Positive Agenda

HARRY WILSON’S WAR—A PLAN TO TRANSFORM THE
COMPTROLLER’S OFFICE
―New Yorkers…have a chance to choose someone who knows

finance and is not beholden to the Democrats in control in
Albany... It is rare for someone of Mr. Wilson‘s talents and
expertise to compete for one of the most important and least
glamorous jobs in state politics.‖
—editorial endorsement, October 15, 2010
―New York needs a controller who knows what he‘s doing…

Superbly qualified, and brimming with cogent, ambitious
plans, Wilson is by far the best choice for these times.‖
―New Yorkers who care about the state's finances, economy –

and their own pocketbooks – should back Wilson.‖
—editorial endorsement, September 28, 2010
―Harry Wilson has the courage, talent and independence to

invest responsibly, and the skill to excel at the other elements of
the job.‖
―Citizens Union believes Wilson shows a deep understanding of

the problems facing government…Citizens Union is convinced
that Wilson can bring a new and innovative approach to the
position of comptroller and has the knowledge and demeanor to
be a very effective and needed force for change.‖
— endorsement, October 17, 2010
HARRY WILSON’S WAR – A PLAN TO TRANSFORM THE COMPTROLLER’S OFFICE
"It is rare for someone of Mr. Wilson‘s talents and expertise to compete for one of the most important and least
1
glamorous jobs in state politics." - New York Times
―Harry Wilson’s War – A Plan to Transform the New York State Comptroller’s Office‖
To anyone paying attention to the race for New York State Comptroller, it should be obvious that there
are significant differences between me and my opponent. Among other things, we have sharply different
backgrounds and skills, as well as different priorities for and views of the Office.
Below is a summary of the positive agenda I plan for the Office of State Comptroller. I believe the
Comptroller must be an aggressive watchdog on behalf of the taxpayer, using every power and skill at his
or her disposal to protect taxpayers from the culture of out-of-control spending in Albany. In the closing
days of the campaign, when New Yorkers are making their final decisions on the mix of statewide
candidates they will vote for to lead New York over the next four years, I feel it is critical to communicate
the goals I have set for this Office and the list of initiatives and reforms I plan to implement in order to:
1. Identify specific spending cuts and work with the Governor and Legislature to implement them;
2. Fix New York State‘s broken financial operations;
3. Rid the Comptroller‘s office of scandal and ongoing conflicts of interest;
4. Drastically improve and professionalize the management of the New York State Pension Fund;
5. Protect New York State‘s retirement system for the over one million current and former
government employees who rely upon it for their financial security, and from politicians who are
raiding its assets to make up for their own mistakes and mismanagement;
6. Reduce the tax and regulatory burden on all New Yorkers;
7. Promote economic reforms that make New York State an attractive place for new business and
job creation; and
8. Provide regulatory relief to local governments from unfunded Albany mandates, a major factor
driving New York‘s sky-high property taxes.
The New York State Comptroller’s Office

