Report: NYS public authorities threaten state's fiscal health

A new research paper from the Hugh L. Carey Center for Government Reform at Wagner College details how New York’s public authorities became a mechanism for unrestrained spending, why previous reform efforts failed, and what needs to be done to regain control.

The paper is entitled “New York’s Secret Government: Public Authorities Are Out of Control and Threatening the State’s Fiscal Health.”

The author of the paper is Adam Simms, Senior Research Fellow for the Carey Center. In his paper, Simms notes that New York state’s taxpayers will pay more than $5 billion this year in debt-service payments on more than $43 billion of debt owed by the state’s public authorities.

That $5 billion in debt service amounts to 35 percent of the $14 billion that Governor David Paterson has asked the legislature to cut from the state’s current budget deficit.

Yet the state cannot solve its deficit by canceling these debt service payments. Doing so would drive New York State into default. And because this debt must be paid, other portions of New York’s budget will be slashed — undermining vital services New Yorkers depend on, including education, health care, and assistance to the poor and elderly.

Any plan to stabilize New York State’s current fiscal crisis, Simms concludes, must include reform of its public authority debt.

“New York’s Secret Government” provides a readable narrative, drawn from public documents and newspaper accounts, of how previous governors and legislatures have abused the state’s public authority network in end runs around the state constitution in order to saddle taxpayers with billions of dollars in debt that voters were never asked to approve.

The Carey Center’s report also details how and why recent attempts to provide reasonable oversight of public authority spending were derailed by political maneuvering that amounted to “cosmetic reform” rather than real reforms.

“What New York State needs to do in order to rein in public authority spending should be well known to every legislator, since it is spelled out in public documents issued by state officials,” notes Simms. “All that is lacking is a will to act on those documents’ recommendations. Our state’s current fiscal crisis provides an excellent, if unfortunate, occasion to take up the issue of public authority reform again — and, this time, to act responsibly.”

Readers can download a PDF copy of the Carey Center’s report, “New York’s Secret Government: Public Authorities Are Out of Control and Threatening the State’s Fiscal Health,” from the Wagner College Web site at THIS LINK.