New York State Comptroller Edward V. Regan on Friday blasted an $80 million revenue bond deal included in the state's revised fiscal 1992 budget as "the worst fiscal gimmick in this state."
The offering entails the New York State Thruway Authority selling $80 million of revenue bonds to finance a portion of its capital program, which has been funded on a pay-as-you-go basis from the proceeds of toll collections. Tools were raised in the late 1980s to support this program.
The bonding was proposed by Gov. Mario M. Cuomo two weeks ago as part of a $360 million spending restoration plan. After a week of debate, the governor and lawmakers agreed to a revised state budget that included about $700 million in spending, increasing the total fiscal 1992 budget to about $52.4 billion, about $500 million more than the budget proposed by Gov. Cuomo in January. The bond deal would finance some of the additional spending.
Mr. Regan wrote to Mr. Cuomo upon hearing about the proposed bond deal two weeks ago. In an accompanying statement released on Friday, he said, "It now appears that the real reason for the authority's toll hikes was to provide additional state operating funds, making the action nothing more than a sophisticated, albeit presumably legal, money-laundering scheme between the state and the authority."
"This proposal should be rejected outright. In is nothing more than additional backdoor borrowing which will increase the amount of New York State taxpayer-supported debt," Mr. Regan said. He claimed the state's reliance on "one-shots or recurring one-shots will ultimately result in financial chaos for the state."
A spokesman for the state's budget division said, "We are aware of the comptroller's concerns, and we believe that we proceeded in the best and most responsible way to close down the budget."
The state relied on a number of bond deals to provide fiscal relief in fiscal 1991, which ended on March 31. In addition to more than $3 billion of refunding bond issues sold by the state's dormitory sold a $30 million issue to buy a highway from the state, and the Urban Development Corp. sold a $241 million issue to buy Attica State Correctional Facility from the state. The refundings freed up reserves for use in the budget, and the proceeds from the thruway and prison bond sales were turned over to the state's general fund.
All these measures have been heavily criticized by Mr. Regan, who blames a good deal of the state's current fiscal problems on the use of over $2 billion in nonrecurring one-shot revenue gainers in fiscal 1991.
The latest bonding proposal calls for the thruway authority to sell $80 million of revenue bonds and turn over from its toll collections about the same amount to the state's treasury for operating expenses. One method proposed for funding the debt service on the authority's proposed bonds would be to tap a portion of the money ear-marked for the newly created dedicated transportation fund.
Assessing the potential impact of the sale, Mr. Regan said replacing the thruway authority's cash with bond proceeds to pay for the authority's capital program essentially negates the reason for the last toll increase, which was to create a pay-as-you-go capital program for the authority.
"As you may recall, both the thruway authority and my office were sued over the last increase," Mr. Regan stated. "While this litigation was successfully defended, the reason for the toll increase, as noted by the Court of Appeals, was to provide cash for the authority's rehabilitation program, thus allowing tolls to be removed in 1996 with the highway in a state of good repair.