Ticked off. (Dan Kaufman)

With all the fan boy excitement surrounding the new Apple Store at Grand Central, it is no surprise the shiny glass bauble was able to land a sweetheart deal for the space. Now, State Comptroller Tom DiNapoli is probing Apple's lease with the M.T.A., according to the Post, looking for signs of whether or not there was anything untoward about the deal.

As the Post reported yesterday, Apple is forgoing profit-sharing requirements that are common among most Grand Central retailers at the same time the glass goldmine is enjoying particularly below-market rents for its space. Receipts are expected to top $100 million a year.

"The article in the New York Post about the M.T.A.’s contract with Apple in Grand Central Terminal is a cause for concern,” Mr. DiNapoli told the tab. “This is a prime property, and I intend to make sure that the M.T.A. hasn’t given away the store.”

The M.T.A. argues that because Apple had to buyout the previous tenant, it is actually paying about three-times its listed rent of $60 a square foot, and there is the fact that the M.T.A. is still making more off Apple than the restaurant it is replacing, almost 10 times as much. Still, why is it everyone always makes exceptions for Steve?

mchaban [at] observer.com | @MC_NYC

Chris Matthews discusses Trump's impact on the 2012 GOP field, and if he's really serious.

NJ Rhetoric: Christie wants media to "take the bat out" against a critic. [AP]

Media: What Trump really meant by "saved" the Daily News. [Michael Calderone]

Albany Reform: Bill Samuels says Spitzer was better than Cuomo. [Liz Benjamin

Raising for Cuomo: Ivanka Trump, Christine Quinn, Cindy Darrison, Sandi Farkas, Karen Mehiel. [Liz Benjamin]

Hevesi Sentencing: DiNapoli calls it "welcome and just." [Ken Lovette]

Lost in DC: Somebody help Rep. Jose Serrano. [Jessica Estepa]

Court Layoffs: Starting soon. [Rick Karlin]

Honors: Rep. King gets the ax, in a good way. [Flickr]

Photos: Garodnick gets intel. [William Alatriste]

No one hugged Mr. Cuomo. 

Noting the action-or non-action-at the table, Mr. Ortiz, speaking into the microphone at the podium, said, "Nobody wants to embrace the governor." Everyone laughed, and Mr. Ortiz pleaded, "Somebody has to embrace the governor." Ms. Gillibrand, who earlier had given the governor a brief peck on the check, did so again, and the room applauded.

Ms. Gillibrand notwith-standing, the reticence is understandable. Embracing the governor isn't appealing these days, especially if you're Mayor Michael Bloomberg. Mr. Cuomo just announced a $132.5 billion budget that cut about $1.5 billion from city school funding, according to critics.

The day of the Somos dinner, The New York Times used phrases like "unnecessary pain" and "inhumane and financially backward" to describe the budget, and several Democratic lawmakers spent the weekend muttering about adding new taxes and restoring cuts they were forced to accept. 

Getting Mr. Cuomo's budget through the Legislature on time was no easy task. Mr. Cuomo's office allowed legislators to circumvent the three-day waiting period required before voting on legislation, making the circular argument that "the facts necessitating an immediate vote on the bills are as follows: the bill is necessary to enact the 2011-2012 State budget." The Buffalo News' veteran Albany man, Tom Precious, noted that the exact figures outlining how much money each school district was getting were made public around 9 p.m.; legislators finished voting on the budget hours later, at 1 a.m. Times reporter Thomas Kaplan wrote, "At times, legislators did not seem entirely sure about what they were voting on."

Mr. Cuomo, who was chased down by reporters as he left the Somos dinner, confidently defended himself, once again, using the same argument about spending that has been used in recent weeks and months by conservative governors like Chris Christie: "I disagree with the concept that the only way to get better services is 'more money, more money, more money.' We've been spending a lot more money; we're not getting better services. We spend more money than any state in the nation on education; we're number 34 in terms of results."

