Reinvent Albany

Sometimes we forget that Planet Albany isn’t alone in the universe.  There are other states plagued by corruption, undemocratic, secretive and unfair governance.  So we were glad to learn that  a coalition of major U.S. philanthropies have joined with national civil society groups together to launch a significant new, internet based, effort to take on corruption in state government.

The State Integrity Investigation “aims to inspire policy changes to promote good government practices. It will rank every state on its risk of corruption by gathering data on a checklist of over 300 risk indicators across fourteen categories of state government as they apply in each state. In early 2012, the Investigation will issue detailed report cards on every state with stories about what practices and processes are performing well in government, and what areas require improvements.” New York’s overall grade isn’t posted, but has been evaluated in fourteen different areas including government procurement and  public access to information. We haven’t had a chance to go through most of the ratings, but this site — and this initiative — is worth a look. Check it out.

Richard Brodsky, formally a powerful Assemblymember, and long-time inhabitant of Planet Albany, has a provocative essay in City and State comparing Governor Andrew Cuomo to  Russia’s Vladimir Putin. Brodsky’s piece includes the incisive paragraph below which lays out the massive potential power given to the governor by the state constitution.

Join me, for a moment, in the complex details of how this state is governed. Gov. George Pataki discovered and used a provision of the state constitution that has elements of authoritarian regimes. It permits governors to add language on any subject to budget proposals, and bars the Legislature from changing it. For an extreme example, a governor could put language into his budget to repeal all state traffic laws. The Legislature is powerless to remove it and powerless to amend it. That’s not the textbook explanation of how laws are made; we’re taught that the executive proposes and the Legislature disposes. But not in New York. It is also the key reason why budgets have been late for the last 25 years—the Legislature delays the budget vote rather than confront the limits of its power. This year that imbalance is at work as three key issues are included in Cuomo’s budget—privatizing the pension system, consolidating state agencies and changing teacher evaluations.

Along with being a planet and a state of mind, Albany is the capital of fiscal shell games, back-door borrowing, and cost-shifting rip-offs. These scams are used to mask the fact that the state spends more money than it makes. The state does this by finding numerous ways to borrow to pay for current operations. Or, in the case of the state’s “bond issuance fee,” by taking a slice of public authority borrowing to pay for state operations. Normally, this fee doesn’t draw much attention, but the high-profile MTA is especially crunched for cash. And today, the state’s absurd and irresponsible “bond issuance fee” is in the spotlight.

The Daily News reports that since 2006, the MTA has paid the state $105 million in surcharges on money it borrowed through bond sales. But the cost to the MTA of this fee – and the transit riders and tax payers who pay for it – is far higher, given the $6.5 million in annual interest payments on the 30 year MTA bonds from which the fee was paid. The MTA will soon be borrowing billions more for its 2012-2014 capital plan, and faces new state borrowing fees of $75 million. The News reports the MTA is asking the state Division of the Budget (essentially the Governor’s Office) for a waiver of the borrowing fee. We hope the MTA gets its waiver. But the bigger issues is why is there an ill conceived borrowing fee imposed on state authorities in the first place?

The State Public Authorities Law (Art. 9, Title 10, Section 2976)  imposes a fee on all bonds issued by state public authorities, which include big ones like the MTA and Dormitory Authority, and dozens of local Industrial Development Authorities. This 2002 law was created to generate additional cash for the General Fund, and it appears to give the Director of the Division of the Budget (one of the governor’s top cabinet members) total discretion to waive the fee – there are no criteria spelled out in the law. Granted, it makes sense for the MTA and state agencies to borrow money through bonding to spread out the costs of infrastructure that provides benefits across decades. But borrowing to pay current bills is stupid, unfair and expensive. A 30 year bond costs roughly twice the amount borrowed. And current operations benefit current tax payers, not future ones. The bond issuance fee is another Albany fiscal scam, and it should be eliminated.

(PS We did a quick scan of the budget and didn’t see the total amount of bond issuance fee revenue being projected for 2012/2013. Email us at info@reinventalbany.org with a page and link if you have it.)

Public Authorities Law Sec. 2976