Report: Ongoing woes at NY's public authorities

ALBANY -- Local public authorities in New York increased operating expenses by 28 percent since 2012, while debt has increased and job-creation efforts have been mediocre, a report Monday contended.

The state Authorities Budget Office, which oversees nearly 600 of the agencies on the state and local level, said more needs to be done to provide a full accounting of the billions of dollars spent by state authorities, such as the those that oversee transit systems, as well as local authorities that aim to entice new jobs.

"Public authorities play a tremendous role in government," the office's director Jeff Pearlman wrote in the report.

"However, for too long they have operated with limited oversight and often have amassed crippling debt that has threatened the stability of our state and local economies."

Similar findings

The report comes on the heels of a USA Today Network in New York series last month that found the state's job-creation program, including industrial development agencies, have failed to meet job goals, despite billions of dollars in subsidies to companies.

The Authorities Budget Office echoed some of the concerns in its annual report Monday.

For example, the data reported by most of the 109 industrial development and local development agencies "continues to raise questions as to the effectiveness of the state’s economic development approach," the report said.

The operating expenses at Westchester County Health Care Corp., which runs Westchester County Medical Center, grew 49 percent between 2012 and 2016 and debt increased 56 percent, the report showed.

It also showed the CEO earned $2.5M and and $553,000 in bonuses. It doesn't list the name, but the organization's CEO is Michael Israel, who has often topped the list of highest paid public authority employees in recent years.

Job growth questioned

The report said a county's private sector employment had little to do with IDA incentives, but the agencies still provided $53 million in tax exemptions for 292 projects last year.

The highest number of IDA projects between 2012 and 2016 were in Monroe County at 269, but the report noted the number of projects doesn't mean the local economy is booming.

While Monroe and the two counties on Long Island, Nassau and Suffolk, had an average growth of 5.6 percent for private sector employment between 2012 and 2016, it was still 2.5 percentage points lower than the state average of 8.1 percent.

Conversely, three counties with few IDA projects -- Columbia, Putnam and Ulster -- were on par with the state's average job growth during the five-year stretch, the report said.

The Authorities Budget Office warned about the proliferation of local development corporations, which have grown as offshoots of local governments to get expenses and employees off the public rolls -- making them ripe for abuse.

Debt among them included a $893 million increase between 2012 and 2016 in Monroe County; up $722 million in Dutchess County and an increase of $636 million in Westchester County.

In the shadows

Public authorities, which date back nearly a century to manage a specific purpose, like highways or bridges, are required under a 2009 law to report their operating expenses and activities each year amid criticism that they operated with little public scrutiny.

Still, 115 of them didn't meet the reporting deadlines, the state agency said.

Public authorities associated with state government, such as the Metropolitan Transportation Authority in New York City and its suburbs, increased spending 15 percent between 2012 an 2016, the report said, while the increase was 28 percent for authorities run locally.

The state increase was largely due to salaries and other benefits at the MTA and repairs by the Housing Trust Fund Corp. after Hurricane Sandy in 2012 destroyed part of New York City and its suburbs.

Report criticized

The report has a flawed methodology, said Brian McMahon, executive director of the state Economic Development Council, which represents industrial development agencies in New York.

The report, for example, said the 284 IDA projects approved in 2012 received $147 million in financial aid over the past five years and created 980 more jobs than expected -- a total of 9,746.

While that sounds positive, the figures are skewed mainly by two big projects on Long Island. So 33 of the 66 IDAs analyzed had fewer jobs than anticipated from projects approved in 2012, the report said.

The data "suggests that there is little correlation between a county’s change in private sector employment totals between 2012 and 2016 and the number of projects approved by an IDA in the county," the report said.

McMahon said the job figures create a misrepresentation.

"While job creation is often the reason an IDA will assist a project, there often are other reasons," he said. "For example, an IDA may assist a manufacturer to help it finance productivity-enhancing equipment, which will make the business more competitive, but may actually result in fewer employees.

McMahon added, "If companies invest to become more productive and more competitive, they will stay in our communities longer."

© Gannett Co., Inc. 2017. All Rights Reserved


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