January 4, 2012
By Bendix Anderson
A federal investigation into his fund-raising efforts won’t stop New York City Comptroller John Liu from speaking out to defend the pensions of City employees.
“None of that is going to stop me from doing the work you put me in office to do,” said Liu at the annual holiday event held on December 19, 2011, one of the many engagements attended by Liu this month. The event was hosted by the New York City Managerial Employees Association at the Battery Gardens Restaurant. “Forces seek to demonize pensions,” he said. “We are battle the rhetoric with sound research.”
Liu implied that the intense media coverage of an investigation into his campaign fundraising is part of the price of his principled stand on issues such as pensions. “We knew they would throw the kitchen sink at me,” he said.
The controversy began in October. Liu had earlier announced that he would only accept donations of less than $800 apiece. The legal maximum donation under New York City’s campaign finance laws is $4,950 — more than five times larger than Liu’s self-imposed limit. Other candidates who intend to run for New York City mayor in 2013 regularly accept campaign donations up to this legal maximum.
But an October story in the New York Times questioned whether all the fundraisers in Liu’s campaign were really keeping to its self-imposed $800 limit. Interviews with people listed as individual donors by Liu’s campaign denied having contributed — the clear implication is that some donors had contributed more than $800 and attempted to disguise their large contributions.
In November federal authorities arrested one of Liu’s top fund-raisers, Xing Wu Pan. He is accused of helping a Federal Bureau of Investigation agent, posing as a businessman, circumvent campaign contribution limits by employing straw donors. Liu’s campaign says that it is cooperating with the investigation.
At the same time, Liu stood out as one of the chief defenders of New York City’s system of public employee pensions from proposed benefit cuts. Lui says the pensions are part of a promise that the City has made to people who work for it. “That promise must be kept.”
Over the last year the Administration Mayor Michael Bloomberg proposed pension reforms — cuts to benefits — including raising the retirement age for City employee hired in the future. According to Liu, the proposed pension cuts are unlikely to help reduce costs in the short term – and are unlikely to be necessary in the long term.
In October, Liu and the mayor’s office have worked together on a proposed merger of the City’s five pension plans into a single fund with an investment manager appointed by the fund’s board of directors. The manager would be compensated consistent with the private sector.
Hopefully, the change would make the pension system much efficient — over the last ten years, the City’s five pension plans reportedly averaged yields of 2.7 percent, roughly equal with other public pension funds, but far below the pension fund returns of institutions such as the Harvard or Yale Universities over the same period. A percentage point or two of improvement for the City plans could make more than a billion-dollar-a-year difference to the City budget.
A few union and political leaders, including Teamsters Local 237 President Gregory Floyd, object to the proposal, saying it would amount to a Wall-Street takeover of the City pension plans, with the fund manager potentially earning a Wall-Street-sized salary much higher than other City employees. However, in recent months discussion of the proposal has been overshadowed by the furor of fund-raising.