2006-06-09 / Community

Mirsky: Revamp Public Authorities

Addressing the need to fixNew York State'sbusiness practices, local Assembly candidate in the 23rd AD Stu M. Mirsky called this week for a radical rethinking of how the state handles its operational responsibilities. Homing in on theMetropolitan Transportation Authority, one of 583 public authorities operating in New Yorkas a proxy for state and local agencies,Mirsky noted that "these public authorities are created by our state and local governments to insulate elected officials from voter oversight.But that'sled to more problems than it's fixed."Whilethe state constitution restricts thelegislature's ability to incur debt withoutvoter approval, Mirsky noted that "public authorities like the MTA have no such constraint and, as a result, debt levels in New York have gone through the roof. Of the massive $227 billion in public debt the state is now responsible for," he said, "fully 73% or $166 billion was issued byquasi independent public authorities like the MTA."

Mirsky emphasized that public authority debt, while allocated on the books to theauthorities which incur it, isa burden on state taxpayers since the state retains the obligation torepayit in the event the authorities which incur the debtcannot. "Where do you think the stateis supposed to get the money to repay in the event of default?" asks Mirsky pointedly. "From our pockets, of course. It's one of the reasons our taxes are so high. High debt levels carried by the state, even if only indirectly, kick up state borrowing costs, adding to debt service levels in the state budget which, of course, adds to our tax burden."

The MTA, which has responsibility for running the transit system in the metropolitan area, is one of the major offenders in terms offiscal mismanagementamong all the public authorities, notes Mirsky. "Don't forget," he says, "that in 2003 the MTAhid some $500 million from public scrutiny while pleading poverty in order to raise ourfares." He also recalls the late nineties scandal at MTA headquarters at 2 Broadway in Manhattan. The MTA spent $300 million there on what was supposed to be a $100 million renovation ofrented space. "Subsequent investigation revealed misallocation of funds through phony billings, no-show jobs, task overcharges, etc. People went to jail for that one," Mirsky notes.

But that may only be the tip of the iceberg. In 1990-91 the MTA's own Comptroller, said Mirsky,undertook an audit in response to claims bymiddle managersthat contract vendors were getting a free ride because the MTA wasn't charging them for use of its own equipment, though this was requiredby contract. Roughly twenty vendorswere reviewed and initial findings were so unsettlingthat the MTAComptroller broke with precedent to issue an immediate directive to managers to correct the flawed practices before the audit was completed. But a former MTA auditor who worked there at the time alleges that, while as much as $70 million of vendor fraud was uncovered for the three year period under review, and perhaps as much as $6 billion could be involved over an even longer period, only $6 millionwas ever actually recovered. Meanwhile the audit, itself,was ultimately halted, asserts the former MTA auditor and the problems itdiscoveredleft unaddressed becauseof management indifferenceor worse.

The former auditor, who has gone on radio with his concerns andwas written up inthe Black Star News, claimsthestill unresolved matter, including allegations of internal corruption and cover-up,was brought to the State Attorney General's attentionin 2005 but that the matter seems to have ended there. "There could be a lot more to this than meets the eye,"says Mirsky, "and this may bethe reason we can't seem to rein in the costs of doing business in this state."

New York's combined local and state tax burden was 53% above the national average,according to a June 2nd New York Sun article Mirsky noted, coming in at $5,260 per person per year, or $339 more than the second most taxed state in the union, Connecticut.(Information based on a Business Council of New York State study reflecting 2004 census data.) The 2004 per capita tax level is up from a combined tax burden per New York resident of $4,684 in2002, a 12% increase in only two years. By contrast, California's comparable per capita tax burden in 2004 was only $3,736 according to the same study. "If we want to bring taxes down," says Mirsky, "we have to start by controlling the spending and debt creation that's brought us to this point. But we can't do that if we don't start reining in out-of-control public authorities,particularly entities with the kind of dismal track record presented bythe MTA." Mirsky notes thatthe whole question of using public authorities to get around the debt creation restrictions built into our state constitution has clearly backfired.

"Given the size of the debt we keep racking up and ourstatus as the highesttaxed state in the nation,"says Mirsky, "it's obvious these authorities have outlived their usefulness. At the same time, allegations of corruption and mismanagement surroundingentities like the MTA can't be allowed to fester any longer.This is another example where our current 'go along to get along' representation in the state legislature has failed us. Our incumbent Assemblywomanshould be raising these questions every day she's in Albany and withofficials of organizations like the MTA each and every time theycry to us that they needmore of our money.Before they get another cent, before they're allowed to raise another fare, let them explain why they can't seem tomanage what they already have in a transparent and publicly accountable way.

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