Billion-dollar back door
How does a state that isn’t supposed to borrow money without voter approval still manage to borrow billions every year? When even legislators aren't sure how, something is wrong in New York.
Technically, the state has limited power under its constitution to borrow money. Other than routine borrowing to cover bills while taxes are coming in, or emergencies like insurrections and forest fires, and a few other limited circumstances, the constitution requires voter approval before the state can incur big debts.
But voters aren’t always in the mood to increase the state’s debt. Over the past half-century, they rejected about half the bond acts put before them. Lawmakers and governors tend to be wary of proposing bond acts, mindful, perhaps, that it’s too easy a target at election time, especially in a state known for high taxes.
Yet New York owes a whole lot of money: $66.2 billion as of the end of the 2019-20 fiscal year, according to the state comptroller’s office. Of that amount, though, only $2.1 billion was voter-approved.
So where is all that debt coming from? Public authorities, New York’s not-so-secret back door.
Authorities borrow money for public purposes, and their debt is backed by the state. So taxpayers who are normally supposed to have a say in incurring state debt have no say in the bulk of the borrowing the state does, but they ’re on the hook to pay it back.
It’s all legal, and yet it has an air of sneakiness about it. Unlike the debt incurred through bond acts, there’s no real public debate. The work of public authorities is opaque to the average New Yorker, done in offices and board rooms mainly by unelected officials.
Scandals over the years involving nepotism and other kinds of favoritism, no-show jobs, extravagant salaries and otherwise questionable spending prompted the state to say it would take steps to keep a closer eye and a tighter rein on authorities. But their fundamentally undemocratic and opaque nature endures even as some legislators say they’re uncomfortable with the situation.
There has been talk of some modest reforms that would seem to be noncontroversial and entirely achievable. They include giving the state comptroller greater oversight authority, increasing the Authorities Budget Office's funding so that it’s able to fulfill its mission of monitoring authorities’ compliance with state law, and requiring public authorities to provide more information on their websites that should be readily accessible to the public. Why should it be difficult to track down an authority’s existing debts, proposed borrowing, salaries, and conflicts of interest among board members?
We appreciate the need for the state to have some flexibility when it comes to borrowing. But after years of talking about it, it’s time for lawmakers to fix a system they seem to agree is not transparent or accountable enough. And it’s hard to put this off any longer now than Democrats who have been talking about this for years control all of state government. If New York is going to have this back door, it should be wide open for the public to see what’s going on.