In New York, Comptroller's Race Drew Fire

IT'S a runoff.

New York City Democrats will get a second chance to choose their candidate for the city's second most important job, comptroller. Neither the incumbent, Elizabeth Holtzman (33.4 percent), or her challengers, Alan Hevesi (35.3 percent) and Herman Badillo (31.4 percent), could win the required 40 percent of the vote. Now, Ms. Holtzman will face Mr. Hevesi on Sept. 28. Mr. Badillo, who is also running as a fusion candidate with Republican Rudolph Giuliani, is already assured a place on the November ballot.

The comptroller's race became a battle after it was reported that Providence, R.I.-based Fleet Bank loaned Holtzman's failed 1992 Senate campaign $450,000 at a favorable interest rate. The city later made a Fleet subsidiary a co-manager in the underwriting of a bond issue. However, Mayor David Dinkins removed Fleet from the underwriting when the loan became public knowledge.

Holtzman maintains that she did no wrong but refused to authorize the release of a city investigation into the affair. She now says she will allow the report to be released. Hevesi says he will stop talking about the issue once the report is out. On Monday, Badillo, in an interview, predicted that the issue would be ``devastating'' to her candidacy. Holtzman acknowledges that she took ``a pounding,'' but now refers to herself as ``the comeback kid.''

Since she took over the job in 1989, Holtzman has broadened the scope of the office. In her campaign appearances, she has highlighted her plan to provide more jobs for the city and better health-care services. However, the number of audits performed by her staff dropped compared with the number of audits performed by her predecessor, Jay Goldin.

``If you cut down on the number of audits, that could lead to fraud and corruption,'' says Badillo, who is also a certified public accountant. Both Hevesi and Badillo have campaigned on ways to improve the auditing system.

Former Mayor Ed Koch refers to Holtzman as ``an unhappy comptroller,'' more interested in a Washington job. ``When you have someone who doesn't enjoy their job, you don't get the best,'' adds Mr. Koch, now a political commentator.

Last year, Holtzman ran for the Democratic nomination for the United States Senate. She came in fourth but made enemies when she launched an attack on former Rep. Geraldine Ferraro, who came in second in the primary. Ms. Ferraro is among a group of Democrats who supported Hevesi.

The position of comptroller changed in 1990 after the city, in a charter revision, eliminated the Board of Estimate, which controlled major expenditures. When there was a Board of Estimate, the comptroller was powerful because the comptroller had 2 of the 11 votes. The mayor had two votes, and six votes were needed to pass matters that came before the board.

Holtzman's office audited the city's schools for asbestos in 1990 and found that 40 out of 50 schools had a serious asbestos problem. However, Badillo faults Holtzman for not following up on the audit.

``If you know anything about accounting, this would cause you to conclude you better examine all the other schools because if 80 percent had asbestos problems, it means the whole program is no good, and all the schools should have been audited,'' Badillo says. Now, the city's schools are closed until the problem can be fixed.