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ABO2014AnnualReport (1)

ABO2014AnnualReport (1)

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Published by Nick Reisman

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Published by: Nick Reisman on Jul 09, 2014
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● Transparency 
● Integrity 
 Annual Report on Public  Authorities in New York State
July 1, 2014
E-mail address: Info@abo.ny.gov
Authorities Budget Office
P O Box 2076
Albany, NY 12220-0076
Local:518-474-1932 Toll Free: 1-800-560-1770
A Message from the Director of the Authorities Budget Office
 July 1, 2014 In accordance with Section 7 of Title 2 of the Public Authorities Law, the Authorities Budget Office (ABO) is pleased to issue its eighth annual report on the financial operations, practices, and structure of state and local public authorities.
Since the ABO’s first report
 in 2007, the number of state and local authorities subject to the reporting and governance provisions of the Public Authorities Accountability Act and the 2009 Public Authorities Reform Act has more than doubled from 281 to 568. This net increase is almost exclusively attributable to the
ABO’s persistent effort to identify and subject to reporting not
-for-profit corporations created, sponsored by, or affiliated with local governments. At the same time
, the ABO has worked with the Governor’s Office,
the Legislature, municipal officials and officers and representatives of public authorities to officially dissolve approximately 150 state and local authorities determined to be inactive, defunct, or otherwise no longer performing the purpose for which they were created. Legislation that would dissolve an additional 37 authorities
has passed the Legislature and is awaiting the Governor’s signature
. In the past year, 9 not for profit corporations that met the definition of a local authority were also legally dissolved and 10 notified the ABO of their intent to dissolve. The information found in this report provides a useful, but incomplete, starting point to assess the activities, finances and operations of New Yor
k’s state and local authorities; p
articularly as the data relates to evaluating the quantifiable impact of public authorities on economic growth, job formation, or the
management of the State’s infrastructure. We caution that this information cannot be the sole criteria
for measuring the effectiveness of public authorities or for determining the community benefits derived from the financial tradeoffs often made by these authorities. Several general observations and conclusions can be drawn from this report, based on the information provided by state and local authorities.
Although public authorities are expected to act as independent public bodies governed by boards of directors with a fiduciary duty to the authority, one-third of all current board members are elected or appointed public officials. Public officials on these boards are faced with the difficult task of separating the responsibilities and obligations of their public positions from the fiduciary duty they must exercise as directors of a public authority.
While public authorities award and expend billions of dollars in public funds annually, more than 25 percent of all authorities reported to us that they have no staff to carry out daily administrative and financial activities. This raises questions as to how these entities can function effectively.
The presence of an IDA or an LDC, the number of projects assisted by these entities, and the amount of financial assistance provided to projects has little correlation to any change in private
E-mail address: Info@abo.ny.gov
Authorities Budget Office
P O Box 2076
Albany, NY 12220-0076
Local:518-474-1932 Toll Free: 1-800-560-1770
sector employment in the county those IDAs and LDCs are located. Thus, any evaluation of the effectiveness of economic development agencies and the cost benefits they produce is difficult.
Forty-eight percent of the not for profit corporations (i.e., LDCs) that reported indicated that they do not provide any financial assistance for economic development or job creation projects. In many cases, these corporations apparently exist to assume financial responsibility for services or programs previously performed by government or function to provide financial relief to municipalities.
Despite statutory reporting requirements, too many public authorities, especially those not for profit corporations that satisfy the definition of a local authority, are failing to meet these reporting and accountability requirements. On average for any given year approximately 125 authorities are delinquent and out of compliance with state law. The ABO lacks sufficient enforcement capability to incentivize authorities to meet their obligations under the law to submit timely and accurate reports. Despite deficiencies in the quality and reliability of some data and the failure of certain state and local authorities to provide information to the ABO, useful information can be found in the data tables of this report. Such as:
State authority operating expenses increased from $25.7 billion in the fiscal year ending in 2009 to $30.3 billion for fiscal year ending in 2013 (audited financial information for the Nassau Health Care Corporation and Nassau Interim Finance Authority was not reported to the ABO at the time of this report). This is a 17.6 percent increase in operating expenses. Over the same five year period, total state expenditures for governmental activities increased 8.6 percent, while total primary government exp
enses rose 10.8 percent (Source: OSC “State of New York Comprehensive Annual Financial Report”).
Total debt outstanding for all reporting authorities rose from $231.3 billion in 2010 to $250.8 billion in 2013, an 8.4 percent increase. Outstanding debt reported by state authorities rose from $142.7 billion to $151.9 billion or 6.4 percent between 2010 and 2013. The percentage of outstanding debt issued by state authorities for their own purposes declined from 40.7 percent to 39.6 percent. Outstanding state authority debt issued at the direction of the state for state purposes decreased from 35.7 percent of state authority debt to 33.8 percent, and the percentage of outstanding state authority debt issued on behalf of third parties (conduit debt) rose from 23.6 percent in 2010 to 26.6 percent in 2013.
During this period, outstanding IDA debt, as reported, declined by 39.2 percent, from $21.2 billion to $12.9 billion. This decline is attributable, in part, to the statutory prohibition on the issuance of debt by IDAs to finance civic facility projects, which took effect in 2008. As a result, IDA financial assistance to approved projects is increasingly in the form of property and sales tax abatements rather than tax exempt bond financing.

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