Monday, May 15, 2006

Putting The "Public" Back In Public Authorities

With Few Watching, Pot Boils Over

"Many of New York's public authorities do important work and do it well, but their good work is eclipsed by the irresponsible actions and mismanagement by others. The reforms enacted already will strengthen accountability and transparency of what has been an immense shadow government."

- Alan G. Hevesi, NYS Comptroller

There are, at last count, some 730 Public Authorities in operation in New York State. "Public Authority." A misnomer for a quasi-governmental agency that runs on the taxpayers' dime, has the power to spend with almost reckless abandon, and is accountable to almost no one. "Public Authority." That which has been labeled as "the fourth branch of New York government."

Officially speaking (and this comes directly from the website of the NYS Comptroller, "Public authorities are corporate instruments of the State created by the legislature to further public interests. Public authorities are legally and administratively autonomous from the State. Each public authority is governed by a separate board of directors, with the majority of directors appointed by the Governor and/or Legislature. Though created by the State, public authorities are subject to neither the State Constitutional limits on the incurrence of debt nor legislative budget approval process."

What this means, in plain English, more or less, is that such administrative behemoths as the Metropolitan Transportation Authority (MTA), Long Island Power Authority (LIPA), New York Racing Association (NYRA), and the Nassau Regional Off-Track Betting Corporation, operate, if not candestinely, then certainly, well under the radar and virtually without reproach.

The recent near-disaster involving the Roosevelt Island tram -- operated under the auspices of the Roosevelt Island Operating Corporation -- illustrates just how bumbling management, with little or no oversight, places the public at risk.

So, just how much unbridled power do these so-called public benefit corporations have?

- Public authorities have the power to levy user fees and charges, but not taxes (witness the $1 per month surcharge unilaterally imposed by the MTA on your EZ-Pass account. A bill to eliminate this abomination passed the State Senate in March, and is now in committee in the Assembly);

- Most public authorities have the ability to borrow funds by issuing debt. Total public authority debt reached over $120 billion in 2004, and continues to grow. [$44.6 billion of this amount is State funded debt, which makes up a majority of the $48.2 billion total outstanding State debt.] As the late Senator Everett Dirksen was purported to have said, "A billion here, a billion there, and pretty soon you're talking real money!";

- Although debt service on State funded borrowing is paid by taxpayers, none of this debt is approved by the voters. Only 11 public authorities in New York have their borrowing reviewed by the Public Authorities Control Board.

In terms of what mismanagement -- if not outright corruption -- means at the public authorities, consider the following:

- Former Horse Racing Capital Investment Fund Chair Pleads Guilty to Grand Larceny; Comptroller Audit Details Financial Improprieties, Chair, Executive Director Received Thousands of Dollars in Personal Expenses, Other Inappropriate Expenditures, Chair Ran Private Business from Government Office;

- Albany Water Board/Finance Authority: More Public Authorities Out of Control Poor Oversight Led to Cost Overruns, Huge Losses, Cash Flow Problems;

- Audit Details Severe Mismanagement at Westchester County Health Care Corp., Inaccurate Budget Projections, Bad Management Decisions, Poor Financial Controls, Inadequate Accounting Systems All Contributed to $207 Million Loss Over Four Years, Deficits Persist, But Progress Being Made on Financial Operations Under New Management Team;

- Audit Finds NYRA Routinely Violated State Law And Its Own Policies In Purchasing Millions In Goods And Services In 2002-2004, Comptroller Cites Association’s Use of No-Bid Contracts, Notes NYRA’S New Leadership Has Begun to Implement Reforms With Help of Federal Monitor;

- Audit Finds Thruway Authority Has Not Taken Recommended Steps To Monitor E-ZPASS Contract;

- MTA Board Responsible For Its Financial Crisis, Has No Effective Plan To Fix It.

And the list, as they say, goes on!

Among other reports and a host of audits issued by the Comptroller's office, is a scathing indictment of an almost total lack of oversight in public authorities awarding of billions of dollars in contracts.

We fear, and the Comptroller's findings appear to confirm, that malfeasance is but the tip of the public authority iceberg -- and we, as taxpayers, are the unwitting passengers on the NYS Titanic. The legislative band too often fiddles as our unsinkable ship goes down into the icy waters of debt...

It was back in the day, when the master builder and infamous power broker, Robert Moses, reigned supreme over a slew of so-called public authorities, from the Triborough Bridge Authority to the Power Authority of the State of New York, giving Moses -- and Moses alone -- an internal infrastructure through which he could (and did) set policy, issue bonds, collect tolls, dole out patronage, and spend billions in taxpayer dollars to build bridges, tunnels, roadways and World's Fairs.

The excesses and abuses under Moses, and continuing thereafter, resulted in the neglect of mass transit, the carving up of communities, and the totalitarian stronghold over public monies without public oversight that, even today, plague New York's cities, suburbs, and yes, taxpayers.

The Comptroller, together with Attorney General Eliot Spitzer, proposed legislation, appropriately known as the Public Authorities Reform Act. In essence, the legislation is designed as much to restore public confidence in public authorities as it is to ride roughshot over them.

In January of this year, the State Legislature passed, and the Governor signed (see, they actually DO accomplish something up in Albany! Alert the media), a comprehensive Public Authorities Accountability Act. It goes a long way -- light years, in fact, in the 80 mostly-odd year history of atonomous public authorities in New York -- to open these secretive and sometimes corrupt agancies to what could be the cleansing light of say.

Still, more needs to be done -- much more -- primarily in the State Legislature, which created the beast in the first place, to bring public authorities back into the sphere of public scrutiny, public trust, and at least some semblance of public control.
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Click HERE to read Public Authorities, from the Gotham Gazette.

Click HERE to read the report of the Citizens Budget Commission of April, 2006, Public Authorities In New York State.

Click HERE to read the Newsday article, Power Pay For Power Players (or, as we call it at The Community Alliance, LIPA-suction at work!)

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