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Links Roundup: NYS Public Authorities

March 10, 2015

New Yorkers Foot The Bill For Billions In Public Authority Spending

News Written by Kate Gurnett

Spending by New York’s largest public authorities jumped $3.5 billion since last reported in 2013, with  state and local authorities reporting nearly $60 billion in spending in their latest annual filings, according to a report released today by State Comptroller Thomas P. DiNapoli. Meanwhile, the combined debt of state and local authorities topped a quarter of a trillion dollars.

“Public authorities borrow and spend billions of dollars outside the state budget,” DiNapoli said. “And from Buffalo to Brookhaven, New Yorkers foot the bill. These shadow governments are responsible for the bulk of our hefty debt burden and are used to provide hundreds of millions of dollars annually in non-recurring resources to support the state budget. Recent authority actions suggest that authorities must do more to open their doors to public accountability.”

Of the nearly $60 billion spent, DiNapoli found that state public authorities spent $38 billion in their last reported fiscal year, while local authorities reported spending $21.5 billion. Of the 1,180 public authorities in New York, 325 are state authorities, 847 are local authorities and eight are interstate or international authorities, according to DiNapoli’s report.

DiNapoli’s report found that New York now relies on public authorities to undertake most of its borrowing -dubbed “backdoor borrowing” because it circumvents a state constitutional provision restricting the issuance of general obligation debt without voter approval. In addition, the state uses authorities to provide hundreds of millions of dollars annually to support the state budget, which disguises state spending levels and weakens transparency and accountability. The last two enacted state budgets combined anticipated more than $650 million in budget relief from the Metropolitan Transportation Authority, the New York Power Authority and others, essentially shifting costs from the general tax base to those who use authority services.

Just five years after the last major legislative public authority reform, DiNapoli’s report identified troublesome issues at several public authorities. They include:

  • The investigation of the Port Authority of N.Y and N.J. by the U.S. Attorney’s Office, the Manhattan District Attorney, the U.S. Securities and Exchange Commission and others, related to matters including the 2013 George Washington Bridge access lane closures;
  • The Thruway Authority’s indication in late 2013 that a toll and finance task force would be created to identify new resources to help pay for the new Tappan Zee Bridge. To date, however, the Authority has not established such a task force, and the financing plan and toll impact of the new bridge are unclear. Moody’s Investors Service and Standard & Poor’s Rating Services lowered their credit ratings for the Authority, citing factors that included uncertainty about funding of the new bridge and adequacy of overall Thruway toll revenues in coming years;
  • Findings by the Authorities Budget Office that the Environmental Facilities Corporation board made inappropriate use of executive session, dismissed concerns raised by the federal Environmental Protection Agency without proper consideration, and engaged in only limited discussion and participation in meetings regarding its approval of a $511 million loan to the Thruway Authority for projects associated with the Tappan Zee Bridge replacement; and
  • The Long Island Power Authority’s reduction of oversight for its service provider. Audits and reports on LIPA in recent years have identified areas requiring improvement, including adequacy of regulatory oversight, rate relief, financial management and debt, customer service, and storm preparation and response.

In total, public authorities employed 153,578 people at a cost of nearly $10 billion a year in total compensation, with more than 19,000 employees (nearly 13 percent) receiving total compensation of $100,000 or more. By comparison, less than 8.7 percent of state employees and 14.7 percent of New York residents earned as much.

Public authorities’ spending and activities — including purchases, personnel expenditures, contracts and other transactions — are not subject to the same independent review, oversight and reporting requirements as state agencies. The Comptroller’s audits of public authorities’ have revealed numerous examples of deficient contracting practices, improper expenditures and inadequate oversight. While the Public Authorities Accountability Act of 2005 and the Public Authorities Reform Act of 2009 established accountability mechanisms, authorities remain largely exempt from many day-to-day controls that apply to other government agencies.

The report is based on self-reported data by public authorities to the Office of the State Comptroller. The data, which is not independently verified by the Comptroller’s audits, represents the authorities’ most recently reported fiscal years, and does not reflect a common fiscal year or the state’s fiscal year.

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