The New York State comptroller's office is pressing Gov. Mario M. Cuomo and the state Legislature to consider a proposal for substantially increasing state oversight of local governments in fiscal distress.
The five-step plan, disclosed by state Comptroller Edward V. Regan in a letter to Mr. Cuomo last Friday, would link the proposed oversight powers to the depth of a municipality's budget problems. Localities in the worst trouble would be placed under a specially created state board.
The comptroller sent the letter and a nine-page report detailing his suggestions to the governor, Senate Majority Leader Ralph J. Marino, R-Muttontown, and Assembly Speaker Saul Weprin, D-Queens.
So far the proposal has not drawn support from localities. Officials with two of the major groups representing the state's municipalities faulted the plan for not restoring state aid or providing relief from state mandates.
Providing the impetus for Mr. Regan's proposal is "the unprecedented number of local governments seeking authorization for deficit financing in the current legislative session," the comptroller wrote in his letter to the governor.
This level of deficit bonding has "highlighted the lack of a consistent oversight process for these local governments dependent upon the degree of fiscal stress they are experiencing," he wrote.
Ten municipalities have submitted bills to the state Legislature for the authority to cover fiscal 1992 budget deficits with bonds, including two of the state's largest counties, Nassau and Suffolk.
Nassau wants to sell up to $71 million in bonds, while Suffolk hopes to issue as much as $91 million worth.
Cynthia Munk, a spokeswoman for Mr. Regan, said the plan was designed to spark a debate on how best to prevent other state municipalities from suffering a similar fate, and how the state can address the current situation. She added that the comptroller's office is not currently seeking legislative approval of the plan, but may do so.
"We sent the letter and the report to the governor and the Legislature in order to get them to think about the problem and possibly adopt legislation," Ms. Munk said. "These proposals were designed to provide a framework. Maybe they'll say it's good. Maybe they'll come up with suggestions of their own."
Under the plan, the oversight role of the comptroller's office would begin when a government's deficit exceeded 5% of its budget or $30,000, whichever was greater. At the moment, this oversight begins only after the municipality obtains authority to issue deficit bonds, and only if the municipality includes in its deficit legislation a provision calling for the comptroller's review of its financial documents.
The plan then proposes a series of progressive measures implemented by the comptroller's office and keyed to the severity of the financial stress. These would culminate in a state takeover of a municipality's financial affairs during periods of "chronic fiscal stress."
The governor and the state Legislature would then create a control board, similar to the one established during New York City's financial crisis of the mid-1970s and the one operating today in Yonkers, that would provide a financial plan for the municipality, review and approve budgets, and monitor the government's financial plan.
Spokesmen for Mr. Weprin of the state Assembly and Mr. Marino of the state Senate said the comptroller's plan has merit, even though it appears too late to stave off fiscal distress for many troubled municipalities like Nassau and Suffolk counties.
But those representing the interests of local governments in the state were less enthusiastic.
Edwin L. Crawford, executive director of the New York State Association of Counties, said he "is unimpressed" by the proposal, largely because it does not address the growth in county expenses mandated by the state. Mr. Crawford said that by the end of 1992, state mandates will increase by 18% over levels established last year.
Edward Farrell, executive director of the New York State Conference of Mayors, said he supported the "concept" of greater state oversight to prevent fiscal problems among cities. But he added that many of the problems faced by local governments can be traced to cutbacks back in state aid.
"Cities in this state have lost 45% of their state aid over the past two years," Mr. Farrell said. "A lot of the problems of the cities and villages in new York are due to the actions of the state."