"So," Mr. Cuomo added, "it's not as simple as 'shovel more money to these groups and maybe something will happen.' We need to stress performance and achievement in these programs and make the programs work."

"Bullshit!" said the City Council's education chairman, Robert Jackson.

He was standing in the Crowne Plaza Hotel earlier that day, handing out copies of the Times editorial criticizing Mr. Cuomo's budget.

"And I say bullshit-I'm sorry, they tell me not to curse anymore," he said. "The bottom line is, we're losing a billion dollars because of this state budget. A billion, O.K.?"

Mr. Jackson is somewhat ahead of the curve. Many Democrats-particularly city Democrats-have either maintained a bashful silence about a state budget that sends far less money to the city than prior budgets, or are only now getting around to raising concerns about the on-time state budget agreement the governor triumphantly announced last week.

It's not just the fact that the governor pushed the budget through the Legislature quickly, threatening to pass take-it-or-leave-it "extender bills" in the absence of a punctual consensus by the Legislature, though there was that. The governor is very popular at the moment, and resistance is, politically, not all that easy. It is not a coincidence that at a time when even the famously immovable Assembly speaker, Sheldon Silver, hasn't seen fit to pick a fight with Mr. Cuomo over the budget, most Democratic officials in New York have chosen to accept it all with a smile.

It has been Mr. Bloomberg, by virtue of his jurisdiction, who has been most vocally opposed to Mr. Cuomo's spending cuts, practically standing in for what surely would have been the Democratic opposition to the Cuomo budget, if there were any concerted Democratic opposition to speak of. Mr. Bloomberg said the state cuts impacting New York City were "an outrage." He wrote an op-ed in the Daily News, headlined, "How the State Budget Unfairly Singles Out NYC."

The mayor's outspokeness is also coming at a time when he's suffering from historically low approval ratings. To pump those up, and get his story out, Mr. Bloomberg is running ads saying he's protecting the city.

Mr. Bloomberg is largely blaming the governor for what he says will be a 6,000-head reduction in the city's workforce of teachers. Mr. Cuomo's aides have said that the mayor is exaggerating. Cuomo spokesman Josh Vlasto said in a March 28 public statement that "the City Department of Education has a surplus of over $300 million" and "the city revenue position has improved, so they have much less pressure on their overall budget."

Unions representing teachers and municipal workers are running ads saying the city is greedily hoarding a $3 billion surplus while threatening layoffs.

The issue would seem to be one of semantics. The mayor's aides say there is no surplus-especially not one in their Department of Education-and they stop just short of calling those claims flat-out lies. The $3 billion surplus is already earmarked to plug the budget gap in the upcoming fiscal year-which the city is legally required to do-starting in July. Using it now, Bloomberg aides say, will only lead to more layoffs and deeper cutbacks when those later expenses come due. 

When asked to verify the education surplus claim, a spokesman for Mr. Cuomo pointed to the Financial Plan Statements for New York City, issued by the city's Office of Management and Budget. The report does in fact show a $271 million surplus. But the figures are from December, and have since been updated. The latest report, showing January figures, says the $23 billion agency has only a $17 million surplus, hardly enough to make a statistical dent.

When asked about the January figures, the Cuomo spokesman, Mr. Vlasto, said the December figures represented an end-of-year surplus, and thus were valid. Not so. The calendar year (January to December) does not line up with the city's fiscal year (July to June). Doug Turetsky, a spokesman at the Independent Budget Office, said the December figures were "outdated" and that with the December figures, "you're halfway into the fiscal year." 

Even City Comptroller John Liu, whose office is obligated under the city charter to comb through the city's finances and issue reports on it, and who is not exactly shy in airing his opinions, has been thoroughly muted in his assessment of the facts at issue in this argument. 

The city's habit of rolling over surplus created a "fiscal cushion" that "masks the City budget's structural imbalance," Mr. Liu's office wrote in a March 21 report. "While the City has provided $83 $853 million in additional funding to the DOE to mitigate the impact from the expiration of [federal stimulus funds] at the end of FY2011, these funds will not
be adequate to prevent addition pedagogical layoffs." [corrected] 

So Mr. Cuomo is right about Mr. Bloomberg.

