A New York referendum could change the municipal bond landscape in the Empire State, according to analysts.
Voters will decide a ballot measure on Nov. 7 on whether New York State should hold a constitutional convention, which among many issues at stake could set the stage for debates about state borrowing limits and providing more revenue-generating capabilities for municipalities.
Public finance advocates pushing for the convention argue that changes are greatly needed on issues such as enabling school districts easier access to the bond market and granting local governments more control of taxes.
“Right now there is no local taxation allowed without state authorization,” said Gerald Benjamin, a political science professor at SUNY New Paltz, who has long advocated for a constitutional convention. “The state has too much control over traditional local revenue sources.”
Passage of the convention referendum would put every aspect of governing New York state up for grabs. The convention would feature a three-year process with an election of delegates taking place in 2018 followed by a meeting in April 2019 to propose amendments for a new voter referendum in November 2019.
Benjamin, who is a member of the Committee for a Constitutional Convention that is campaigning for the referendum’s passage, has stressed that a convention would allow New York to explore enhancing various governance measures such as relaxing state control over local revenue sources for municipalities such as property and sales taxes.
He also hopes a review of the constitution would explore adding “broad-based parameters” for all state-issued debt, which today is largely sold through conduits.
“Most state debt is no longer backed by New York's full faith and credit,” said Benjamin, who was appointed by former Gov. Mario Cuomo as a research director in years leading up to the last convention referendum in 1997. “Most is authority debt, or other approaches to bypassing constitutional process limit.”
Ken Bond, partner with Squire Patton Boggs, has been pushing hard for a constitutional convention because he wants to amend laws to grant school districts and local development corporations statutory authority for issuing revenue bonds without needing to get state legislative approval.
Bond along with 17 other legal scholars contributed to the book “Making a Modern Constitution: The Prospects for Constitutional Reform in New York.” His section argues the need for constitutional finance law reforms.
“Lawyers, bankers, state pensioners, public employees, businessmen, and most people might say we are on the same sinking ship—that we all have more to lose by keeping the constitutional status quo than we did a few years ago,” said Bond in the book. “How New York survives and succeeds or fails in the global economy over the next few years may be a function of whether we collectively have the foresight and the courage to revise and amend our Constitution.”
A constitutional convention referendum appears on the state ballot every 20 years and failed the last two times, in 1977 and 1997.
Former state assemblyman Jerry Kremer said the last constitutional convention held in 1967 accomplished little and he worries that today’s turbulent political climate would wreak havoc on the debates. He noted that the Citizens United Supreme Court decision could pave the way for out-of-state interest groups to have too much influence on a convention.
“Once you start this process it gets totally out of control,” said Kremer, who is president of Uniondale, N.Y.-based Empire Government Strategies. “In the current political climate there are so many forces from outside the state who would want to have an influence on New York policy.”
Constitutional conventions have a track record of getting drawn by political lines, according to Kremer, with 1894 marking the only time a bipartisan one occurred. The last time changes were recommended and adopted during a New York State constitutional convention occurred after passage in 1937, according to Kremer.
“The concept of a lot of fresh ideas that people will listen to is very remote,” said Kremer. “The idea of this being an agent for change is very unlikely.”
Public support for a convention has faded in recent polls of New York State registered voters conducted by Siena College. A poll released Oct. 6 showed that 44% of those surveyed would vote yes for a convention compared to 39% against, down from a 45 to 33% margin in September. While 44% said the convention was a “once in a generation opportunity”, 45% indicated it would be “an expensive waste of time,” according to the 789 polled from Sept. 25 to Oct. 2.
Bond said it has been an uphill battle trying to educate voters about the importance of approving a constitutional convention against the backdrop of organized opposition efforts by labor unions who fear changes to their pension benefits. While current pensioners are not at risk, according to Bond, concerns about uprooting the status quo have unleashed "vote no" signs across the state.
“All over the state there are ‘vote no’ signs because of the scare tactics on pensions,” said Bond. “Whether the average Joe on the street will vote in an off-year election and vote 'yes' I have my doubts,” said Bond.
An Oct. 25 Baruch College poll commissioned by Evan Davis, manager of the Committee for a Constitutional Convention, said 32% of 801 registered voters surveyed supported a convention with 27% opposing. The same survey also indicated many potential blanks for the ballot measure with 18% saying they wouldn’t vote on the proposition with 21% not sure. A majority of 56% said they hadn't heard or read about the constitutional convention referendum.
“There are still many people who either don’t know about the constitutional convention or what it entails,” said Davis, a former counsel to Governor Mario Cuomo. “We are really trying to educate people on how it works.”
Bond said he is not optimistic leading into Election Day with what he described as little enthusiasm on the ground from legal and finance scholars to get out the vote. He remembers when 1977 convention ballot measure failed even after Fordham Law School held a symposium on the importance of finance law changes, and said with no major constitutional changes implemented since 1938, the time has long overdue for the state to revisit its governing laws.
“Would you drive a 1938 Studebaker?” he asked. “Why do you settle for a 1938 state constitution?”