies.

"You're getting a sense already that you don't have a bum in the group, right? There are five people with very interesting and thoughtful approaches, most of the time," said Brodsky.

In addition to Brodsky, former federal prosecutor Sean Coffey, former state insurance superintendent Eric Dinallo and State Senator Eric Schneiderman all stayed after the forum to work the press.

Here are audio excerpts of questions on New York State's pension fund and Gov. David Paterson's approach to pass an overdue budget, posed by forum moderator and editor of City Hall News Edward-Isaac Dovere. Only three candidates answered each question according to the forum format.

QUESTION ON PENSION MANAGEMENT: One of the major issues that Andrew Cuomo has been focusing on in the last few years as attorney general has been the pension system, how it was managed especially under Alan Hevesi. Last October he built the sum of his work into a package of reforms that he proposed called TRUST, which stands for Taxpayers' Reform for Upholding Security and Transparency, that was a lot about changing the authority of the pension system and the checks that are in place. What is your opinion of the TRUST legislation that Cuomo proposed? And what would you do differently from Cuomo if elected attorney general, related to the pension prosecutions and the pension system?

RICE: I think it's a good start, what Attorney General Cuomo has suggested, that you have to start somewhere. This is an area that, actually this whole pension issue came up in my county because of the abuses there with how people were qualified in terms of their employee status. The part of the investigation that I took was special district related. What the grand jury came up with was a number of legislative, executive and administrative fixes, and that's something I would build on as attorney general. There are certainly legislative fixes that you can make to make the pension system more transparent, more accountable, where not just the employer but the employee has to sign off on in terms of how you're qualified in terms of pension, but there are certainly a lot of administrative fixes and it all revolves around accountability and transparency. We do not have a system here in New York State that can support the pension obligations going forward. That's just a fact. Everyone knows that. So what are we going to do to address that issue? And I believe that the first step is instituting accountability and transparency and I believe that is what Attorney General Cuomo started to do with his TRUST bill. The whole concept behind that is allowing there to be accountability and transparency and when someone misqualifies themselves or fill out the paperwork wrong, they don't have a defense and say, "well, it's not my responsibility." That's the problem where you have counties like mine that right now have to put $91 million additional dollars into the pension system because of the economic collapse a couple of years ago. (I'm getting a wave.) This is what we have to do. It's putting more accountability and transparency into the system and the legislative fixes that the grand jury came up with that we'll be proposing in Albany and hopefully that's going to be the second leg to what Attorney General Cuomo has done.

SCHNEIDERMAN: I was very proud to stand with the attorney general when we introduced the TRUST act, and as chair of the Codes Committee this comes within my jurisdiction. Brian Foley, the chair of the Banking Committee, was also involved. And the heart of it really is reorganizing New York State's pension system. We have a sole trustee now--there are very few states that have such a system, it's just as good as a state controller might be. You really shouldn't have one person with this much authority and ability to have influence over what happens in that office, what happens with pensions, what happens with pension cases. The key to that reform, unfortunately the current controller who I like very much, Tom DiNapoli, was opposed to it, his allies in the legislature were opposed to it. I do think we will come back to it and I'm hopeful we're going to be able to pass it. I do think that another aspect of the pension issue, and I think Assemblyman Brodsky will probably speak about this, is that he and I sponsored a bill that would empower pension funds to actually bring actions on their own. Right now in New York State if your pension fund - a union pension fund, for example, or a local government pension fund - lost money in a scam, there are very strict federal restrictions on what they can recover. And I think that's a financial problem but that's also a structural problem. We're leaving billions of dollars on the table because New York is in the minority of states that have not allowed pension funds to bring action under the Martin Act and recover for themselves.

BRODSKY: Let me state my views in the context of disagreements with things you just heard. If Ms. Rice is suggesting that the pension fund can't pay its obligations, I think that is both not correct and perhaps not a matter to be lightly touched on. With respect to Sen. Schneiderman, I'm one of those people who doesn't believe in a committee on investment policy. I think that records show that that leads to investment decisions done on a horse trading basis--if you vote for my investment idea, I'll vote for yours. Single trustee properly understood with greater transparency is a much safer system, and the safety of that system is the primary obligation. Look, you're getting a sense already that you don't have a bum in the group, right? There are five people with very interesting and thoughtful approaches, most of the time. The differences are going to be what you want the next attorney general to do. And with respect to both the pension system, or questions of balance sheets of off-book entities, there is a transformational moment in front of us. We're going to have to modify this office, change it, transform it into something that can address issues not historically viewed as those within the purviews of the attorney general. That distinguishing quality and what those distinctions are seem to me to be emerging now on this issue of pension, but it seems to me to be the heart of what this slash-forum-slash-non-debate ought to be reflecting.