It is common knowledge that the New York State Comptroller‘s Office is hugely underutilized when it
comes to reforming and fixing New York State‘s financial problems. It has also been marred by shameful
corruption.
1
―For New York Comptroller, Attorney General.‖ Editorial. New York Times 16 Oct. 2010. A18. 18 Oct. 2010.
<http://www.nytimes.com/2010/10/16/opinion/16sat2.html>
1
The office has been occupied most recently by a professional Albany legislator, Tom DiNapoli, who
became Comptroller through an appointment engineered by Shelly Silver and over the objections of a
bipartisan panel of experts assembled in order to choose someone who was qualified. At the time of this
backroom Albany maneuver, the State governor – a member of the current Comptroller‘s own party –
called Tom DiNapoli ―thoroughly and totally unqualified.‖ Mr. DiNapoli had absolutely no financial or
investment experience and he failed to accurately answer basic questions about finance when confronted
by reporters.2
My Experience
By contrast, I have a deep restructuring skill set and fifteen years of broad investing and financial
experience at some of the best financial firms in the nation. In 2009, after years of restructuring broken
companies, reforming their management to make them efficient and returning them to profitability, I
offered to join the U.S. Treasury Department to work for the President‘s Auto Task Force. There, I led
the restructuring of General Motors. I crossed party lines to serve in that capacity – I was the only
Republican on the Task Force‘s leadership team – and helped lead the largest successful corporate
restructuring in American history, saving hundreds of thousands of jobs, including tens of thousands in
New York.3 Those skills, acquired from years of investing and successful restructurings, are perfectly
suited for the Office of State Comptroller, especially in a State government like New York‘s, which is in
dire need of turnaround.
I also bring the personal perspective of having grown up in a working class immigrant home in Upstate
New York and personally living through the devastation caused by ruinous Albany policies. My father
worked as a bartender and my mother operated a commercial sewing machine; she was laid off from her
job a number of times as the factories at which she worked unable to compete. I know too many New
Yorkers have suffered through these same problems, and that we need to change our State‘s disastrous tax
and regulatory policies in order to retain and attract businesses, jobs and people.
As a result, I come to this race with both the personal commitment to achieve needed change and the
skills required to drive the reforms New York so desperately requires.
My Ethics Agenda
My most immediate objective will be to institute a sweeping set of ethics reforms in order to rid the
Office of the State Comptroller (OSC) of scandal, corruption and conflicts of interest, and thus restore
faith in the Comptroller‘s ability to carry out his fiduciary obligations. The starting point is banning pay
to play practices as well as closing every pay to play loophole.
Presently, there are SEC regulations preventing select professional classes that do business with the OSC
from contributing to the Comptroller or a candidate for Comptroller. But other professional classes
conducting business with the OSC continue to receive millions of dollars in compensation and remain
free to donate to the Comptroller – and donate they do.
2
Ryan, Frank. ―Testy Pol Gets ‗F‘ in Fiscal Ed.‖ New York Post. 1 Feb. 2007. 18 Oct. 2010.
<http://www.nypost.com/p/news/regional/item_IEzSNcjIiaj1KSlOJO5ceJ>
3
I was both humbled and gratified when Wayne Barrett of The Village Voice wrote that I ―…may have
accomplished more in [the] six-month stint on…‗Team Auto‘ than others do in lifelong public service careers.‖
(Barrett, Wayne. ―Harry Wilsons‘s War.‖ The Village Voice. 6 Sept. 2010. 18 Oct. 2010.
<http://blogs.villagevoice.com/runninscared/archives/2010/09/harry_wilsons_w.php>)
2
Consider securities plaintiffs‘ attorneys. As a multi-billion dollar institutional investor, New York State‘s
Pension Fund has meaningful holdings in public companies. Consequently, the Fund sometimes serves as
a lead plaintiff representing shareholders in lawsuits filed against corporations accused of improper
financial activities. The OSC maintains discretion to choose legal counsel on behalf of all shareholders in
these cases, where success can lead to judgments that run into the hundreds of millions of dollars.
Lawyers can claim a large percentage of the recovery in legal fees. In turn, New York State Comptrollers
have collected hundreds of thousands of dollars in campaign contributions from these litigators.
As of July 2010, Tom DiNapoli has taken at least $130,000 in contributions from the same securities
plaintiffs‘ attorneys he chose to represent the Fund in class action cases.4 This exposes an obvious and
lingering conflict5 and is precisely the kind of pay to play culture that has scandalized the Comptroller‘s
office and so must be prohibited. Yet, Mr. DiNapoli has shown no intention of reform and refuses to
discontinue exploiting the OSC‘s leverage for his political benefit at the expense of New Yorkers.6
In an effort to eliminate this vexing pay to play practice, I will make sure that any time the Pension Fund
serves as lead plaintiff in a securities suit, its attorneys will be barred from making political contributions
to the New York State Comptroller or a candidate for that office for two years after the date of their
selection. In addition, I will apply the same contribution restrictions to these attorneys that the SEC
instituted for bond underwriters and more recently investment firms, so that plaintiffs‘ attorneys cannot
win business from the OSC after donating to the Comptroller or a candidate for that office for two years.
The current Comptroller has tried to distort this principled stand, arguing that I won‘t defend the interests
if the Pension Fund. Nothing could be further from the truth; in fact, given my many years of investing
experience, I am certain I have a far greater understanding of shareholder rights than the unelected
Comptroller. I am simply, and emphatically, stating that it is unethical to hire one‘s donors and carry out
such work.
Another professional class with interests closely linked to the Fund that generates large campaign
contributions is public sector labor. The conflict for the OSC in this case is its discretion in accounting
for the Fund‘s obligations. Economists are in agreement that the methods the OSC now uses substantially
overstate the degree to which the Fund‘s long-term liabilities are covered by its current assets.7-8-9-10
This distorted financial analysis obscures the true costs of the Fund‘s liabilities and thus misrepresents the
economic cost of the State‘s contractual commitments. In order to properly plan for our long-term
liabilities, we need to establish a proper accounting, one removed from the influence of donors. The
4
New York State Board of Elections Campaign Filings.
5
U.S. Senator Robert Bennett (R-Utah) called for a ban on such contributions, and the Treasurer of Rhode Island
saw fit to return all of his campaign money that came from securities plaintiffs‘ attorneys.
6
Lovett, Kenneth. ―State Comptroller DiNapoli Taps Top Donors to Defend State‘s Pension in Megabucks Suits.‖
New York Daily News. 6 Oct. 2009.
7
The Financial Crisis Effects on the Alternatives for Public Pensions, The Brookings Institution, by Douglas J.
Elliott, April 15, 2010.
8
The Liabilities and Risks of State-Sponsored Pension Plans, by Robert Novy-Marx and Joshua Rauh, Journal of
Economic Perspectives, 23(4): 191-210.
9
The Market Value of Public-Sector Pension Deficits, by Andrew G. Biggs, American Enterprise Institute for
Public Policy Research, April 2010, No.1.
10
Walsh, Mary Williams. ―A New Plan for Valuing Pensions.‖ New York Times. 21 June 2010. B1.
3
injured parties in this are all New Yorkers, since the actual math is irrefutable, and—despite temporary
accounting gimmicks—pension shortfalls would be borne by unsuspecting taxpayers.
By contrast, Mr. DiNapoli has received over $550,000 in contributions from public sector unions since he
was appointed Comptroller.11
Since the OSC‘s responsibilities with regard to pension obligations are ongoing and continual, the
Comptroller and Comptroller candidates must refuse contributions from public sector unions in order to
remain conflict free; a two-year ban would not adequately address this conflict.
My Agenda for Fixing New York State’s Pension Gap