And, "as a result of the State's fiscal problems, the financial burden in support of [the city's Department of Education] operations has fallen squarely on the City," Mr. Liu's office wrote in that report.

So Mr. Bloomberg is right about Mr. Cuomo.

But Mr. Liu, who managed a team of actuaries at PricewaterhouseCoopers and holds a degree in mathematical physics, says the existence of a surplus at the Department of Education is a matter of interpretation.

"Both sides are correct," Mr. Liu told The Observer. "No side would make an incorrect claim, all right? No governor is going to make an incorrect claim. No mayor is going to make an incorrect claim. But things are subject to interpretation, and therefore both are correct." It depends on what you mean by "surplus." 

Seated in a cushioned chair in the basement of the Legislative Office Building the morning of the Somos dinner, Mr. Liu said, "The dispute notwithstanding, the bigger issue is that the negotiations have moved from Albany to City Hall. We'll see what happens in the next few months. There's three months to go. A lot can happen in the next three months."

He went on: "Keep in mind that between the mayor's November plan, and the mayor's February plan, three months, $2 billion materialized, O.K.? So, we got another three months to go. A lot could happen."

How Mr. Cuomo handled his budget is a marked contrast to how Mr. Bloomberg handled his, said Fred Siegel, a historian with Cooper Union who is also associated with the conservative Manhattan Institute think tank.

Both Mr. Cuomo and Mr. Bloomberg are settling their budgets in absence of huge federal stimulus dollars. Mr. Cuomo, bravely, opted to restructure expenses, such as Medicaid, and charged headfirst into the state's other major expense, education.

Mr. Bloomberg, now handling his 10th budget, is only now getting to structural changes, said Mr. Siegel.

"The easy thing is to cut services and blame it on someone else," said Mr. Siegel. "The hard thing to do is structural reform."

Without another injection of federal stimulus money, and with Wall Street still recovering from his epic implosion, "it's hard to see a deus ex machina that pulls us out of this," said Mr. Siegel. "What Cuomo is doing is responding to that lack of deus ex machina." Mr. Siegel, who is no fan of Mr. Bloomberg, is skeptical of Mr. Cuomo as well.

"I'm one of those people who describes Cuomo's budget as the tallest building in Topeka. Cuomo leaped over the low expectations," said Mr. Siegel. "Tactically, politically, he did a brilliant job. I'm just not sure where the substance is here." How exactly does the governor go about closing 3,700 unused prison beds, and where specifically do you find the millions of dollars in Medicaid savings, wondered Mr. Siegel.

And now it's Mr. Bloomberg's turn. He will make his latest budget pitch to city lawmakers in a few weeks. He is husbanding an extra $200 million in reserves heading into next year, in the part of budget that requires him to keep a poll of money in reserve-a minimum of $100 million. Mr. Bloomberg has tucked away $300 million.

But that small reserve is hardly enough to stave off what city lawmakers say will be a painful exercise: fighting to preserve services without the ability to raise taxes and bring in additional revenue. And members of the City Council are not looking forward to it.

"I think people understand we're in a difficult economic climate and that cuts are necessary here," said Dan Garodnick, a Democrat repressing Manhattan's East Side, who counts Mr. Bloomberg among his constituents. "But they need to be done fairly and with an eye towards protecting the most vulnerable New Yorkers."

"We should be honest with people when we say we're going to do less," said Councilman Lew Fidler of Brooklyn. "And we're going to do less." 

"Telling people all is well, all is well-like the ending scene of Animal House, when there's a riot going on around you-does nobody any favors," he said.

Back in the Crowne Plaza in Albany, Mr. Cuomo's budget and political future were the topic of conversation among a group of LaGuardia Community College students who just ran through a mock session acting as various members of the State Senate. "They should have not cut so into SUNY," said Christian Sanchez-Narvaez, a CUNY student who played the Democratic conference leader, John Sampson. He was happy some of Mr. Cuomo's cuts were restored by legislators, but "they could have done a lot better, done a lot more to restore that money." 

