Recently, I received a phone call from David Neustadt, director of communications for State Comptroller Alan Hevesi. He wanted to know if I was aware of all the audits of New Yorks bondissuing public authorities that the comptroller had been conducting. Hevesis office was doubtless reacting to a City Journal piece I had written a few months back on the need to clean up the notoriously corrupt state authorities, created decades ago by Governor Nelson Rockefeller to get around the state constitutional requirement that voters approve all state borrowing (see Spitzers Double Standard, Winter 2004). These quasiindependent bodies have over the years buried New Yorkers under a mountain of debt by issuing bonds for innumerable projects, many of them utterly dubious. I reminded Neustadt that my criticism in the piece targeted not Hevesi, primarily, but state attorney general Eliot Spitzer, whose speak-loudly-but-carry-a-small-stick approach to cleaning up the largely unaccountable authorities wasntand still isntgetting the job done.
Spitzer rightly compares the authorities to Enron: they share shady accounting practices that have resulted in the public getting ripped off. But while government prosecutors have indicted every major Enron officialeven the C.F.Os wife sits in the coolerSpitzer hasnt even brought a civil suit against any top executive of any major state authority. If many people are misbehaving at these government entities, as Spitzer acknowledges, why hasnt he gone after any of them? He certainly has shown no hesitation in punishing institutions and individuals on Wall Street. His double standard is glaring: private sector corruption is fair game, but not the public sectors dirty deeds.
As for Hevesi, the state comptrollers audits of the authorities are impressivefar exceeding anything done by his two predecessors in office, Democrat Carl McCall and Republican Ned Regan. The audits take us back to the days of fearless and methodical comptroller Arthur Levitt. Hevesi has exposed, for example, the Long Island Power Authoritys payment to an interim CFO of $580,000 over 14 months under a contract never submitted for approval to the comptrollers office, as required by law. He has uncovered as well the misstatement by NYC Transit, which runs Gothams buses and subways, of more than $850 million in operating expenses.
But such audits arent supposed to be ends in themselves. Instead, theyre supposed to lead to actionby top executives and directors of the authorities, by the governor, by the state legislature, and, ultimately, by prosecutors. And on that score, theyve failed dismally. No state official, Spitzer included, seems to have taken the audits seriously. After Hevesi issues one of them, sometimes a couple of small stories appear in local newspapers, but thats iteverything then goes on just as before. The before, in the case of the authorities, has been a quarter century of corruption.
What could Hevesi do to spur action on his audits? He should call a high-profile press conference and name those elected and appointed state officials who are not enacting reforms based on his reports. Hevesi should become the states chief whistleblowerwhich would give him a place in the history books. New Yorks political elite has long benefited handsomely by using the state authorities as personal cash cows. Members of this corrupt class have rarely faced punishment for their actions, but instead get treated as if theyre respectable prominent citizens. If the state comptroller starts naming names, he might begin to change the sleazy culture at the authorities. Better yet, he might successfully push for the abolition of many of them, which would cause New Yorkers to owe him a deep debt of respect and gratitudethe only kind of debt New York pols have rarely imposed upon the states taxpayers.