For months, I have been alerting New Yorkers to the coming pension and tax catastrophe as a result of the
current unelected Comptroller‘s pension mismanagement. I released a 53-page white paper on the
subject, entitled ―Public Pensions: Averting New York‘s Looming Tax Catastrophe,‖ that is available on
my website.12
Every economic authority on public pensions – including Professor Joshua Rauh, who told The New York
Times our relevant analysis was ―spot on‖ and finance professor Zvi Brodie, who called New York‘s
numbers misleading – agrees with our analysis.13 Orin Kramer, the former Chairman of the New Jersey
Pension Fund, a prominent investor and Democratic fundraiser and donor to Mr. DiNapoli, wrote an op-
ed for The Times also supporting our analysis.14 Indeed, there is little disagreement on this point among
outside economic experts, and New York State‘s Pension Fund is facing a serious shortfall when
subjected to the same private sector standards all corporations and nonprofits must abide by.
Having exhaustively detailed the size of our pension problem in our white paper, I laid out specific
prescriptions for change, based on three bedrock principles:
1. The true extent of our shortfall must be made clear through an honest accounting. Current
accounting policies cover up a massive underfunding of as much as $100 billion.
2. New Yorkers are already the most heavily taxed people in the nation and cannot afford additional
taxes, so increased taxes cannot be a part of any solution.
3. The benefits of New York‘s government workers, retirees and their beneficiaries are to be
provided for in full. They have earned these benefits as part of their negotiated compensation on
the basis of a contract that must be honored.
What‘s left? There are only two remaining levers: creating a long-term restructuring that fills our pension
hole over time and reforming new employee benefits through a sixth tier. We also must craft a more
conservative investment policy for the future that is consistent with this long-term plan, as the current
investment strategy, in which the incumbent became the first Comptroller ever to lose money in his
tenure, is further exacerbating the problem. This approach will also include less active management and
reduced fees, further improving performance and reducing costs. I believe I am the only candidate for
11
New York State Board of Elections Campaign Filings.
12
www.wilsonfornewyork.com
13
Walsh, Mary Williams. ―State Pension Fund Faces Shortfall, Candidate Says.‖ New York Times. 1 Sept. 2010
14
Kramer, Orin S. ―How to Cheat a Retirement Fund.‖ Editorial. New York Times 11 Sept. 2010. A19. 18 Oct.
2010 <http://www.nytimes.com/2010/09/11/opinion/11kramer.html>
4
Comptroller with the experience, skills and independence to construct such a plan and work with the
Governor and the Legislature to implement it.
By contrast, the current Comptroller has tried to execute a very different plan. First, he tried to hide the
problem by engineering a fiscally disastrous pension borrowing plan to kick the can down the road. This
plan is nothing more than a disguised raid, deferring current obligations into the future to balance current
budgets without an honest accounting of our problems. Second, he has announced the first in what will
be a long line of employer contribution increases that will trigger massive property tax increases and/or
drastic service cuts. I estimate the five-year cost of this plan will be an additional $1,300 per household
outside of New York City.
My Agenda for Professionalizing Pension Investments

New York‘s Pension Fund under Mr. DiNapoli has performed substantially worse than the median large
public pension fund.15 Specifically, the Pension Fund‘s compounded annual growth rate for the past year,
past two years, and past three years is well below the median among comparable public pension funds,
according to the most relevant data by R.V. Kuhns and Associates. Most recently, Mr. DiNapoli reported
that for the quarter ending on June 30, 2010, the Pension Fund lost another 4.38%.16 While we estimate
that the median public pension fund will show extremely strong returns for the recently completed third
quarter (likely in excess of 10% due to the huge run-up in domestic and international equity markets
during that time), the Fund has underperformed throughout Mr. DiNapoli‘s tenure.
An even greater problem arises because Mr. DiNapoli has maintained unrealistic return expectations for
the Fund. By this measure (when compared to his benchmark, which he must hit or otherwise trigger
employer contribution increases) he has underperformed his targets through June 30, 2010 by over $55
billion. Significantly, taxpayers have to make up any shortfall in those expectations.17
Recent stewardship of the State Pension Fund is a lesson on the perils of an overly aggressive return
assumption: by shooting too high, the Fund took on too much risk, which led to more volatility and
underperformance. And today‘s market realities are far different from those of the 20th Century, during
America‘s transformation from a largely agrarian economy to the world‘s largest industrial power. That
level of growth cannot be replicated over the long-term by an economy as mature as ours is now – a fact
on which virtually all private sector investors of repute agree. Therefore, long-run expectations and (the
post-dot com bubble) recent history suggest long-term equity returns of much less than what we
experienced during America‘s transformation into an industrial power.
But New York State‘s Pension Fund is still investing as if it‘s in a 20th Century bull market, and its risk
profile and losses are staggering as a result. Interestingly, over the last three years, the most conservative
part of the portfolio, the fixed income portfolio, was far and away the best performing portion of the Fund
(a 6.8% compound annual return over the past three years, when overall performance was negative). Had
15
R.V. Kuhns & Associates Public Pension Performance (> $2bn) Report for the Fiscal Quarter Ending March 31,
2010, p.17. This perfectly overlaps with New York State’s fiscal year and is a direct data match. The R.V. Kuhns
data are available online at:
http://www.pera.state.nm.us/pdf/PERAFinancialArticles/FY10Q3PerformanceAnalysis.pdf (accessed August 2010).
16
Source: http://www.osc.state.ny.us/press/releases/sept10/090210b.htm
17
Office of the State Comptroller, New York State and Local Retirement System, “Retiree Annual Statement—
FAQ”, 5 Aug. 2010. <www.osc.state.ny.us/retire/retirees/ras_frequently_asked_questions.htm#faq1>
5
the current Comptroller established a 6% investment return assumption over those recent three years
(right at the beginning of his tenure) and shifted more assets into fixed income to reflect the risks and
realities of the modern market (instead of hoping for performance from markets in a different era), then
the Fund would have performed much better, with less risk, than it actually did, and taxpayers would be
much better off. Instead, the current Comptroller sought to increase the 25% cap imposed by the
Legislature18 on the riskiest part of the Pension Fund‘s portfolio – alternatives – even while arguing that
such firms ―knowingly made risky bets in search of quick profits at any cost . . . truly the worst of Wall
Street.‖19
My solution is to establish target returns and asset allocations that will incorporate less risk, less active
management, reduced fees and less volatility. These efforts will help to professionalize the Pension Fund
and, with our earlier ethics reform proposals, create the most effective and transparent public fund in the
nation – and one that does not trigger massive tax increases, as Mr. DiNapoli has done.
My Agenda for the Audit Function of the Comptroller’s Office