He added, "I think education could have been restored fully."

apaybarah@observer.com

The first battle was over the choice of comptroller. And Tom DiNapoli is a fine guy. Like him, he’s a friend.

But I said, “You guys are putting institutional interest over public interest. He’s not the guy who should be running our pension funds.” I had a conversation with Shelly Silver back then, in which I said, “Shelly, if you had your pension here, would you give it to Tom DiNapoli to manage?” He said, “Of course not.” So I said, “Then why would you make him the comptroller?”

So I would go back to the public and maybe the legislature and speak to them in a different way, but not be any less demanding… I got criticized after we did our first budget for actually sitting down and talking to them to get compromises. We got a heck of creative steps, $600 million, we changed education policy, changed health care policy. We redid worker’s comp, saving businesses $2 billion by restructuring, all in four months.

A spokesman for DiNapoli declined to comment.

According to DiNapoli, the rate is closer to 16.5 percent, a considerable bump over the 13 percent rate that DoE claims.

"The city school system needs to sharpen its pencils when it comes to knowing which kids are dropping out and which kids are transferring to another school," said DiNapoli.  "DoE should be doing its homework and making sure the right papers are turned in to back up the reasons why students are leaving school."

DiNapoli says that the reason for the discrepancy is that DoE erroneously classified dropout students as having been "discharged" from high school, when in fact in order to be label "discharged" students must transfer to another school, leave the country, or have died.

For a full copy of the report click here

Seriously, New York's halls of power are starting to resemble an old episode of "Night of 1,000 Stars!" 

Check out New York's Lawmaker Lookalikes >>

(By the way, one more resemblance of note—that of this very feature to Spy magazine's beloved "Separated at Birth" column. We know. We get that all the time.)

"It sounds like turnout is holding up in the city which is very important for us and so were feeling good about it," the comptroller candidate said.

DiNapoli had been criss-crossing the city, trying to drum up Democratic turnout to bolster his chances against his Republican challenger, Harry Wilson.

"Tremendous amount of vote out here, I was out in Long Island as well in my home base of Nassau County, and we've been traveling across the state you know over in the past couple of few weeks, but obviously in the city its also easy to get around to places where there are a lot of voters," DiNapoli said.

The comptroller race is said to be one of the state's closest, with the most recent Siena poll having DiNapoli tied with Wilson, after a poll just last week showed him up by 17 points.

DiNapoli hopes that his last-ditch efforts will pull him ahead in the final hours.

"I think there's a very strong field operation, we're working all across the state to get the vote out," he said. "I think its going to be worth three or four points easy in terms of having an impact on the final vote, so certainly in the closer races, and there's a perception is that my race is one of the closer ones, I think its going to make a huge difference."

Assembly speaker Sheldon Silver, New York City comptroller John Liu, state senator Daniel Squadron, assembly member Grace Meng, council member Margaret Chin were among supporters at a press conference at the Chinese Consolidated Business Association.

"We've all showed up together because that's how important it is to send a message," Squadron said.

In his remarks to the group of a couple of dozen Chinatown locals, DiNapoli  talked up his pension management, his plan for accountability in government, and the importance of entrepreneurship for small businesses. He also stressed the need for Chinese voters to come out on election day as they had for Liu in 2009.

He only talked about his Republican challenger Harry Wilson in response to a question, saying that Wilson does not have the experience or values needed to be a successful comptroller.

"My opponent who has absolutely no experience in government, in running an agency, and in delivering on what government needs to do," DiNapoli said.

"He made millions in a way that hurt too many people," he said in reference to Wilson's companies subprime financial investments. "Those are not the kinds of values that represent the best of Wall St., those are not the kind of values that should be represented in the comptrollers office, where you need to look out for the greatest good for the greatest number of New Yorkers "

DiNapoli emphasized his strong working relationship with Liu, labeling the pair a "dynamic duo".

