ALBANY - A proposed constitutional amendment to reform New York State's long-term borrowing practices received constructive criticism yesterday from a Wall Street bond analyst and a stern rebuke from an anti-debt advocate during a legislative hearing on the issue.

The hearing, sponsored by a task force of Republican state assemblymen, also featured testimony from an official representing a state bonding authority who said his agency's debt sales would be reduced if and when the proposed constitutional amendment takes effect.

The constitutional amendment, devised by officials in the state Budget Division and majority leaders in the state Assembly and Senate, was approved by the Legislature earlier this year as part of New York's fiscal 1994 budget.

However, the amendment, which would create a new form of state debt that would not need voter approval for issuance, still must pass another sitting Legislature and win approval from voters before it can become law. The earliest the amendment could take effect is the 1997 fiscal year, which starts April 1.

The hearing marked one of the first public discussions of debt reform since the proposed amendment's initial passage, and a chance for the Assembly's minority party to voice its opinion on the subject.

The Assembly Republicans were largely uninvolved in the amendment's drafting, and several interviewed said they voted for the proposal without full knowledge of its contents.

Public testimony on the debt reform measure began with remarks by taxpayer activist Robert L. Schulz, president of the All-County Taxpayer's Association. Schulz, a Glens Falls, N.Y., engineer, has sued the state in more than a dozen cases claiming that its use of appropriated debt without voter approval violates the state constitution. He recently won "standing" to sue again.

But Schulz, in his testimony, said the state's plan to change the constitution is not the answer, adding that he and his organization will oppose any change to the state constitution's voter approval clause.

"As far as we are concerned, the constitutional debt limiting provisions that we now have represent valid and adequate protection of the people against wayward and misguided government borrowing practices," Schulz said.

Michael Brooks, a municipal credit analyst at the firm of Sanford Bernstein & Co., said he did support some aspects of the state's debt reform proposal. But he said as it is written, the amendment "does not go far enough. "

Brooks, for example, took issue with a cap established on how much of the new debt can be issued. The cap, 5% of total personal income in the state, would allow officials to sell at least $21 billion in debt without voter approval, an amount that Brooks said was too high.

"As I understand it, the cap was sized to allow the state to carry out a reasonably full capital program even if the voters failed to approve any more borrowing," Brooks said, adding later that "there are clearly benefits in a system of checks and balances."

State budget officials have said that they plan to also place general obligation issues on the ballot for voter approval in an attempt not to use up the bonding authority provided under the cap.:

Theodore A. Holmes, the acting executive director of the state Dormitory Authority, which issues bonds on behalf of the state, said that while he agrees with the need for debt reform, he said that the authority system for selling state debt has served the state well.

Holmes also told the task force that the amendment would reduce the amount of financing completed by the authority.

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