In theory and in law the OSC‘s auditing power affords the Comptroller independent, constitutional
authority to investigate all aspects of State government operations and spending; a tremendous amount of
potential public good is connected to its effective use. In light of this formidable mandate, the incumbent
has both underutilized and misapplied the auditing function since taking office and subsequently
squandered opportunities to play a key role in repairing New York State‘s broken fiscal condition.
My view of this auditing function is far different than the current officeholder‘s. My goal is to transform
this office from an irrelevant backwater when it comes to discussions of fiscal reform to the State‘s active
leader in exposing Albany‘s fiscal problems, identifying specific spending cuts and proposing workable
solutions. This transformation includes a repurposing of the OSC‘s auditing practices, so that instead of
issuing public audits aimed primarily at press attention – with little, if any, follow-through that actually
saves taxpayer money – and political favors, audits instead become a meaningful management tool that,
in their conclusions, offer significant restructuring recommendations and then work with government
officials to actually implement those recommendations and achieve the targeted savings.
This vision for the OSC‘s auditing potential is derived from a solutions-oriented, restructuring
perspective. I believe that the Office should develop a full restructuring plan for New York, including:
1) A high level review of the organizational structure of State government, identifying areas of
overlap and duplication; specifying metrics to measure effectiveness; assessing core
competencies of key agencies; and benchmarking our organizational structure to other states.
2) A SWAT team approach to each of the largest areas of spending, starting with Medicaid, and to
identify problem areas, like the MTA.
a. Each SWAT team would then conduct a bottoms-up, line item by line item review of
every dollar of spending in its target area.
b. For each subject area review, the analysis would include a review of wasteful or
fraudulent spending; a cost-benefit analysis for programs and leading alternatives;
18
Cataldo, Adam and McDonald, Michael. ―States Double Down on Hedge Funds as Returns Slide.‖ Bloomberg. 14
Aug, 2008. 10 Aug. 2010. <http://www.bloomberg.com/apps/news?pid=newsarchive&sid=amI_UFrp4XB4>
19
―Interview with Thomas P. DiNapoli, NYS Comptroller.‖ The Empire Page. 26 Aug. 2010. 31 Aug. 2010.
<http://www.empirepage.com/2010/8/26/interview-with-thomas-p-dinapoli-nys-comptroller>
6
establishing quantitative and qualitative objectives to measure future performance; and

specific recommendations to reduce spending and/or improve service delivery.
3) The combination of the top-down review and the bottoms-up analysis of each segment of State
government would form the core of the restructuring plan.
The current Comptroller has argued that such a robust approach is beyond the Office‘s responsibilities. I
vehemently disagree. It is unrebutted that the Comptroller has the power to audit every dollar of State
spending, and his role as the taxpayer‘s watchdog must be pursued to the fullest extent of the powers of
the office. What the office requires is a Comptroller with the skills and experience to apply power
broadly enough to drive a necessary turnaround of our State.
In addition, New York State‘s budget remains relatively unexamined by OSC audits, despite the fact that
there is uniform agreement that Albany‘s budget process is horribly broken. In March 2010, the current
Comptroller published a strategy paper for ―ending New York‘s fiscal crisis,‖ which proposed basic and
necessary budget reforms. Mostly these reform proposals echoed those that are perennially discussed by
fiscally responsible advocacy organizations in New York. Where the Comptroller has truly fallen short,
though, is in failing to turn his full auditing capabilities to the State budget. If he did, he could
immediately remedy a number of irresponsible practices on his own, absent political action or
constitutional amendment, on which his current budget reform proposals rely.
For example, the State budget operates on a cash basis, which allows for various timing-related gimmicks,
such as paying Fiscal Year 2010 expenses in Fiscal Year 2011 to balance the 2010 budget. Such
gimmicks are prevented in the corporate world through the use of Generally Accepted Accounting
Principles (GAAP), which, among other things, matches expenses to the period in which they are
incurred.20 While adopting GAAP-based accounting requires legislation,21 the Comptroller has both the
ability and the authority to effectively redraft the budget on a GAAP basis – thus laying bare the
shortcomings of the budget process, increasing the pressure for reform and revealing to taxpayers the true
depth of our State‘s structural budget deficit.
If elected, I plan to audit every line-item of State spending to identify specific cost cuts and work with the
Governor and the Legislature to implement them. I fully intend to identify enough realistic cost cuts
within 100 days of taking office to close the $8.2 billion budget gap for fiscal year 2011, without a single
penny in new taxes or borrowings – and then work with the Governor and the Legislature to implement a
realistic budget that incorporates these cuts.
My Agenda for State Budget Reforms

I advocate the following key budget reforms:
 An honest accounting of our State pension problems, beginning with applying private sector
standards, as maintained by FASB, to our Pension Fund.
o Put an end to borrowing schemes that raid the Pension Fund in order to help balance the
State‘s budget (i.e., the Comptroller‘s ―pension amortization plan.‖)
20
Barro, Josh and McMahon, EJ. ―Blueprint for a Better Budget.‖ Empire Center for New York State Policy.
Albany, NY: 2010, 45.
21
Legislation has been introduced in both the New York State Assembly (A10637) and Senate (S7284)
7
 Create a multi-year financial planning process where the budget must include a five-year forecast
of revenues and expenses and require that the approved budget be balanced for the first two years
of the forecast.
o Identify present and future structural budget gaps, require proposed action to close the
gaps and adjust periodically, but at least every year, to take into account changed
conditions.
o Explicitly identify every key assumption in budget forecasting.
 Require that New York State releases more frequent updates to the Financial Plan.
 Balance the budget not just for the General Fund, but for all non-federally funded State spending.
 Ban the use of one-shots to balance the budget or fund recurring spending.
 Create a full balance sheet for New York State that incorporates State authorized debt, all
authority debt, underfunded pension obligations and unfunded retiree health care obligations.
o Require all future debt issuances to be issued by the State Comptroller and to be
accounted for in this comprehensive balance sheet.
o Have this comprehensive balance sheet subject to a debt cap that is frozen for five years
and thereafter can only rise by the lesser of inflation or 2%.
 Change the beginning of the fiscal year to July 1 to allow policymakers to have a more complete
picture of tax revenues and allow incoming administrations adequate time to reorder budget
priorities.
 Require that, if the Governor and the Legislature cannot agree on a revenue forecast, an average
of the Governor‘s, Legislature‘s and Comptroller‘s forecast be utilized.
 Require that all mandates have a full, multi-year accounting of their costs as part of their
legislative description before the Legislature votes to approve the mandate; this multi-year
accounting must be subject to the independent review of the Comptroller.
 Apply a spending cap for New York State of the lesser of inflation or 2%.
 Institute a property tax cap of the lesser of inflation or 2%.
 The State should be required to balance the budget according to Generally Accepted Accounting
Principles (GAAP).
 Require that the Governor‘s budget take effect if the Legislature has not passed a balanced
budget, as certified by the Comptroller, by the start of the fiscal year.
Finally, I will not certify a dishonest budget. I believe the comptroller has the constitutional authority to
refuse to certify, and I will use that authority. Budget gimmicks over the past two decades have put state
taxpayers in an unsustainable position. The current Comptroller has certified dishonest budgets that went
out of balance almost immediately. Those shenanigans resulted in mid-year school cuts, hospital cuts,
park closures, and other serious disruptions to the taxpaying public. I will not allow these political games
to continue at the expense of hard-working taxpayers.
My Agenda for Unfunded Albany Mandates

