Reinvent Albany Supports the State Senate Investigations and Governmental Operations Committee’s Report on Public Authorities
Reinvent Albany thanks the State Senate, Chair James Skoufis, and the Investigations and Governmental Operations Committee for their well-researched investigative report on public authorities released December 16th. We appreciate the Senate’s effort to examine authorities more closely, particularly Industrial Development Agencies (IDAs), and the Assembly’s, which held a hearing on local authorities Reinvent Albany testified at in November.
Reinvent Albany believes greater scrutiny of public authorities is long overdue. As the Senate report notes, public authorities have proliferated over the last 100 years, becoming a massive shadow government that is less transparent and accountable than state agencies. According to the report, there are 583 authorities (48 state and 535 local), an increase of 298, or 126 percent, from 2008. Most authorities are IDAs and Local Development Corporations (LDCs), which give out business subsidies.
Authorities, however, vary greatly in their size and purpose, and many issue debt that was once restricted to state agencies. Collectively, authorities spent $54.2 billion in 2018 and held a total of $282.1 billion in outstanding debt ($14,437 per New Yorker).
Reinvent Albany believes authorities are often giving out business subsidies without accountability. Our belief is echoed by the report, which finds:
“[p]rojects requesting financial assistance are frequently approved with minimal scrutiny and little community input. This system appears to often favor the interests of business without sufficiently examining if the public interest is being met.”
“[d]uring the course of the investigation, the Committee found that many IDAs, as a matter of practice, approve any application that checks the required boxes without serious scrutinizing of the project’s need for incentives.”
Other Notable Findings from the Senate’s Report on Public Authorities
- The Authorities Budget Office is woefully underfunded and deserves an increase in its budget. The Committee recommends at least a $1 million increase to over $3 million — which is also strongly supported by Reinvent Albany and other good government and fiscal watchdog groups. For the 2019 fiscal year, the ABO’s budget is just $2.059 million, and it has 11 staff to oversee 583 authorities.
- Authorities – particularly IDAs – are rife with conflicts of interest
- “Of the 143 authorities investigated by the Committee, 35 reported a board member or employee having at least one conflict of interest since January 1, 2016. In total, the 35 authorities reported 199 conflicts of interest.”
- Additionally, “Twenty-two authorities failed to explicitly disclose to the Committee whether (or not) a board member of employee reported a conflict of interest since January 1, 2016.”
- Authorities fail to file required reports with the ABO.
- The report finds, “As of June 30, 2019, 137 public authorities failed to submit its annual report, audit report, and/or budget report for the previous fiscal year. One state authority, Nassau Health Care Corporation, failed to submit all three reports. The delinquent list also includes 30 local authorities, 12 IDAs, and 94 LDCs.”
- Authorities are not nearly as transparent as they should be.
- IDAs are particularly poor at providing public information regarding economic development projects they give taxpayer subsidies to, as required by ABO rule. Sixty percent or more of IDAs surveyed failed to post applications, resolutions and agreements for active projects, or their criteria for evaluating those projects, on their websites.
- According to the report, “the investigative team had an alarmingly difficult time contacting staff of public authorities. On numerous occasions, the contact information listed for an authority was the general municipal building number or the clerk’s office. Additionally, when staff contacted several authorities via the information listed on their website, the individuals who answered were completely unaware of the public authority’s existence. Public authorities have a responsibility of transparency to the communities they serve; therefore, having accurate contact information readily accessible to the public is critical.”
Reinvent Albany supports the intent of the following legislation recommended by the Committee:
- Expands the oversight authority of the State Comptroller to include direct audits of private organizations that are under the control of municipal corporations or other local government entities. This bill passed the legislature and is on the Governor’s desk (S5445/A7476), and Reinvent Albany wrote a memo in support of the legislation.
- Permits County Comptrollers to audit IDAs located within their municipality (currently only the ABO and the State Comptroller have the authority to examine the operations and finances of IDAs).
- Require public authorities to respond to ABO recommendations, as agencies are required to do for audits by the State Comptroller.
- Requires certification under penalty of perjury for knowingly filing false or inaccurate information with the ABO to address inaccuracies in the PARIS database.
- Requires LDCs adhere to the same financial assistance agreements and benefit recapture policies as those required of IDAs.
- Requires public authorities to plainly disclose all conflicts of interests on their individual or shared websites.
- Prohibits IDAs from issuing financial assistance to projects that have already started development (S4668).
- Requires retention applications from companies that threaten relocation to supply incentive offer letters, if any, from other states.
- Prohibits IDAs from issuing financial assistance to projects in which the project benefactor is not publicly disclosed at the time of the required public hearing for the project (S4667).
- Standardizes IDA fees for all IDAs that operate within the same county in order to mitigate “shopping around” by companies seeking benefits.