The Cuomo Administration's defensive response to our analysis of the state's latest attempt at debt "reform" was disingenuous, even by the standards of Albany politicians ("Guest Word," Aug. 29, 1994).
Gov. Mario M. Cuomo's budget director, Rudy Runko, hints that since "bill memorandums, fact sheets, and press releases" were available, we must not have studied them or were "intentionally misleading." Mr. Runko should know that we read the bill itself (and his memos) and concluded that the bill would allow what it says it allows: new forms of massive borrowing without any approval of voters, who are liable to pay it all back.
Mr. Runko does not appreciate our discussion of the state's massive public authority debt since "the state is not responsible for payment of debt service on a large portion of public authority debt." But, as Mr. Runko surely knows as head of the Public AuthOrities Control Board, such authorities are creatures of the state, run by appointees of the governor, and do indeed carry out "state purposes." If Mr. Runko really believes we should not be concerned about $63 billion in public authority debt, is he then prepared to say that the state should remove its oversight responsibilities and will not, under any circumstances, intervene if an authority threatens to default? He might recall that the state intervened and bailed out the Urban Development Corp. after it defaulted in February 1975.
Regarding the Local Government Assistance Corp., Mr. Runko flatly denies that LGAC debt was proposed to be issued to pay income tax refunds. We refer the budget director to the executive budget, annual message of the governor, page A13: "In 1994-95, LGAC is expected to issue another $315 million in bonds (net proceeds), during the third and fourth quarters of the fiscal year. These sales will enable the state to restructure additional local assistance payment schedules, while also reserving another $154 million for the payment of personal income tax refunds to taxpayers" (emphasis added). The legislature subsequently approved this proposal by the governor. It should be noted that along with Gov. Cuomo, Mr. Runko's own name appears on the cover of this document, though he appears to have forgotten its contents.
Mr. Runko also accuses us of being misleading for our claim that the newly authorized revenue bonds may be issued without voter approval -- but he then attempts to justify it by claiming that revenue bonds will have a higher credit rating. Without these new revenue bonds, "the alternative," Mr. Runko states, "is to continue to issue appropriation-backed debt in unlimited amounts without voter approval." We strongly disagree. The alternative, Mr. Runko, is for the feckless Cuomo Administration to exert some self-control and stop issuing "backdoor" debt to circumvent the voters, violating the letter and spirit of the state constitution.
We also did not confuse the issues surrounding the proposed debt "cap." Mr. Runko would have us all believe that the state will issue "far less debt than allowed under the cap in the early years," so not to worry. Sorry, but judging by the explosion of public debt during the Cuomo Administration, such assurances cannot be taken seriously. We stand by our contention that the cap is meaningless since it allows up to $5 billion in new borrowing in its first year (and rising for the next 10 years), and it does not encompass any existing debt or future general obligation or public authority debt.
At least Mr. Runko concedes that "backdoor" borrowing may continue for "local, not state purposes," contrary to the public relations claims of politicians that the debt amendment ends "backdoor" borrowing. But Mr. Runko's distinction between government purposes is spurious. Our point remains that the language contained in the proposed amendment allows "backdoor" borrowing without any genuine restrictions, and for potentially unlimited purposes. And it is the taxpayers -- be they state, county, town, or school district (they are the same people) -- that are ultimately liable for the debt while being denied the right to vote on its issuance.
Finally, Mr. Runko assigns the purest motives to Gov. Cuomo and his hand-picked state comptroller, H. Carl McCall, in their efforts to pass debt reform. But with all "backdoor" borrowing loopholes, the phony debt cap, and the effective removal of the voters from authorizing debt, the new amendment appears as nothing more than a way for politicians to boast of "doing something" about out-of-control borrowing, while ensuring that borrow-spend-and-tax policies continue unabated.
George J. Marlin,
Peter Murphy
