New York Governor Expected to Outline Huge Fiscal Reforms And Capital Programs
Gov. Mario M. Cuomo of New York last night was expected to unveil a major package of sweeping reforms and economic development programs that includes proposals calling for the state to assume all Medicaid costs and a $7 billion capital program.
Gov. Cuomo also was expected to call for new bonding authorization for the Municipal Assistance Corporation for the City of New York to help shoulder some of the city's capital costs, according to sources and a copy of his speech obtained by The Bond Buyer.
The capital plan would finance such innovative projects as a light-rail system and new subways lines, and spur the creation of a new authority to develop land in the borough of Queens.
Gov. Cuomo was expected to outline the reforms in a speech to the New York City Partnership - a group of business, civic, and union leader - at the Equitable Building in midtown Manhattan.
This morning at the Waldorf Astoria in midtown Manhattan, he is expected to present the reform package in a 35-page document at a breakfast meeting sponsored by the Association for a Better New York.
Gov. Cuomo described his agenda in the speech scheduled for last night as "one of the largest efforts ever launched by the state."
The governor said he proposes that the state commit itself to assuming "gradually the entire remaining cost of Medicaid now being borne by "New York City and other localities over a period of years.
When the takeover is complete, it would cost the state $1.6 billion annually, Gov. Cuomo said, adding that the net savings to the city by the year 2000 would total $1 billion annually.
To pay for this, the state would probably take a portion of, or all of, the revenues generated by certain local taxes, he said.
Turning his focus once again to the Municipal Assistance Corp., Mr. Cuomo said he wants to assist the city in lowering costs for capital projects by having the corporation issue debt to fund specific city projects.
"Because MAC can sell bonds at interest rates well below the city's, this measure will save the city millions of dollars each year in interest payments," he said.
Sources familiar with the bonding proposal said it would be in addition to the plan already on the table to refund $1 billion of the corporation's first resolution bonds, and then give the city $1 billion over the next three to five fiscal years.
The corporation, established in 1975 to borrow on behalf of the city during its fiscal crisis, was given new borrowing powers by the state in 1990 in return for turning over surplus funds to the city. It was authorized to sell up to $1.5 billion of bonds to finance city school and transit projects if the city asks for the bonding.
But as part of the proposal expected to be unveiled last night, the governor may seek legislation to increase the corporation's bonding capacity, sources said. One of the sources said the increase could total "just a couple of hundred million dollars," or even reach $6 billion.
Gov. Cuomo also vowed to do everything he could to get the $1 billion of revenues from the Municipal Assistance Corp., which has already been pledged but held up because of the concerns about the city's fiscal health. Fiscal monitors, bond raters, and the corporation's board members have said they would like to see the city implement major reforms in its budget before receiving the money.
Also included in the governor's package is a call to amend the state's constitution to allow local governments to use level debt service payments to evenly spread interest payments on their bonds. The law not stipulates that these issuers must pay the bulk of their debt service in the early years of the repayment schedule.
In addition, the package calls for allowing the city to use some state money to finance bridge painting.
Most of the governor's proposals would require approval by the state Legislature.
Commenting on the governor's Medicaid proposals, a spokesman for the state Senate said, "We are not saying no, but we are not even going to consider any kind of long-term takeover by the state until Medicaid costs are brought to manageable levels."
A spokesman for the Assembly said most lawmakers in that body were aware of the broad outlines of the overall plan, but needed to see specific details before commenting.
As part of the proposed massive $7 billion capital program, Mr. Cuomo said the resulting economic development programs would create 25,000 permanent jobs, produce 54,000 construction-related jobs, and generate an estimated $8.2 billion in economic activity by the year 2000.
The capital plan calls for creating a new authority called Queens West, which would be modeled after the state's Urban Development Corp. The new authority would finance the acquisition and development of the 74 acres in Queens known as Hunter's Point.
Also under the capital plan, the Port Authority of New York and New Jersey would finance a $1.6 billion light-rail system spanning the distance between John F. Kennedy International Airport and La-Guardia Airport by leveraging a $3 fee on passengers leaving city airports, Mr. Cuomo said. The fee would generate $100 million annually according to the projections, he added.