Outside of New York City, which raises a significant percentage of its government revenue from the
personal income tax, the crushing weight of property taxes is widely recognized and justifiably resented.
In the downstate suburbs, property taxes in many counties and localities are the highest in the country in
terms of the actual dollar figure that people have to pay. Westchester, Nassau, Rockland and Suffolk
counties are all among the highest taxed in the country.22 For people living on a lower income, and
especially those who are unemployed or under-employed, this tax burden has become increasingly
22
New York State Commission on Property Tax Relief. Final Report to Governor David A. Patterson. Albany, NY:
2008, 21. <http://www.cptr.state.ny.us/reports/CPTRFinalReport_20081201.pdf>
8
untenable.23 In many regions of Upstate New York, the tax assessment as a percentage of the value of a
property is also the highest in the country. These include Niagara, Monroe, Onondaga and Erie counties
among several others.24 In cases where property values are depressed, this only increases the downward
pressure, destroying wealth and encouraging further outmigration. In large part because of these
exorbitant property taxes, New York State has the highest local tax burden in the country as a percentage
of income. Local taxes in New York State are a full 79% above the national average,25 far greater than
the tax differential at the state level.26
There is no single explanation for why local taxes in New York State are so extraordinarily high.27 But
clearly State mandates are a major factor, especially if Medicaid is taken into account. In fact, the New
York State Association of Counties (NYSAC) estimates that 90% of the property tax that is collected by
counties in New York goes to fund just nine State mandates.28-29 While obviously many of these
mandated programs are meritorious, the end result is that county governments have largely lost control
over their own budgets. In essence they have become powerless appendages of the State legislature, with
the consequence that local infrastructure has become increasingly difficult to build and maintain.30
As part of my effort to modernize and re-energize the office of the State Comptroller, I believe we need to
move beyond the traditional model of simply assessing whether tax dollars are being spent honestly. In
contemporary New York, many of the costs that government imposes do not involve actual tax
expenditures. Rather, they involve things that State government requires people to do. These kinds of
costs should also be scrutinized, and there is no better place to begin this process than with government
mandates.
For that, we need to undertake a thorough accounting of all the mandates that Albany imposes on
counties, schools and localities. Thanks to NYSAC and other groups and associations, such as the Public
Policy Institute, many of the most onerous have been identified. Moreover, there have been a variety of
attempts over the years to estimate what some of these mandates cost. But we have never properly
institutionalized this process in a way that would produce detailed and actionable data to give local
23
Ibid, 24. In fact, this trend was already well underway, before the recession. According to the New York State
Report, property taxes in New York State increased by 54 percent between 2000 and 2007, while wages only
increased by 26 percent.
24
Ibid, 22.
25
PowerPoint Presentation from the New York State Association of Counties or NYSAC dated September, 2010.
See slide 10.
26
27
Ibid, 24. In fact, this trend was already well underway, before the recession.
28
Ibid, 36. This notes that teacher salaries in the New York suburbs are approximately 50 percent above the
national average. While the cost of living in the New York suburbs is very high, this still represents a significant
premium. Interestingly New York City teacher salaries appear to be slightly lower than the average premium for
the metropolitan region. Good salary data tends to be proprietary, but rough estimates are available for free on
the web. One web-based provider is PayScale.com
29
PowerPoint Presentation from NYSAC. See slide 12.
30
The nine mandates they identify are Medicaid, Public Assistance/Safety Net, Child Welfare, Preschool Special
Education, Probation, Early Intervention, Indigent Defense, Youth Detention and pension contributions. They
were listed on NYSAC’s home page as of October 12, 2010.
31
PowerPoint Presentation from NYSAC. See slide 13.
9
officials the information they need to pressure the Governor and Legislature to roll back wasteful
spending and reduce the high cost of local taxes.
Nevertheless, it is clear that mandate relief could save New Yorkers several billion dollars a year. A 1999
study by the Public Policy Institute, for example, estimated that the potential savings to local taxpayers
from mandate relief would total $5 billion, with $2.3 billion additional savings from Medicaid.31 In
today‘s dollars, those savings would be substantially higher through inflation alone. 32 More recently in
2008, the Commission on Property Tax Relief estimated that the potential savings to local taxpayers from
changes to State law and mandate relief affecting school districts would total between $3 billion and $4.5
billion statewide and $2 billion to $3 billion for all school districts outside New York City.33 That same
year, the New York State Commission on Local Government Efficiency and Competitiveness also issued
a report, where they identified approximately $1 billion in cost savings associated with mandate relief.34
In short, there are a number of costly mandates that should be subjected to the scrutiny of cost/benefit
analysis in an effort to achieve reasonable policy goals in a more cost-effective manner.
Conclusion
Throughout this campaign, I have worked to highlight a radically different vision and approach to the
Office of New York State Comptroller. In sum, I believe the Comptroller can be a key figure in
developing the intellectual framework for a turnaround plan for New York State and be the primary
defender of taxpayers against Albany‘s culture of out-of-control spending. And I believe that such a
process will result in a healthier, leaner and more effective State government that measures performance
and outcomes, allocates tax receipts in the most efficient way possible, focuses on and achieves its
carefully considered core goals and relentlessly pursues accountability in our State government. I believe
these values and practices are missing from Albany and are the key reasons why New York is suffering
the early stages of a massive fiscal crisis that is growing rapidly. But I also believe that strong leadership
that embraces reform can save our state before it‘s too late.
33
Ward, Robert B. The $163 Lightbulb: How Albany’s Mandates Drive up your Local Taxes. Public Policy Institute.
Albany, NY: 1999, 2.
34
As calculated on the web from an inflation calculator. The URL is: http://www.westegg.com/inflation/
35
It should be noted, however, that the report states that these estimates, which were produced by staff, were not
reviewed by Commission members.
36 st
See. P.2. 21 Century Local Government: Report of New York State Commission on Local Government Efficiency
and Competitiveness. The report can be found on the web at the following URL:
http://www.nyslocalgov.org/pdf/LGEC_Final_Report.pdf?pagemode=bookmarks.
10
Appendix – Recent Endorsements:
Editorial
For New York Comptroller, Attorney General

