New York’s Empire State Development Corp. yesterday announced that it will dissolve 13 of its subsidiaries and merge 25 others into a single holding company called Empire State Allsub Corp.
None of the subsidiaries have outstanding debt but those being merged have assets or liabilities that preclude their dissolution, said ESDC spokesman A.J. Carter. The subsidiaries to be dissolved had either completed the purpose they were created for or those projects were never undertaken.
The ESDC expects the merger to be completed this month and Carter said that the corporation can make the changes without an act of the Legislature. Of the 740 public authorities listed by the state comptroller’s office, 108 of them, or about one in seven, are subsidiaries of the ESDC. Public authorities sold 77.4% of the state’s $32.85 billion of debt last year, according to Thomson Financial data.
Yesterday’s move is a likely prelude to broader authority reform statewide.
Gov. Eliot Spitzer mentioned authority reform in his campaign, his state of the state speech, and in his legislative agenda last month, but has not yet not released details of his proposed reforms.
Spitzer plans to introduce two pieces of authority legislation within days or weeks, according to his senior adviser, Lloyd Constantine. One would eliminate “moribund authorities,” defined as those that either exist in name only or that haven’t done anything in a long time.
“None of the authorities on that list falls into the category of an underachiever,” Constantine said. “We’re talking about really the dead authorities.” He said that the authorities targeted for elimination would have until the end of the calendar year to make a case for why they should not be dissolved in case they still have outstanding debt or still have a valuable function to perform.
The other bill would enact authority reforms that the governor’s office is currently negotiating in high-level talks with the Legislature, Constantine said. He did not give many details of the bills and said that more comprehensive debt reform was unlikely this year.
Assemblyman Richard Brodsky, D-Westchester, chairman of the Committee on Corporations, Authorities, and Commissions, and Sen. John Flanagan, R-Suffolk, chairman of the Senate Standing Committee on Corporations, Authorities, and Commissions, both introduced authority reform legislation earlier this year.
“Probably the core provisions of both bills which are shared in common are a significant increase of the scope, the size, the authority, and the stature of the Authority Budget Office,” Constantine said. “Both the Legislature’s bill and the governor’s bill seek to invest the authorities budget office with significantly greater clout.”
Under the governor’s legislation, the ABO would have greater oversight authority and would become a repository of information on public authorities and the bill would standardize disclosure formats, he said.
But while Constantine said that the ESDC’s move to close and consolidate subsidiaries was part of the governor’s authority reform effort, Brodsky said that point was part of the problem.
“The authorities are not part of the governor’s office,” he said. “If ESDC wants to do that, it’s probably a good idea.”
Brodsky said the role of the ABO has been a standing point of contention among state leaders. When former Gov. George Pataki created the ABO under the 2005 Public Authorities Accountability Act, he put the office into the Division of the Budget. Brodsky said that having the office within the executive chamber is “illegal and very unwise” and for that reason the Legislature has refused to fund its operations for two straight years.
Brodsky’s bill calls for the ABO to be headed by a director appointed by the state comptroller rather than being part of the Division of the Budget.
“The only thing that makes sense is an independent budget office,” Brodsky said. “To the governor’s credit, they have recently shown an understanding of our position and the discussion are constructive.”
