Long-simmering tensions between Mayor Bloomberg and undead District Attorney Robert Morgenthau boiled over last week when the mayor's office accused the DA of quietly keeping $83 million in settlements, fines and forfeitures in 62 "secret" bank accounts. One official said Morgenthau's office kept "two sets of books" in order to bypass the city’s financial review process. But Morgenthau's camp insisted the city has known about the accounts for years, and speculated that Bloomberg was actually retaliating against Morgenthau because he's frustrated that 40% of the DA's settlement money still gets kicked up to the state. Bloomberg wants it all, and Morgenthau called his tactics "chickenshit." But that was last week!

Yesterday Bloomberg told reporters, "The district attorney said he is going to have the comptroller audit all these [accounts]. As long as he's in compliance with the law, that's fine with me. We're certainly not having a battle, shouldn't be having a battle over anything else.. That should end all of this." Great, except Hizzoner also made a point of saying, "Given that we set the budget for the district attorneys, we have to know if they have other revenues... because we don't have enough money for our schools and police and fire." Catch that "we set the budget" bit? You gonna take that Morgy?

"There's been implied threats all over the place," one source familiar with both men tells the Daily News. "They said, one way or another, we'll get the money." The Manhattan DA's office gets 82 percent of its $91 million budget from city taxpayers, but last year turned over $119 million in settlement money to the state, and $181 million to the city. Morgenthau argues that the DA needs to maintain independence from city politics (hence the separate bank accounts), and hates that the Mayor thinks he can slash his budget, so hopefully there'll be more.