By Kathy Kahn
During the Roaring 20s, New York created its first public authority—The Port Authority of New York. Since then, that bloated agency has been joined by over 600 “authorities” – a swamp where funding allocated to a specific authority often ends up underwriting unrelated state projects outside its purview.
With New York’s state-funded debt projected to reach $63.7 billion at the end of the current fiscal year and to increase to $71.8 billion over the following four years, a report released by NYS Comptroller Thomas DiNapoli on December 14 outlined how the money poured into authorities can be monitored to reduce the state’s debt.
DiNapoli urged a Constitutional amendment to ban the issuance of state-funded debt by public authorities and other entities and to allow multiple General Obligation Bond acts to be considered by voters in the same year, as well as require all state-funded debt to be issued by the Comptroller following voter approval. A limited amount of debt could be issued without voter approval annually, along with emergency debt to be issued only under extraordinary circumstances and within strict guidelines.
The Comptroller’s report urged the creation of a NYS Capital Asset and Infrastructure Council to provide an inventory and monitor the status of all capital assets of the state and its public authorities, as well as, in its discretion, local authority and municipal corporation capital assets which receive a significant state investment. It also recommends establishing a Statewide Capital Needs Assessment and require a 20-year strategic plan to use as a guideline for the five-year Capital Plan.
“Debt is often a basic part of the financing picture, whether the focus in on school buildings, highways, water and sewer systems or other facilities,” said DiNapoli.
“However, we need to use debt wisely. In order to avoid overpaying for capital assets and burdening future generations with excessive debt, New Yorkers must keep a careful eye on how much the state borrows, the purpose of the debt and its affordability.”
New York State’s debt burden is among the highest in the nation; at $3,116, per capita debt was three times the median for all states. Total state-funded debt is projected to increase by $10.4 billion, or 17 percent over the state’s current five-year capital plan period. State-funded debt service is projected to increase by 14.5 percent or more than $1 billion over that period. When debt service costs go up, it can be more difficult to fund important programs and balance the budget.
“In response, I have proposed Constitutional amendments that would impose a comprehensive debt cap linked to the level of personal income in the state, while prohibiting long-term debt except for capital purposes,” said DiNapoli in his report. “The reform package would also ban “backdoor borrowing” public authorities use to conduct on behalf of the state and return control of state debt to the voters.” To help ensure that such debt is used for the highest priority purposes, my proposal would also require including a comprehensive annual assessment of statewide capital needs by means of the Capital Asset and Infrastructure program.
“These reforms would go a long way toward ensuring effective capital planning and affordable debt levels for New Yorkers today and for years to come,” said DiNapoli.
To read the report, go to www.osc.state.ny.us and visit the Newsroom.