Published: October 15, 2010
Harry Wilson
New Yorkers will soon elect the first comptroller since Alan Hevesi disgraced the job. Almost
four years ago, Mr. Hevesi was replaced by Thomas DiNapoli, who was picked by fellow
Democrats in the State Legislature.
Mr. DiNapoli, who started with little experience or knowledge of finance, has been a worthy
caretaker. New Yorkers, however, have a chance to choose someone who knows finance and is
not beholden to the Democrats in control in Albany.
That person is the Republican candidate, Harry Wilson, who helped turn around General Motors
last year.
Mr. DiNapoli has made some helpful changes in the comptroller‘s office in an effort to shield the
$125 billion pension fund from political influence. He has also repeatedly warned about
problems in the state budget. But he adopted a questionable plan from the pension fund, and he
has failed to push hard enough to create public campaign financing for the comptroller‘s office.
It is rare for someone of Mr. Wilson‘s talents and expertise to compete for one of the most
important and least glamorous jobs in state politics.
Mr. Wilson went to Harvard Business School and worked for Goldman Sachs, the Blackstone
Group and Silver Point Capital. Mr. DiNapoli tries to make that résumé sound tainted, but the
investment and management skills exhibited with General Motors are just what are needed for
New York‘s financial and ethical blight.
Mr. Wilson promises to strengthen ethics rules, make better audits of state agencies and
drastically reduce the $350 million a year in investment fees paid for the state‘s pension fund.
11
Wilson for Controller: Challenger has the smarts and skills for state's top
money job
Editorials
Sunday, October 17th 2010
New York needs a controller who knows what he's doing.
New York needs a controller who can rescue the office from the hash made of it by the corrupt
Alan Hevesi and the underqualified Tom DiNapoli.
New York needs a controller who can be a force for reinventing state government, in the process
lifting dead weight from taxpayers' shoulders.
Give the job to Harry Wilson. Superbly qualified, and brimming with cogent, ambitious plans,
Wilson is by far the best choice for these times.
Charged with safely growing New York's $125 billion pension fund, the next controller must
have the ins and outs of money management down cold. Wilson fits the bill perfectly, having
prospered at four of the world's smartest investment houses.
Charged with rescuing New York from insolvency as the state's chief fiscal officer, the next
controller must lead the way toward streamlining Albany. Wilson proved his turnaround skills in
helping to run the Obama administration task force that rescued the U.S. auto industry.
Charged with ferreting out waste as chief auditor, the next controller must follow the money and
report back without fear or favor. On this score, Wilson is the ultimate Capitol outsider: a self-
made man with zero ties to the corrupt old guard.
Newcomer to politics that he is, Wilson would apply fresh, astute ideas to banish the same-old,
same-old ways of doing business.
Most importantly, his strategy for serving as sole trustee of the pension fund is dead-on right.
He would shock Albany - and New Yorkers at large - by presenting a truthful accounting of the
retirement system's costs, along with the means to meet the expenses without raising taxes.
12
He would shift investments away from the fantasy of scoring outsized returns on risky bets, a
move that would save hundreds of millions of dollars that flow to private advisers at little or no
gain to the retirement system.
He would establish an independent board to scrutinize the wisdom and propriety of handing
pension money over to anyone.
He would document why New York must shift to providing 401(k)-style retirement savings
accounts to newly hired workers.
Wilson, a Republican, is challenging DiNapoli, a Democrat. The winner will serve beside the
incoming governor, presumably Andrew Cuomo. Most tellingly, Cuomo has declined to endorse
fellow Democrat DiNapoli.
To do so would be to severely undercut Cuomo's central thrust - that he will be the leader who
finally defeats the Albany special interests to usher in a new day of taxpayer-friendly, merit-
based governing.
Clearly, Cuomo knows that DiNapoli was ill-prepared to serve when pals in the Assembly
appointed him to serve out Hevesi's term after Hevesi was revealed to be a crook.
DiNapoli had one qualification: He had affably bided his time as a member of the Assembly for
nine terms. He had never managed so much as a mom-and-pop store - nor did he have the
slightest bit of financial experience.
You wouldn't have hired DiNapoli to handle a dime of your retirement savings, let alone $125
billion.
And you still wouldn't, because his performance fell beneath low expectations.
As but one example: DiNapoli's returns on pension investments have lagged behind those of
other large public retirement systems, costing the fund hundreds of millions of dollars.
Wilson is not just an alternative. He's an excellent alternative. So who is the guy?
The son of Greek immigrants, Wilson grew up in Johnstown, a city of 8,000 west of Albany. His
roots are working-class. His father was a bartender; his mother operated a sewing machine.
President George H.W. Bush named Wilson a presidential scholar when Wilson was a senior in
high school, a distinction earned by only 141 students that year. Subsequently, Wilson graduated
from both Harvard College and Harvard Business School. Then he made his mark at the top
ranks of New York's financial industry.
In 2009, Wilson volunteered for the task force established by President Obama when General
Motors and Chrysler verged on liquidations that would have thrown hundreds of thousands out
of work and further pounded the economy.
13
The lone Republican in the group, Wilson was key to restructuring GM so the company is now
competitive and will likely prove a profit-making investment for taxpayers. New Yorkers need
him to do the same for this state.
For State comptroller: Harry Wilson

