High debt and high taxes: Shouldn’t reform follow?

In Columns by Hal PetersonLeave a Comment

It was during the 1930s, in the depth of the deft 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 a stalled economy. Using those funds as start-up capital, banks and financial institutions willingly bought authority bonds. Arguing 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% of that is held by the Metropolitan Transportation Authority 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 have 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 August 16th 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 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 separate entities. One particular finding cited the misuse of agency employees by municipalities, raising all sorts of accountability issues.

Last but not least, the budget office identified 130 public agencies that exist in statue, but no longer serve a public purpose. Up until now, it seems that no one was watching closely and consistently for specific activities that mandate correction.

On a personal level, I’ve examined many audit reports issued by both Nassau County and the New York States Comptroller’s Office. They often present remarkably clear picture of fundamental, hard to imagine practices that constitute theft of services, waste of critical resources  and fraud-persisting over the years.

It seems apparent that individually and collectively we do not hold our public authority leaders to the same performance standards fundamental to most well managed for profit businesses. It’s wonder that New Yorkers face some of the highest taxes in the nation.

In my humble opinion, a very high percentage of these findings were preventable. The legislation that was enacted last year should result in meaningful reform. I’d love to know if you agree.



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