The Business of New York is Business
Comptroller Thompson on Business and Banking, Part 3
By Mary Alice Miller
As chief fiscal officer, Comptroller Thompson’s primary job for the last 7 years has been counting the city’s money. The Comptroller conducts audits of city agencies; during his tenure from 2002 to 2008, Thompson has uncovered $260.2 million in actual and potential revenues and savings through 658 audits and special reports. In FY 2008 alone, the Comptroller conducted 80 audits and special reports, generating $16.5 million in actual revenue and savings. Thompson found if all his recommendations in the 2008 audits and special reports were implemented, the potential cost avoidance, savings and revenues identified in FY 2008 would total $59.1 million in addition to the 16.5 million in actual revenues and savings.
Thompson has made numerous recommendations for fair, alternative means of strengthening the city’s finances and has advocated for state and federal policy favorable to the city. Using the power of his office, Thompson’s sharp eye has contributed greatly to the city’s financial health while balancing the needs of business and residents.
Acknowledging the current restructuring of Wall St.’s financial services industry,
Thompson said, “I think we still will want to be the business capital of the world; the financial capital of the world. But we have been overly dependent on Wall Street and have not wanted to break that dependence.”
Thompson actions as Comptroller reveal his support for ethics in NYC’s business environment.
Weighing in on the side of NYS Attorney General Andrew Cuomo, Comptroller Thompson recently submitted an amicus brief to the U.S. Supreme Court, asking the court to support the State AG’s right to investigate national banks for possible violation of state fair lending laws.
“In New York City, African-American and Hispanic homebuyers and owners, at all income levels, have been the victims of disparate and unequal treatment by home mortgage lenders, including national banks and their affiliates,” Thompson said in the brief. “Our information shows a clear pattern of racial disparities in the lending practices of banking institutions in the city.”
Thompson provided the court with data collected by his Community Action Center (CAC) through its Foreclosure Prevention Helpline. In April 2007, Thompson launched the Foreclosure Prevention Helpline – at (212) 669-4600 – to help individuals and families confronted with losing their homes. The Helpline since has received more than 4,100 calls, resulting in 2,200 cases being opened. Thompson’s office used that data to produce detailed maps showing that foreclosure rates are much higher in minority communities in New York City irrespective of income levels. Thompson’s submission illustrates that in New York City there is a clear distinction between the banks’ treatment of minority and white residents that clearly justify the Attorney General’s investigation.
“After years of unchecked subprime lending, the subprime crisis occurred, followed by national and worldwide financial crises,” Thompson said. “Earlier scrutiny, exposure and correction of national banks’ abusive subprime lending practices, such as unequal treatment of minority borrowers, might have lessened those crises. For that reason, it is vital that Attorney General Cuomo and other state regulators be permitted to investigate the home-lending practices and other legal compliance of national banks.”
Thompson’s advocacy for fair lending practices began years earlier when in 2002, he stood with the City Council’s attempt to legislate a proposal that would have prohibited the city from doing business with institutions that engage, directly or indirectly, in predatory lending practices. When Mayor Bloomberg responded by taking the Council to court in Mayor of New York vs. City Council of New York, the Comptroller spoke up.
The Comptroller has sought various other means to enhance collection of tax revenue and stimulate diversity of businesses in NY.
This past February, Thompson urged the City to implement a tax amnesty program (particularly for businesses) to increase revenue. In a letter to Mayor Michael Bloomberg, Thompson stressed that while the state has created a mechanism for enhancing tax revenue collections, the city must fully participate to generate as much revenue as possible. “Tax amnesty programs have been used to good effect in the past to bring in additional revenue during times of fiscal stress,” Thompson wrote.
Thompson referred to last summer’s NYS “Voluntary Disclosure and Compliance Program,” essentially a tax amnesty program, which allows eligible taxpayers to avoid monetary and criminal penalties by paying unpaid taxes that one owed and agreeing to pay all future taxes. “While the city will benefit from this program when delinquent taxpayers pay taxes that also have a city component, such as personal income or sales taxes, the city is not taking advantage of this program to enhance collections of the taxes it administers – specifically the business taxes,” Thompson added.
According to Thompson, in Fiscal Years 2003 and 2004, the city collected $106 million in tax revenue through tax amnesty programs. This included $22 million stemming from a state tax amnesty program in FY 2003, and $84.4 million from a city tax amnesty program in FY 2004, — data from the Office of Management and Budget’s tax program estimates. The latter program provided an amnesty over three months for a range of city-administered taxes including business taxes, the real property transfer tax and others.
Comptroller Thompson supports extension of the Empire State Tax Credit Program to include the film and television production industry, which employs 30,000 people directly in the city and tens of thousands indirectly in related fields. “The Empire State Tax Credit Program affects a wide range of individuals and businesses across the city and state,” Thompson said. “I am urging the governor to extend this tax credit to help sustain job creation in this vital New York industry, and am further asking the state to apply federal stimulus funds for this purpose. The program creates jobs and provides significant tax revenue to the state treasury. It’s just the kind of economic push that New York State needs right now. It just makes fiscal sense.” Thompson added, “To those who would question funding for a tax credit during a fiscal downturn, I would counter that this program has been enormously successful in increasing employment and providing a boost to a host of local businesses – from caterers to postproduction houses – that serve the film industry.”
Comptroller Thompson’s office oversees management of NYC’s 5 pension fund and retirement systems – NYC Board of Education, Employees, Fire, Police and Teacher’s. The Comptroller’s Pension Policy Division develops programs consistent with the fiduciary obligations of the funds’ and systems’ trustees, and are aimed at advancing corporate governance, and corporate social and environmental responsibility reforms at selected companies in which the funds and systems are shareowners.
The Comptroller’s 2007 Corporate Governance Proposals called for numerous policies including: stronger criteria of director independence for members of board audit and compensation committees; a proposal for adoption of a board policy for addressing shareholder proposals that win majority votes; a proposal for adoption of a policy requiring that a significant portion of future stock options granted to senior executives be performance-based; a proposal for adoption of a pay-for-superior performance standard in company executive compensation plans for senior executives; and a proposal for adoption of a policy to allow shareholders an advisory vote to ratify the compensation of named executive officers. These proposals were met with considerable success, and were adopted by 10 companies the pension funds invest with.
Proposals regarding the recommendations from the Comptroller’s office on corporate, social and environmental responsibility issues were submitted to 76 companies, requesting either board adoption of a specific policy or issuance of reports disclosing board policy or actions on 14 specific issues. The corporate social and environmental responsibility program included proposals asking companies to take actions on one or more of the following and other issues: implement the International Labor Organization (ILO) and UN Human Rights Norms in their international operations, and allow for independent monitoring of compliance; adopt an explicit prohibition of workplace discrimination based on sexual orientation and gender identity; report on company policy to prevent negative racial and ethnic stereotyping in products; report on efforts to reduce carbon dioxide and other emissions from existing and proposed power plants; disclose political contributions; report on company policy and procedures regarding company assessment of the adequacy of host countries’ standards to protect human health, the environment and company reputation; institute policies to help protect freedom of access to the Internet; and report on policies and procedures for minimizing customer exposure to toxic substances and hazardous components in marketed products. Proposals were adopted by the boards of directors at 28 companies.
According to a spokesperson, Comptroller Thompson is very concerned about the impact of financial services on the city, and is monitoring these issues closely as part of his responsibilities providing oversight to the city’s budget and finances.