A new agreement would give investigators in the Office of Inspector General access to the tax return data of lawmakers and state employees. It's an issue that’s already making waves at the Capitol. Capital Tonight reporter Nick Reisman has the latest.

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NEW YORK STATE -- Lawmakers are questioning an agreement quietly struck between the state inspector general and the Department of Taxation and Finance that would empower a selected few to access tax returns of any state employee.

“Doesn't it trouble you at all that 62 people are being deputized? This is not just a tax function that the inspector general has. The inspector general has an investigative function. Doesn't it trouble you at all that 62 people will now be able to gain access to tax records of state employees?” asked State Senator John DeFrancisco.

The Times Union reported Monday that a memorandum of understanding was inked in January providing for the unusually broad powers be granted to the inspector general's office, which is part of Governor Andrew Cuomo's administration. Thomas Mattox, the commissioner of the Department of Taxation and Finance, was grilled on the witness stand by a joint budget committee.

“The agreement still requires the department to effectively sign off and insure that the provisions of secrecy are met once that transfer occurs,” Mattox said.

Later in the day, the inspector general's office and tax and finance released a joint statement calling the Times Union story inaccurate. Though not denying any specific facts in the story, the administration says the agreement was part of an overall consolidation effort. That didn't dissuade lawmakers from being uneasy with power as evidence by this exchange between Mattox and Denny Farrell, an Assembly Democrat.

“But you're now just automatically saying to everybody in the IG, you don't have to tell us why, you can just basically do it on your own. Isn't that what you're saying?” Farrell asked.

“No chairman, that isn't what I'm saying at all. I think the best way to think about this is again, at least back to 1996, we've had a formal working relationship with the state IG,” Mattox replied.

The news comes days after Inspector General Ellen Biben, whose career has been closely aligned with Cuomo over the years, was picked to be become the leader of the independent Joint Commission on Public Ethics. The move was hailed by good-government groups, but raised questions over whether the watchdog could remain independent.