QUESTION ON BUDGET PROCESS: While we're sitting here this morning, the state budget negotiations are at least theoretically still underway. As we all know, the process is a little bit different this year, with David Paterson pushing through cuts and revenue generators into his budget extenders, such as the one for $1.60 new tax on packs of cigarettes that will be in the budget extender this afternoon and the two of the people at the table will have a vote on. There had been some questions about whether the extender process is legal, in addition to questions about some of the actions that the governor has taken--the furloughs of state workers was challenged in court--and he has said now that there might be layoffs sooner than he agreed to in the memorandum of understanding he signed when getting the Tier 5 pension deal passed. What is your opinion on the legality of what's going on in the budget situation, and what would you do if elected attorney general if the state's facing a similar situation next year or at some point over the next four years?

BRODSKY: The furloughs were illegal and found to be. The use of extenders are of questionable legality and they have a very bad public policy impact insofar as since the legislature is constitutionally unable to amend them, we no longer exist in what we conceive of as a representative democracy with respect to those kinds of things. The way out of this was essentially to adopt the Ravitch plan. Now, put aside the merits of the temporary borrowings that were part of the deal because what they were was a trigger for long-term structural balance. And long-term structural balance is the goal. The missed opportunity in this budget is not that we're not going to muddle through with a budget that's roughly in balance, cut a lot of spending, do some revenue stuff, it is that we are not approaching that central core issue that I think in the long term matters most. But what the Ravitch plan also did is it restructured the roles and powers of the branches. It gave the governor additional empowerment authority, which can be a good thing. And it restored to the legislature what everybody here intuitively thinks we have. The power to take a governor's proposal and say no we're going to fix that part and do so by voting in open session to do that. That structure, a long-term structural balance with an outside enforcement mechanism, a reconfiguration of the powers of the governor and the powers of the legislature, was the single best idea to get us out of this mess that I've heard.

COFFEY: What's going on is a disgrace. It's been 80 days since the budget was due. We don't have one. And we've been playing chicken every week since with these extenders which I do think are of dubious legality, but what's the option? And I think it goes back to a fundamental problem: the machinery of government of this state is broken. It's broken for a lot of reasons and we need to figure out a way to get out of it. And we need reform. And I happen to think--people say reform, reform--everyone on this table is going to have a reform agenda eventually. I'm running because of reform, and I put out a very specific reform agenda that is meant to get the machinery of government working again, I encourage you to read it. It includes things like bipartisan redistricting. Incumbents are too comfortable here. They're way too comfortable. We need to make them less comfortable. Ninety-eight-and-a-half percent of incumbents who run for reelection are reelected. We need campaign finance reform, we need public financing for the comptroller and the attorney general. We need our part-time legislators to tell us what they make in their other jobs and who their clients are. We need to shine some light on there because they're too comfortable. What other state and union goes on like this? So we need to change some things, and we need to make our legislators accountable and the ultimate accountability isn't just an ethics commission with teeth that's truly independent, it's the ability to get rid of them, to fire them when they don't do the people's business. They're not doing the people's business and I think we're going to get reform this year for two key reasons. One, I'm running and making it a very very specific mandate. If I get elected I'm going to show up in Albany in January with specifics. But more importantly, you're going to make it an issue. You're going to demand from everybody running for office what's your position on reform? What's your position on full disclosure, on bipartisan redistricting? What's your position? Everyone's going to have to take a position and when they show up in January they're going to have to do something, not half-hearted measures like the one introduced this year that had gaping holes in disclosure for lawyers. Absolute disclosure. We need something different. Look at the web site, look at what we all say about reform and hold our feet to the fire. And you'll get reform.

DINALLO: I agree with Richard's legal analysis. I think the interesting question is the role of the appeals and the opinions section of the attorney general's office. So I think the office have had in three areas--the affirmative cases that we've talked a lot about, what Avi Schick raised which is the defense side, and there's also this core opportunity in appeals and opinions--you know the last two solicitor generals I worked with clerked for the Supreme Court, these are like the rocket scientists at the AG's office. And I think there's a big role that Andrew Cuomo has taken up, which is sort of being a first drafter on important legal issues and statutes and potentially new constitution that I think the AG's office is deemed apolitical for these purposes. And some of the things I would look towards at office is issuing opinions early to give some guidance, and also one core legislative issue that I've talked about is I think we should have a full-time legislature and I would propose it as an attorney general. The reason I think that's core is because every single piece of political corruption that you read about out of Albany, almost every single one, comes from their outside business interests. And we have our problem with Congress, there are days when you want to throw them into the Potomac, but the one thing you don't see generally is their hand in the cookie jar of outside businesses because there can't be any. And I think that would fix Albany overnight. You'd find out who wants to be the true full-time public servants who are there sort of for the pseudo half life with their business interest, and you would change the look overnight and you would drop 95 percent of the corruption issues out of the system.

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