The Myth of a New York State Balanced Budget

In Columns by Hal PetersonLeave a Comment

A/C the Division of the Budget, state law requires the Governor to submit, and the Legislature to enact, a General Fund budget that is balanced on a cash basis of accounting. The State Constitution and State Finance Law does not provide a precise definition of a balanced budget, in practice it is considered balanced, if sufficient funds are available, or expected to be. 

Al be it the absence of a “precise definition” the $178 billion approved budget hardly reflects real operating costs, leaving the management of other people’s money highly questionable.  

Governor Cuomo would disagree. He mentioned, in a recent address, “our state is the most progressive fiscally sound government in the U.S.A.”

Now the rest of the story. It has to do with some 48 state and 535 local authorities that operate virtually as an independent 4th branch of government. Last year, operating expenses totaled $52.2 billion with, contract debt one-quarter of a trillion dollars issued without voter approval, none of which is an obligation of the State or local governments. In 2018, authority debt made up 94% of State debt outstanding.   

The four largest spenders (in 2018) were the MTA, the Power Authority of the State of New York, the New York State Thruway Authority, and the New York State Affordable Housing Authority. The combined amount, $20 billion. So much for a balanced budget.   

The State’s current reliance on public authorities primarily began in the 1930s with Robert Moses transforming the state’s infrastructure.  Under Governor Nelson Rockefeller, the use of public authorities at both the state and local levels expanded even further, often avoiding (then and today) the mechanism that provided oversight and transparency to the operations of traditional government agencies.

In 2007, State Comptroller Thomas DiNapoli, completed a detailed analysis that forced the legislature to take action and “restore accountability for authority actions to the taxpayer and eliminate authority abuses.” Three years later the Public Authority Reform Act became law proving for the first time in a long history, some measure of accountability.

Much of the information provided in this column is available for review using (1) the web site of the Authorities Budget Office (abo.ny.gov) and (2) a senate report titled a “Final Investigative Report: Public Authorities in New York State (nysenate.gov) that highlights a wide range of fiscal and other concerns that should be further addressed to rein in and control the “shadow” government issues evident.    

Three years ago, I had an opportunity to work with the ABO staff arranging a meeting at the Rockville Centre Public Library to discuss, “Returning New York State to a Path of Fiscal Stability.” A very good turnout with the comptroller’s office involved, The guest speaker ABO Director David Kidera. His summary remarks gained everyone’s attention as follows:    

“At the end of each year’s legislative session, my office is required by Public Authority Law, to release their investigative findings to the governor for hopefully corrective use. For reasons that defy logic, these findings have never been put to productive use, suggesting a clear and definite need to truly understand and debate whether New York State, its local governments, and its taxpayers can continue to support the growing size of the system as structured, administered and currently enforced. We also need to   further amend our laws to establish the legal framework within which we expect authorities to operate into the future. We also must consider better enforcement tools that will heighten compliance with statutory and ethical standards and instill trust that the decisions of public authority directors and executives are being made in the best interests of the public.”

A week after I met with then State Senator Dean Skelos to discuss what occurred. He was not aware of the release of ABO annual reports and felt no further action by the legislature (or anyone else) was required.  

Go figure. Currently, the ABO, given the huge scope of its work cannot fulfill its duties with a staff of 11 employees, and very limited funding. Reminds me of the understaffing of the S.E.C. during the 2007-08 financial crisis. The inmates continue to run the institution.   

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