New York State Comptroller Thomas P. DiNapoli today called for changes to the state’s fiscal practices, including limiting discretionary lump sum spending, restricting “backdoor spending” by public authorities and imposing a constitutional limit on state debt, among other reforms, to bring increased transparency and accountability to state finances.
DiNapoli released his recommendations in a report, “Unfinished Business: Fiscal Reform in New York.” The report demonstrates that despite well-intentioned efforts to rein in the state’s debt, increase disclosure by public authorities and improve budget practices, further reforms are needed.
“Too often New York’s approach to budgeting obscures spending and borrowing,” DiNapoli said. “The Governor and the Legislature deserve credit for putting the state on stronger financial footing, but it is time to fix the persistent problems and improve New York’s fiscal practices. Adoption of the reforms I am proposing would help put our state’s finances on a stronger path forward.”
DiNapoli’s comprehensive package of reforms would significantly improve budget practices and enhance the state’s long-term fiscal outlook. His reforms hit four main areas, including spending accountability, adequacy of reserves, appropriate use of debt, and capital planning and prioritization. Specific proposals include:
- Restrict “backdoor spending” by public authorities and require more comprehensive public authority disclosure. Public authorities are not subject to the same checks and balances that apply to state agencies, resulting in hundreds of millions of dollars being spent annually with limited oversight. DiNapoli’s proposal would require state-funded public authority projects to be scored and ranked using measurable and objective criteria. His proposal also requires more disclosure of public authorities’ spending and financing activities.
- Eliminate discretionary lump sum appropriations. The state spends billions of dollars in discretionary pots of money without justification or identifying how projects were selected for funding. DiNapoli’s proposal would prohibit lump sum appropriations and require unallocated funds to be awarded through an open, competitive process with clear, measurable criteria.
- Make the state budget more understandable and transparent. DiNapoli’s proposal would require disclosure of the overall impact of legislative changes to the budget before adoption, include the cost of new and existing programs, and would create a direct link between the budget and the financial plan. More detailed projections would also highlight future budget impacts of current actions.
- Bolster the state’s “rainy day” reserve funds and better prepare for economic downturns. Credit rating agencies have raised concerns about New York’s low reserves compared to other states. DiNapoli’s proposal would bolster reserves in years with cash surpluses, and increase the total amount that could be held in the state’s Rainy Day Reserve Fund.
- Promote more responsible debt practices. While the Debt Reform Act of 2000 attempted to limit debt and debt service, its provisions have been bypassed on numerous occasions. Heavy borrowing since its adoption, coupled with changing economic conditions, has significantly reduced the state’s statutory borrowing capacity. New York is currently the second most indebted state behind California. DiNapoli proposes a series of reforms that would provide a comprehensive definition of state debt, ban “backdoor borrowing” and require voter approval for all new state debt with limited exceptions.
- Create a comprehensive capital planning process. The state spends and borrows billions of dollars annually to build or repair roads, bridges, and other facilities, and needs an effective long-term planning process. DiNapoli proposes a capital asset and infrastructure council to assist policy makers in prioritizing capital investments, identifying critical infrastructure needs and ensuring that the state’s limited resources are used effectively.
Read DiNapoli’s report, “Unfinished Business: Fiscal Reform in New York,” at http://www.osc.state.ny.us/reports/fiscal/fiscal_reform_2016.pdf.