Posted: September 28, 2010
If ever there was a time when New York needed an astute, tough-minded outsider to safeguard
its cash -- as opposed to a longtime insider beholden to Shelly Silver -- this is it.
Republican Harry Wilson fits the bill to a tee, and today The Post enthusiastically endorses him
for state comptroller.
New Yorkers rarely focus on this office, which acts as the state's chief fiscal watchdog and sole
trustee of its $130 billion pension fund. But state finances are imploding, and the economy --
especially upstate -- is in dire straits.
Albany needs a serious financial cop -- and Wilson couldn't have been better groomed for the
task.
Reared in upstate Johnstown, the son of working-class immigrants, he holds an MBA from
Harvard and has experience at several top financial firms. Best of all: He's never held elected
office.
His rival, by contrast, current Comptroller Tom DiNapoli, got his job in '07 when Assembly
Speaker Silver tapped him to replace Alan Hevesi -- a reward for DiNapoli's 20 years of loyal
service in the Legislature.
Could there be a clearer choice?
With Wilson, New York would get a true pro -- with formal training and relevant, real-world
experience.
And he understands the problem: Albany continues "to ratchet up spending to placate special
interests," he says. Thus, "New Yorkers bear the highest . . . tax burden in the nation," which
drives away businesses, jobs and revenue.
The result: "An ever-dwindling tax base supporting an ever-increasing state government -- an
unsustainable dynamic."
14
As an outsider, Wilson would serve as an effective check on Silver (a cinch for re-election), the
next Senate boss and the next governor -- whoever that might be.
Yet, Wilson -- who helped save GM as the only Republican on President Obama's auto task force
-- can also be highly effective on a bipartisan basis.
To be sure, DiNapoli is hardly the worst of the lot in Albany. Indeed, he's usefully warned of
New York's dire fiscal woes for years.
But, let's face it: He's too close to Silver and part of New York's status quo.
Should Cuomo become gov, Wilson would be better able to work with the AG's plan for fiscal
reform -- or stand up to him, and to Silver, should they continue down the current ruinous path.
New Yorkers who care about the state's finances, economy -- and their own pocketbooks --
should back Wilson.
Wilson for state comptroller

Wilson’s talents and experience are superbly suited to the job
October 18th 2010
In the first public debate for state comptroller, the two candidates clarified the choice facing
voters. Incumbent Thomas DiNapoli repeatedly characterized his opponent, Harry Wilson, as ―a
wizard of Wall Street.‖ The challenger disparaged Mr. DiNapoli as ―a creature of Albany.‖
For the job of investing the $125 billion state pension fund and auditing state spending, we'll take
the wizard.
From humble beginnings, Mr. Wilson became an academic star, earning Harvard degrees on
scholarships, then making a fortune in finance. As the only Republican on President Barack
Obama's auto task force, Mr. Wilson played a key role in returning General Motors to profit.
Mr. Wilson, 38, has demonstrated a knack for fixing troubled companies by improving
management practices and company culture. State agencies, Medicaid and other programs, and
school districts would benefit from his expertise. Unlike typical Republican candidates, Mr.
Wilson does not claim that tax cuts will solve our problems—he says that solving our problems
would allow for tax cuts. He is no slave to political ideology.
15
Voters following the race should look past the name-calling, which plays on legitimate public
antipathy toward Wall Street and Albany. Not all hedge fund partners are reckless swindlers
destroying the economy. Not all Albany politicians are corrupt schemers bankrupting the state.
Mr. DiNapoli, appointed by Assembly colleagues to succeed disgraced comptroller Alan Hevesi
in 2007, has been trying to do the right thing. His reforms—such as banning middlemen from
arranging deals with the pension fund—have aimed to insulate his office from the kind of
corruption that brought down his predecessor. Mr. DiNapoli initially rejected campaign
contributions above $10,000, though he abandoned that limit when his fundraising faltered. And
he has dutifully warned of risky budgeting by his former colleagues, despite supporting such
practices as a legislator.
However, there is nothing in Mr. DiNapoli's background to suggest he is cut out to be

comptroller. Mr. Wilson's talents and experience, in contrast, are superbly suited to the job. His
financial acumen would let him lead rather than be steered by the staff that manages the pension
fund.
Mr. DiNapoli is fond of warning that ―Hedge Fund Harry‖ would hand the pension fund to his
―Wall Street buddies,‖ but in fact Mr. Wilson proposes to do the opposite—to move assets into
fixed-income and low-cost index funds over time. It is Mr. DiNapoli who favors the riskier
strategies that enrich financial firms. His warnings about Mr. Wilson are disingenuous and
hypocritical.
Mr. Wilson promises to be a greater check on Albany's fiscal abuses than past comptrollers have
been. He would refuse to sign off on imprudent borrowing and other legerdemain that lawmakers
use to disguise dishonest budgeting. Critics say comptrollers lack such power, but we're eager to
see what Mr. Wilson can do.
Harry Wilson has the courage, talent and independence to invest responsibly, and the skill to
excel at the other elements of the job. We strongly endorse him for state comptroller.
CITIZENS UNION ENDORSES

HARRY WILSON FOR NYS COMPTROLLER and
ERIC SCHNEIDERMAN FOR NYS ATTORNEY GENERAL
Visionary and Innovative Approaches Make Wilson and Schneiderman