Silver took exception.

"Margaret Chin really just reminded me long before the two of you got together, Margaret Chin and I were called the dynamic duo," he said.

On his way out, DiNapoli commented that he remains optimistic by poll results, citing a Wednesday Siena poll that placed him leading in all districts and more than 30 points up in New York City.

"Its all going to be about turnout who comes out to vote so we're working very hard all across the state to make sure that there's a strong turn out certainly in Democratic areas but were obviously getting support from Republicans and independents too," he said.

The ad, entitled "Signs," knocks "Wall Street" Harry Wilson as a Wall Street executive who supports the Bush tax cuts for the wealthy and whose plan for the pension fund would increase property taxes. Wilson has repeatedly accused DiNapoli of being too much of an "Albany insider," who has had too long of a political career to be an effective public servant. A source close to the DiNapoli campaign however has said that their polling shows that having ties to the financial services sector is considered an even more egregious offense than being an incumbent, even in this anti-incumbent year.

According to the campaign, the ad will be showing statewide.

Script and video below:

Wall Street's Harry Wilson has a very Wall Street plan.

He'd protect the tax loophole that lets Wall Street hedge fund executives-like him-pay half the tax rate the rest of us do.

Wilson supports extending the Bush tax cuts for the richest two percent, a windfall for billionaires.

And his pension scheme would send New Yorkers' property taxes soaring.

Republican Harry Wilson. The worst of Wall Street. Too risky for New York.

They begin with opening statements. Wilson goes first. "Our state is in the early stages of a massive fiscal crisis," one brought on he says by "career politicians." Touts his experience in turning around General Motors.

DiNapoli goes next, says the choice is between "middle class values" and "Wall Street values." Says office was a mess when he inherited it. Says, "New York deserves better than Wall Street values." Both of these guys going on the attack early.

7:03: Wilson talks about history as an investor, working class background.

DiNapoli: Says he was always in favor of greater fiscal restraint. Wants to align spending and revenues. "My opponent talks about his experience." Says he doesn't know if being a part of a failed billion dollar industry is great experience

7:05: Grace Rauh asks DiNapoli if Shelly Silver can be considered a reformer. DiNapoli defends the way he became comptroller. Rauh reiterates question. DiNapoli says, "this race is not about Speaker Silver."

Rauh asks Wilson if he is distancing himself from Paladino. Says the comptroller needs to be independent, and so he has not endorsed any candidates for any office.

7:08: Dick Dadey asks about the Hevesi scandal, and placement agents. Wilson wants to extend the bans that DiNapoli put into place against placement agents, says he would expand ban to include trial lawyers. Makes a crack, says pension fund is really big, but has gotten smaller under DiNapoli. DiNapoli touts his own ban, says it won't lead to higher contributions by taxpayers. Wilson says he supports DiNapoli's ban.

7:11 Liz Benjamin wonders, "How come so few New Yorkers know who you are?" Question is for DiNapoli, who says the media doesn't pay enough attention to their work. "I don't think its a question of how often your name registers in a poll...I am very confident that what we are doing serves the people's interest."

Wilson says no one knows who DiNapoli is is because he has been "insufficiently vigilant in protecting taxpayers." DiNapoli says this is not the office that sets the tax-policy for the state.

7:16: Says spending and taxes are too high, says comptroller should use audit power to root out fraud and waste. DiNapoli is asked what he would do to sput economic development. Talks about venture capital funds for companies that want to stay in New York. "When we put our money on the table, other money follows." Wilson talks about VC funding in California

7:19 Cross-examination time! Wilson says you spent 20 years in the Assembly, were passed over by a bipartisan commission and have been criticized by Spitzer, Cuomo, and Paterson. How are you qualified?

DiNapoli says that when people in your own party criticize you it is "a badge of pride." Says office has been under investigation since before he got there. Wilson insists that it is DiNapoli, not the office under investigation.

