DiNapoli: New York Authorities Need More Debt Oversight

New York Comptroller Thomas DiNapoli has released a report aiming to shed light on the less visible side of the state’s bond debt burden.

Tuesday, DiNapoli said New York state and local authority debt is nearing $250 billion. The authorities’ debt per state resident is expected to increase 28% by fiscal 2017-2018 from 2007-2008, according to report information.

“Public authorities are an increasingly influential sphere of government, but they still operate in the shadows with too little accountability to the public,” DiNapoli said. “The Public Authorities Reform Act of 2009 made some progress in improving oversight but more needs to be done to curb the state’s overreliance on public authorities issuing debt without voter approval.”

The state’s constitution requires that state general obligation debt be approved by voters. Authorities’ “debt has been used to avoid public participation in debt management, transferring control to public authority boards and thus further limiting accountability and transparency,” according to the report.

As of March 31, 2012 public authorities had issued more than 94% of all outstanding state-funded debt.

In January DiNapoli released a report noting that all state-funded debt is $3,253 per resident, almost three-times the 50 state median. In inflation-adjusted dollars, this debt per resident has gone up by 24% since 2003. In January DiNapoli called for all state debt to be issued by his office following voter approval. In his proposal there would be a $250 million annual exemption and a provision for the emergency sale of debt.

DiNapoli’s new report faults the use of public authorities to provide direct fiscal relief to the state’s general fund. For example, in fiscal year 2011-2012 the state had the public authorities provide over $500 million in budget relief for the general fund and general debt service fund.

The enacted fiscal year 2012-2013 budget includes $213 million in transfers and receipts from the public authorities to the state. The report suggests this transfer to the state general fund is not an appropriate role for the authorities.

New York Gov. Andrew Cuomo’s budget would expand the use of public authority debt for the general fund by creating a bond financing program backed by sales tax revenues. Cuomo’s press office did not immediately respond to a request for comment.

New York currently has 1,169 public authorities, including 324 state authorities and their subsidiaries, 837 local authorities, and eight interstate or international authorities.

The New York authorities with the largest debt totals are the: Dormitory Authority of the State of New York ($44.5 billion); Metropolitan Transit Authority ($32.2 billion); New York City Municipal Water Finance Authority ($28.4 billion); and the New York City Transitional Finance Authority ($26.3 billion).

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