New York State could miss a $1.5 billion payment due to local school districts on June 1, forcing many districts to borrow to cover resulting cash flow problems, state Comptroller H. Carl McCall said yesterday.
McCall, speaking at a public finance conference sponsored by Empire State Reports magazine in New York City, said the delay in payments would result from the legislature's failure to pass a budget for fiscal 1995, which began April 1.
On other fronts, McCall said at the conference that he was "disturbed" that the municipal industry allowed the Municipal Securities Rulemaking Board to pass its gift ban rule with virtually no opposition.
"What disturbs me the most is an industry that pretty much said, 'We are guilty,'" the comptroller said.
McCall said he believes most campaign contributions from industry participants are not meant for so called pay-to-play purposes.
Last year, following a private industry initiative banning contributions, McCall was forced to dismiss several top members of his campaign finance committee because of their ties to the municipal bond industry.
Alan G. Hevesi, New York City's comptroller, said at the conference that despite press reports to the contrary, he has not moved away from his preference for competitive bidding of bonds.
While Hevesi recently put off implementing his plan to sell city bonds competitively until next year, he said the schedule is consistent with his position.
The comptroller also said the city will seek ways to stretch out its capital program in an attempt to lower overall debt service costs. Under current conditions, the city's debt service costs will rise to 19% of tax revenues in about five years from 14.3% this year.
The city is in the process of choosing a new financial adviser for its general obligation bonds, Hevesi said, and as part of the selection process will ask firms to detail steps they have taken to advance women and minorities.
Women-owned and minority-owned firms are moving into the fabric of the municipal bond market, Hevesi said.
Both Hevesi and McCall agreed that the state's use of the attorney general's opinion instead of a private bond counsel opinion on many of its appropriated bond deals should end. McCall said the practice ultimately costs the state money because the market demands higher interest rates on transactions sold with only the attorney general's opinion.