DiNapoli asks Wilson about tax loopholes that he supports that DiNapoli says favor hedge funds. Wilson says he doesn't want to raise taxes, period. "The fundamental problem in Albany is that we spend too much money, not that we don't tax enough." DiNapoli mentions "you're type of folks."

Wilson asks him how many voters elected him comptroller. DiNapoli snaps, "A lot more will be voting for me in November."

DiNapoli is asked about extending Bush-era tax cuts. Ducks it a bit, says not focus of comptroller's office, calls for a property tax cap. Wilson says he is against new taxes, period.

DiNapoli: I voted for funding for schools and hospitals. Blames Wall Street for killing revenues, i.e. people like Wilson.

Wilson is asked about boycotting Arizona. Says pension fund should not make political statements if it hurts taxpayers. DiNapoli says he takes umbrage. Wilson: public asssets should not be used to benefit politicians.

7:29: Liz asks about divestment from Iran, asks where else they would divest from. DiNapoli says pension fund should not invest in companies that are involved in war-torn regions like Sudan. Wilson agrees, but says he would take it a step further, wants to reduce risk of pension fund. Liz smartly asks difference between Arizona, which Wilson says is political posturing, versus this stand. Wilson says genocide and Iran are different.

7:32 Dick Dadey asks about other states which dont put the whole investment strategy upon one person. Wilson wants to add a series of investment committees. DiNapoli says he would be afraid of the kind of investment committee that Wilson would put together, since it would just be his buddies from Wall Street. Wilson says that a number of people DiNapoli put on his investment advisory committee come from Wall Street, and that people left because he didn't know what he was doing. DiNapoli says it's inappropriate for Wilson to impugn his integrity, says his life in public serivce is an open book. DiNapoli doesn't look pleased.

7:37: Grace Rauh asks about the stimulus and the financial bailout. DiNapoli is generally favorable to both, says we need more investment in infrastructure. Wilson: DiNapoli spends al his time talking about how my friends and I wrecked the economy. "I had no idea I was so powerful." Wilson says he is against the stimulus bill.  DiNapoli again brings up Wilson's previous employer, says you were part of that great wizardry on Wall Street  "that made millions of dollars on the backs of regular people."  They are talking over each other

7:42: Lighting round. Both think there should be a special election to replace vacant comptroller. DiNapoli has been in a casino in past year, Wilson has not. Both have never bounced a personal check, both think abortion should be legal. Neither have ever seen "Mad Men." DiNapoli is against term limits, Wilson is for them. Wilson has a metrocard in his pocket right ow, DiNapoli does not. Neither have been arrested.  Wilson does not favor a full-time legislature, DiNapoli does.

7:45 Grace Rauh asks a silverpoint question. Oh boy. Asks DiNapoli about Cuomo's investigation and why Cuomo hasn't endorsed him yet.  DiNapoli says he isn't running to be the governor's comptroller.

748: Dadey asks if there is anything the comptroller can do to improve the state's budget process. DiNapoli says not comptroller's responsibility, but talks about GAAP budgeting, multi-year budgeting. Says he job is sound the alarm when the spending is out of control.

Wilson says DiNapoli seems like a nice guy, but is a 24-year veteran of Albany and stuck in his thinking. Says the comptroller has to be the primary watchdog for the budget process. DiNapoli says that is what we have done. Says you have to use office as a bully pulpit.

7:51: DiNapoli: This notion that we have this massive pension problem is one that creates fear in people, especially retirees, and is unnecessary.

7:53: Final question. Should legislators provide comptroller's with all of their receipts while they are in session? DiNapol says legislature is an independent branch of government, there is not much that you can make them do. Wilson says of course they should provide receipts. DiNapoli calls Wilson's remarks a cheap shot.

Closing Remarks: Calls himself a sucessful businessman who has turned around failing businesses, wants to do same for state. Calls DiNapoli a career politician. DiNapoli calls Wilson "one of the Don Juans of Wall Street."  Says he has reformed the office.

Onto the spin room!!