New York Comptroller Thomas DiNapoli yesterday called for a constitutional amendment to require most state-backed debt be approved by voters and issued by his office.
While DiNapoli’s office released a strategy paper outlining his wish-list of fiscal reforms, Lieut. Gov. Richard Ravitch will be introducing a four-year fiscal plan for the state, possibly before the end of the week. According to published reports, Ravitch’s plan could include a fiscal control board for the state.
DiNapoli yesterday said the proposals in his paper are needed to restore voter control over debt and to eliminate so-called back-door borrowing through public authorities.
“There isn’t the same level of accountability” with bonds issued by public authorities, DiNapoli said. “Only about 6% of our debt now is general obligation, voter-approved debt. We really need to reset the clock in that regard and put back into the hands of New York citizens the ability to vote on debt.”
The comptroller’s proposal would also prohibit deficit financing, impose a new cap on borrowing, and allow for more voter bond referendums.
The state has approximately $54.83 billion of debt outstanding, up from $14.4 billion in 1990, according to the comptroller’s office and Division of Budget documents.
Most of New York’s state-backed debt is sold through public authorities and therefore not subject to voter approval. Gov. David Paterson’s executive budget proposal for fiscal 2011, for example, called for $5.29 billion of public authority debt compared to $586.2 million of voter-approved GO debt.
DiNapoli said his office should issue personal-income tax bonds, which are the state’s main debt vehicle. Currently, five public authorities issue the state’s PIT bonds, which are not subject to voter approval.
Richard Brodsky, D-Westchester, who chairs the Assembly’s committee on Corporations, Authorities and Commissions, said having the comptroller’s office issue state-backed debt was an “interesting idea.”
“Authority debt has become completely out of control,” Brodsky said, adding that he is currently drafting his own debt-reform proposal.
Criticisms of authority debt may be overstated, however, according to Robert Ward, deputy director of the Rockefeller Institute of Government. Public authorities that issue state-backed debt are easier for governors to control, he said, but the Legislature isn’t entirely out of the picture.
“Most of the debt that people complain about is appropriation-backed debt and by definition appropriations come out of the Legislature,” Ward said.
Other measures DiNapoli proposed yesterday include: requiring the governor to propose three-year plans to close future-year gaps as part of the budget process; increasing the state’s reserves; prohibiting the use of revenue one-shots for ongoing expenses; instituting a more public budget process; and creating a council to assess the state’s 20 year capital needs.
Division of Budget spokesman Matthew Anderson said the office would consider the proposals. Debt and budget reform proposals are a regular fixture of Albany politics, but as the state tries to close a $9.2 billion deficit, this year could be different, Ward said.
“The environment for serious structural reform is probably better right now than at any time in recent memory,” Ward said. “Almost everyone recognizes that the state’s fiscal problems are much worse than they have been in the past and they’re not going away anytime soon.”