High debt and high taxes in New York: Shouldn't reform follow?

It was during the 1930s, in the depth of the great Depression, that Robert Moses put public authorities on New York state’s map. Hailed at the time as “the man who can get things done,” Moses gained the consent of beleaguered politicians to create public authorities that would capture federal appropriations to restart the stalled economy. Using those funds as start-up capital, banks and financial institutions willingly bought authority bonds. Arguing that his projects were self-financed, Moses established a precedent for fiscal management policies that still prevail. Spend now, pay later; with the true cost of operations barely reflected on the state’s budget-ledger.

Currently, our public authorities, according to a 2009 report, are responsible for 93 percent of the state’s indebtedness, if moral obligation and full faith and credit debt are included. That dollar amount is over $133 billion, and over 50 percent of that is held by the Metropolitan Transportation and the Dormitory authorities alone.

On a local level, Ronald Stack, who oversees the Nassau County Interim Finance Authority, which itself holds over $1.7 billion in debt, raises a major concern. "The county is probably in the worst shape I've seen since I've been on the board,” he recently said.

Legislation that Gov. David Paterson signed last year established a task force to assist the Authority Budget Office (ABO) in interpreting and implementing the law. Its first report, issued on Aug. 16 made headlines in the New York Times with the finding of “political meddling” which is unacceptable and a direct violation of the law. Specifically, the budget office advised select authorities that “board members have a fiduciary duty to the authority they serve, and not to the appointing entity." What a finding!

Beyond meddling, the ABO also recently completed a review of 13 Urban Renewal/Community Development agencies, finding half of them operating as units of local government, rather than as separate entities. One particular finding cited the misuse of agency employees by municipalities, raising all sorts of accountability issues.