Eliot Spitzer is done with the wilderness and wants to be the next Comptroller of New York City.
He’ll probably win. And fortunately for those of us who live in New York City, he’ll probably be good at it.
The city comptroller has three main responsibilities: overseeing the city’s employee pension systems (among the largest in the country), issuing debt, and auditing the city’s finances. These are important roles, especially given the extreme stresses that New York City’s budget is under today:
- Rising costs: The amount city taxpayers have to deposit into pension funds has risen from $500 million a year in 2000 to $8.5 billion today. (The city budget totals about $72 billion.) Thanks to the strong stock market, pension costs are finally stabilizing at a “mere” $30,000 per worker per year. But health benefit costs will keep rising, from $5 billion now (or about $17,000 per full time-equivalent employee) to $6.5 billion in 2017. Soon, the city will spend one out of every five budget dollars on employee fringe benefits. We should fix that, as most private companies have, but…
- Lack of reform: In most cases, city employees pay no part of their health insurance premiums. That means that taxpayers have borne nearly 100% of the cost as health benefit expenses have risen on autopilot. Mayor Mike Bloomberg has talked extensively about the need to fix this in new union contracts, as have some candidates for mayor, including Christine Quinn and Anthony Weiner, but…
- labour uncertainty: Most city employee unions have been out of contract for four years. Early in his term, Bloomberg was quite generous with raises, which is a key part of why he hasn’t offered up any since 2008. The unions have refused to sign new contracts, hopeful that a new mayor will give them a fat, retroactive raise, but…
- Depleted reserves: Over the last few years, the city has responded to the economic slowdown and rising benefit costs by depleting its rainy day funds and its retiree health benefits trust fund. With those slush funds gone, the new mayor won’t have much money to buy the unions’ agreement on new contracts, even if he or she wants to. And without reserves, the city is much worse positioned to deal with a recession than it was in 2007.
New York City government has a cost structure that is uncompetitive, unsustainable, and unprepared for economic risk. Legacy costs are crowding out the city’s ability to invest in infrastructure and draw in new and diverse businesses. These are exactly the sort of issues that the city comptroller should be raising the alarm about.
Unfortunately, New York City Comptroller has historically been a job for Democratic machine politicians of little distinction who hope to use the job to get elected mayor. Seven of the office’s eight last occupants have tried to get elected mayor. All but one has failed.
If you’re a machine politician trying to use the comptroller job as a springboard, you can’t be too aggressive in your role as an auditor, less you alienate one of the constituencies you need to back your run for mayor. Comptrollers are captured, and they haven’t been promoting the reforms they should be.
Of course, Spitzer probably wants to run for mayor, too. But his path to the mayor’s seat would be different from the usual comptroller’s. He’s an outsider who doesn’t owe anything to the city’s unions, contractors, health care interests, real estate investors, or anybody else. He has a public profile that will rival the next mayor’s, whoever that is. And he isn’t a mediocrity.
Spitzer told the New York Times yesterday that he intends to broaden the role of the comptroller, by auditing not just the city’s finances but the effectiveness of government policies overall. In other words, it sounds like he intends to set up a shadow mayor’s office.
Given the mayoral administration that we’re likely to get with any of the front-running candidates—lacking imagination and hemmed in by tight fiscal and political constraints—a prominent shadow mayor could be very useful.
Spitzer showed good instincts on cost-effectiveness issues as governor. As Stephen Smith notes, he was one of the few New York State politicians who even tried to rein in the boondoggle of World Trade centre reconstruction. That effort was cut short by Spitzer’s resignation from the governor’s office.
Spitzer wasn’t any good at actually working with the legislature to address the problems he identified, which is a reason to worry that he wouldn’t be a good mayor. But city comptroller, like state attorney general, is a job that would suit Spitzer’s analyst-and-pitbull instincts well without requiring him to actually lead an administration.
One risk is that Spitzer could use the comptroller’s office as a vehicle to rebuild his national profile, using the city’s pension investments as an excuse to be an activist investor. Spitzer likes to sue people and there are a lot of people you can sue when you run one of the country’s largest pension funds.
That wouldn’t do much to serve the interests of New York City residents. But to the extent Spitzer trains his fire on issues within the city’s boundaries, he’s likely to add a lot of value.
Welcome back, Eliot. It’s going to be interesting.
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