Public authorities in New York have accumulated $267 billion in debt, the equivalent of $13,487 for every resident in the state, according to a report issued today by New York State Comptroller Thomas P. DiNapoli. The amount of debt reported by state and local authorities is now posted on DiNapoli’s transparency website, OpenBookNewYork.com.
“New York’s public authorities play an increasingly influential role in government yet they operate outside the traditional checks and balances that apply to state agencies,” DiNapoli said. “Some of these entities are repeatedly used in a way that circumvents borrowing limits and oversight. As a result, New York is shouldering a huge debt load issued by public entities operating in the shadows that voters never approved.”
As of September 2016, there were 1,192 public authorities in New York, including 324 state-level authorities and subsidiaries, 860 local authorities and eight interstate or international authorities, according to DiNapoli’s report.
Public authorities generally are not subject to many of the oversight and transparency requirements that apply to other government agencies, or the same types of controls over their contracting practices and day-to-day operations.
New York is relying more and more on public authorities to undertake most borrowing on its behalf, bypassing a Constitutional provision that restricts the issuance of general obligation debt without voter approval.
Public authority debt reported in the Public Authorities Reporting Information System (PARIS) as issued for state purposes, better known as “backdoor borrowing,” totaled $58.6 billion, representing 22 percent of total public authority debt. Of the total, $51.1 billion was reported being issued by state authorities and $7.5 billion by local authorities in the latest reported fiscal year.
The PARIS data also showed state public authority debt includes an additional $66.7 billion issued for authority purposes and $40.9 billion issued on behalf of other entities. Meanwhile, local public authority debt totaled $108.9 billion, including $74 billion issued for authority purposes and $27.5 billion issued on behalf of other entities.
The report also detailed how the state relies on public authorities as a backdoor source of revenue for its budget. Drawing on such non-recurring resources makes it easier to present a balanced state budget and avoid potentially difficult decisions on spending and/or revenue. The state has regularly shifted responsibility for certain costs from its budget to various authorities. This obscures overall state spending levels and diminishes transparency, accountability and oversight.
Major findings in the Comptroller’s report include:
- Approximately 91 percent of state public authority debt outstanding that was issued for state-purposes was through three authorities: the Empire State Development Corp., the Dormitory Authority of the State of New York or the Thruway Authority;
- State and local authorities spent a combined $66.8 billion in the most recent fiscal years reported (fiscal years vary, but generally the period covered is 2015 or 2016);
- Although state authorities represent just 27 percent of the total number of public authorities, they reported $42.9 billion, or 64 percent, of total authority expenditures. For purposes of comparison, if all state authorities’ spending was included in the state budget, it would equal approximately 28 percent of All Governmental Funds spending in SFY 2015-16;
- State and local public authorities reported more than 44,000 active competitive and noncompetitive contracts, nearly 18 percent of which were awarded noncompetitively; and
- State authorities reported a total of 112,846 employees, and local authorities 53,602, with more than 29,000 (nearly 18 percent) receiving total compensation of $100,000 or more.
DiNapoli has issued public authority audits in recent years that have revealed numerous examples of lax contracting practices, loose expenditure controls and inadequate oversight.
Fiscal reform legislation proposed by DiNapoli would ban backdoor spending by public authorities and require appropriation by the Legislature of all authority spending on behalf of the state, which would then be subject to pre-audit review by the Office of the State Comptroller.
The legislation would also require public authorities’ decisions to fund projects with state appropriations to be based on clear, measurable and objective criteria, unless such appropriations provide an allocation either by statutory formula or to a specific recipient. Authorities would also be required to provide detailed public reports on the expenditure of such funds.
The Comptroller has proposed additional reforms for the procurement processes of the state and its public authorities in the wake of criminal charges and allegations of corruption in the awarding of contracts for state economic development projects.
To read the report Public Authorities By The Numbers, go to: http://www.osc.state.ny.us/pubauth/reports/pub-auth-num-2017.pdf
To read the Comptroller’s legislative proposals, go to: http://www.osc.state.ny.us/legislation/index.htm
For access to state and local government spending and more than 50,000 state contracts, visit www.openbooknewyork.com. The easy-to-use website was created by DiNapoli to promote openness in government and provide taxpayers with better access to the financial workings of government.