Best Choices Over Capable Opponents
16
October 17th 2010
Citizens Union today announced its support for Eric Schneiderman (D, I, WF) for New York
State Attorney General and Harry Wilson (R, I, C) for New York State Comptroller, citing both
candidates' requisite experiences, robust visions and innovative approaches to the respective
positions for which they are running. After interviewing and evaluating the candidates for these
two offices, the board of Citizens Union formally made its decision this past Wednesday.
"Harry Wilson is the no-nonsense, breath-of-fresh-air candidate that New Yorkers have been
seeking in their desire to reform our state government. His experience in turning around failed
and distressed companies like General Motors equips him best to lend his financial expertise in
the effort to dramatically change state government and help resolve our growing fiscal issues.
The fact that he did that for GM while working with Democrats in the Obama White House gives
us confidence that he will bring a welcomed nonpartisan approach to the office. The broad-
minded leadership he promises will hopefully transform the role the office serves in a way
similar to how both Eliot Spitzer and Andrew Cuomo expanded the scope and reach of the
Attorney General's office. New York needs to right its financial ship. We need a skilled fiscal
expert at helm with a big vision- Harry Wilson is that person," said Dick Dadey, executive
director of Citizens Union.
Citizens Union Evaluation of Comptroller Candidates
Harry Wilson's unconventional vision for the comptroller's office led Citizens Union to support
him over incumbent Tom DiNapoli. Wilson, a relative newcomer to the public arena, garnered
attention through his stellar service on President Obama's Auto Task Force restructuring General
Motors, which Wilson cast as an extension of his private sector work for a number of private
equity firms turning around distressed companies. Wilson views the Comptroller's office through
this experience, and sees it as an opportunity to turn around another entity in financial disarray,
New York State.
Wilson impressed Citizens Union with his plans to more aggressively investigate waste and
fraud by promising to do a line-by-line audit of all government agencies and entities as part of a
systemic review of state government. This review, Wilson states, is necessary to reduce spending
so ultimately taxes can also be lowered to generate economic growth and prevent the emigration
of the state's population to more affordable parts of the country. Wilson believes he could
dramatically shrink the Office of the State Comptroller from its current staff of 2,500, noting that
with just about 50 staff and 50 consultants, the federal government was able to restructure
General Motors. Part of this downsizing would involve diminishing the number of money
managers for the state's pension funds by shifting portions of the domestic equity portfolio to
index funds, which Wilson believes would also save nearly $100 million in fees in addition to
reducing the headcount.
Citizens Union also found Wilson's evaluation of the state's pension obligations compelling.
Wilson believes the state's pension funds are woefully under funded by $30-$80 billion and calls
17
for the creation of a sixth pension tier. He takes issue with a Pew Charitable Trusts Center on the
States' report and Governing Magazine assessment that showed New York State had one of the
better funded pension funds in the country, noting the study simply used the current comptroller's
overly positive assumptions for the rate of return on investments. This unrealistic
prognostication, Wilson believes, is rooted in the state's use of discount rate standards
established by the lax Governmental Accounting Standards Board (GASB), instead of those set
by its private sector equivalent, Financial Accounting Standards Board (FASB), which is stricter,
and Wilson believes, more accurate. Wilson also notes that applying the stricter accounting
standards used in the private sector to all of state government reveals an enormous $300 billion
total in debt.
With regard to reform, Wilson would continue the incumbent's ban on placement agents and
expand the ban to trial lawyers doing business with the state pension fund. He, like the
incumbent, does not believe the sole trustee model should be changed but notes that he would
create a committee of world class investors to act as a screen for choosing managers of the
pension fund.
Wilson would also expand the scope of the office and its impact on the state's fiscal affairs. For
example, he would present the state budget after the conclusion of its fiscal year in a GAAP
format so New Yorkers would know exactly how income was received and what was spent on an
accrual basis. Additionally, he would create a state balance sheet showing all of the state's assets
and liabilities, including those of the public authorities and all state agencies. These two items in
particular show the new and welcomed approach Wilson would bring to deep-seeded problems
in Albany.
While Citizens Union feels Wilson has the better vision for how the Comptroller should use the
office going forward, incumbent Tom DiNapoli deserves credit for taking an office deeply
damaged by scandal and using the opportunity to bring about changes in relation to placement
agents, fundraising and transparency. DiNapoli has been a competent office holder who has
competently and with care handled the office, but despite these improvements and approach,
Citizens Union believes that Harry Wilson is better positioned to use the office to push reform of
state entities beyond the confines of the comptroller.
Citizens Union believes Wilson shows a deep and better understanding of the problems facing
government, and can recite particulars on issues and programs that compensate for his newness
to public service in New York State. Citizens Union is convinced that Wilson can bring a new
and innovative approach to the position of comptroller and has the knowledge and demeanor to
be a very effective and needed force for change.
18

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HARRY WILSON’S WAR—A PLAN TO TRANSFORM THE

―New Yorkers…have a chance to choose someone who knows

―New York needs a controller who knows what he‘s doing…

―New Yorkers who care about the state's finances, economy –

―Harry Wilson has the courage, talent and independence to

―Citizens Union believes Wilson shows a deep understanding of

The New York State Comptroller’s Office

My Agenda for Fixing New York State’s Pension Gap

My Agenda for Professionalizing Pension Investments

My Agenda for the Audit Function of the Comptroller’s Office

establishing quantitative and qualitative objectives to measure future performance; and

My Agenda for State Budget Reforms

My Agenda for Unfunded Albany Mandates

Appendix – Recent Endorsements:

For New York Comptroller, Attorney General

Sunday, October 17th 2010

New York needs a controller who knows what he's doing.

For State comptroller: Harry Wilson

Could there be a clearer choice?

Wilson for state comptroller

October 18th 2010

However, there is nothing in Mr. DiNapoli's background to suggest he is cut out to be

CITIZENS UNION ENDORSES

Visionary and Innovative Approaches Make Wilson and Schneiderman

October 17th 2010

Citizens Union Evaluation of Comptroller Candidates

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