In a four-way race for New York City Controller, Councilperson John Liu is launching a TV ad that says he helped catch the Metropolitan Transit Authority (MTA) using two sets of books in 2003 to justify a fare hike.  As chairperson of the Transportation Committee, he got former MTA executive director Katherine Lapp to admit that MTA was using a numbers game.  

A recent New York Daily News article titled “Controller hopeful John Liu takes flack for '2 books' claim on TV ads” about this ad makes a few logical leaps that require dissection, especially since the story seems to try, but does not succeed, to make the case that Councilman Liu’s statements in the ad had been refuted by a state appeals court.  

First, the article suggests Councilman Liu’s statements about “two books” is somehow predicated on a so-called “infamous two books” claim that was made in a state auditor’s 2003 report on MTA and the subject of a decision by the state appeals court.   Isn't it possible that Councilman Liu might have his own reasons for questioning the MTA's budget making process?  After all, as reported in the Daily News story, Councilman Liu grilled MTA Executive Director Lapp about the two sets of numbers three months before the audits were released.  

Second, the Daily News article says that the state appeals court ruled that the “two sets of books” allegation “was untrue” and it “eventually debunked the allegations of two sets of books.”  The one appeals court decision we located on this issue, In Re: Public Interest Research Group Straphangers Campaign, 763 N.Y.S. 2d 13 (July 15, 2003), however, doesn’t really reach this conclusion.  In Straphangers, the plaintiffs sought to reverse the 2003 fare hike by challenging the notice provisions, which did not reveal all of the financial information that was used to justify the MTA fare plan.  The plaintiffs relied on the 2003 state auditor’s report, which suggested that (1) MTA could have avoided or mitigated a rate hike by charging 2002 resources surplus to one fiscal year, rather than two fiscal years which creating the deficit and (2) that MTA did not fully disclose this information to the public, that is, MTA was using “two books.”  

The Appellate Division, First Department, reversed the lower court’s finding that the deficit which resulted from MTA’s balancing of the books was “fictional” and the MTA notices of the public hearing were otherwise “false or misleading” based on the law.   It did not get into the merits of the “two books” debate.  

Rather, the Appellate Division said that MTA met the “sparse” statutory requirements for notice to the public about fare plan hearings and the legislature placed the decision on how to balance the budget firmly within MTA’s judgment.  The Appellate Division acknowledged the value of transparency and robust public debate regarding MTA’s budgeting decisions from the public’s perspective, but declined to impose such costly requirements without the legislative authority to do so.   

Finally, other than the reporting itself, the only real “flack” that appears in the article comes from former MTA Chairman Peter Kalikow who said that two courts ruled that the “two books” allegation was “absolutely false.”  This “flack” appears to be directed at the state auditor’s report, however, not Councilman Liu.

So, although you might never know it from the title of the article and opening paragraphs, there is no flack to be aimed at Councilman Liu.  In fact, the article contains an acknowledgement of his leadership on the MTA budget issues from Gene Russianoff of the Straphangers:

(t)he councilman had a role in the process…It wasn't as if he was off in the Bahamas when this was going on. He held a hearing and focused attention on it.

 Councilman Liu should not be getting any flack for that.