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Queens Chronicle

John Liu talks about mayoral run, federal investigation

Comptroller discusses city finances, federal investigation and higher office

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Posted: Thursday, January 31, 2013 10:30 am | Updated: 11:06 am, Thu Feb 7, 2013.

New York City Comptroller John Liu has a lot of balls in the air — and hasn’t even officially announced his campaign for mayor yet.

Liu discussed city finances, his presumptive campaign for this year’s Democratic mayoral nomination and the ongoing federal investigation into members of his campaign finances and staff on Jan. 24 in a meeting with the editorial board of the Queens Chronicle.

Liu said a formal announcement of his mayoral candidacy would come within a few weeks.

“But my potential opponents have not announced, except maybe one,” he said. “I’m no outlier here ... I’ve been told by so-called professionals that you don’t want to announce too far in advance, and in the dead of winter.”

Liu, who turned 43 this month, is the chief financial official for the city, overseeing auditing, contracts and employee pension funds.

But he spoke at least part of the time as a candidate for Mayor Bloomberg’s job.

He has been critical of Bloomberg’s handling of the expired labor contracts for most of the city’s unions, accusing him of leaving them for his successor to work out.

He also believes Bloomberg’s mandate that no retroactive raises be granted is unrealistic.

“This is a huge crisis that I have been warning about year after year,” he said. “Unresolved labor contracts have huge hidden costs that are not being reflected in the city’s financials. At this point that is an abdication of Mayor Bloomberg’s responsibilities.”

He has faulted Bloomberg for the breakdown in negotiations with the teachers’ union over evaluations, which is costing the city hundreds of millions in education dollars.

But the comptroller disputes the notion that he courts city employee union support in the course of seeking higher office.

“I’ve worked with unions, like I have worked with the administration, but I haven’t courted their support,” he said. “In a campaign I would like to have their support, just as every one of my Democratic opponents and some Republicans do.

He has been an outspoken opponent of the NYPD’s stop-and-frisk procedures, and said there is virtually no chance he would retain popular Police Commissioner Ray Kelly.

“Nobody has even asked him if he wants to stay on,” Liu said. “He’s been there 16 years, four under Mayor Dinkins and the last 12 under Mayor Bloomberg. In a job where you are exposed to so many pressures, that’s a long time for anybody.”

Liu said he would like to eliminate some of the city’s corporate taxes on small businesses to the tune of $200 million, a hole he said could be filled by removing an exemption from general corporation taxes now enjoyed by insurance companies.

“They get $300 million ... every year,” he said. Liu bristled at the suggestion that Connecticut or New Jersey might be able to lure one or more insurance companies to their state by offering the exemptions that Liu would like to take away.

He said studies show that the benefits promised by companies in exchange for tax consideration in new states either do not materialize or do not last.

Next week, Liu’s former campaign treasurer Jia (Jenny) Hou and former fundraiser Xing Wu (Oliver) Pan will go to trial on charges of conspiring to defraud the city by rounding up straw donors to Liu’s campaign.

Published reports on Wednesday said Sharon Lee, a former press secretary in Liu’s office who currently works there in what The New York Times calls a research and liaison role, has agreed to testify as a prosecution witness under a grant of immunity from prosecution.

Straw donor schemes typically collect small amounts of money from people who then are paid back by deep-pocketed donors as a way to circumvent campaign contribution limits.

New York City currently limits individual contributions to $4,950. Liu said he first learned of the investigation in a 2011 article in the Times.

“It came as a shock to me,” he said. “Then a month later one of my supporters is indicted. I don’t do anything different from my potential rivals.”

Liu said, if anything, he has set the bar higher by not accepting contributions from Wall Street or anyone doing or seeking business with the comptroller’s office.

“I’m proud of our campaign and the way we conduct fundraising,” he said.

He also set a self-imposed limit of $800 per individual.

“I thought The New York Times would love that, but then they turned it around and made some sort of freaky Chinese thing out of it,” he said referring to reports of the number 8 having significance in Chinese culture.

“It came as an even bigger surprise to find out they had been tapping my phones for 18 months,” he said. “The trial is coming up Feb. 4. I’m looking forward to it. I think the more information that comes out, the better it is for me, my campaign and for the public.”

Liu’s office launched an audit that revealed the CityTime payroll scandal, and recouped $500 million for city coffers; is examining the infamous and overbudget 911 system upgrades from numerous directions; and recently announced an innovative initiative to invest city pension funds in revenue-producing infrastructure projects.

When asked about the 1 1/2 percent return for the pension fund in 2012, Liu said their return on investments rivals or exceeds most of the other public pension funds in the country under “terrible” market conditions.

Yet he says the most important operation of his office also might be considered the most mundane to outsiders.

“Our accounting bureau,” he said. “My office pays the bills for the entire city government so that the city can continue to run. If our auditing department doesn’t run for a couple of months, it’s not the end of the world,” he said. “If our contract review process gets held up for a couple of months, some contracts might get held up, but it’s not the end of the world.

“But if our accounting department, with payroll processing and keeping the city’s books, if that goes off for two months, that’s a disaster.”

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