BILL NUMBER:  S3919

 TITLE OF BILL :

An act to amend the public authorities law, in relation to prohibiting
the formation of a subsidiary of a public authority without prior
permission of the legislature


 PURPOSE OR GENERAL IDEA OF BILL :

This bill seeks to prohibit the formation of a subsidiary of a public
authority or public benefit corporation without prior permission of
the legislature.

 SUMMARY OF SPECIFIC PROVISIONS :

This bill would add a new §2829 to the Public Authorities Law, to
prohibit public authorities from establishing any new subsidiary
corporation without prior statutory authority therefor; to grandfather
all legally created subsidiaries established prior to July 1, 2008;
and, to require all such previously established subsidiaries to
provide a justification report to the chairs of the Senate and
Assembly Committees on Corporations, Authorities and Commissions on or
before March 31, 2009.

              

 JUSTIFICATION :

Public Authorities, the hybrid of a government agency and a private
corporation, were established to perform specific, focused missions on
behalf of the people of the state of New York. As finance, contracting
and operating entities, they have the flexibility and power to
accomplish great tasks. From bridge, edifice, infrastructure, school
and highway building, to the operation of transportation systems,
convention and sports centers, economic development programs and
public health and infrastructure facilities, these entities perform an
indispensable role and dramatically enhance the quality of the daily
lives of every New Yorker.

Due to their flexibility and efficiency of operation, their design for
speed, as well as their focused mission and specific purpose, New
York's public authorities have often been tasked with performing the
most challenging, difficult and controversial of state projects. From
the time they were used by Robert Moses to build the great bridges,
buildings, parks and edifices of early 20th century New York, to the
present day, there have been many questions and concerns raised
regarding their role and their lack of accountability. Without them,
however, so many of the things that make New York the Empire State,
from our Thruway, to our State University campuses, to our New York
City Transit systems, to the site for the 1980 Olympics were America's
famous Miracle on Ice occurred, to the very housing units millions of
New Yorkers now call home, simply would not exist today.

With the immense challenges and vast revenue streams which our public
authorities have been asked to oversee, there have been many
amendments to the public authorities law, to improve public
accountability without compromising their effectiveness or mission.
These reforms include the establishment of the Public Authorities
Control Board as well as the modernization of the state statutes
governing their debt issuance, capital expenditures, contracting
procedures, and reporting requirements. As we step firmly into the
realm of the new 21st century, we have again witnessed some problems
with certain operations within select public authorities. It is
therefore incumbent upon the legislature to once again address these
issues with the same determination, and in the same manner, as to

promote increased accountability without diminishing the public
benefit which these governmentally-created corporations provide.

Financial, budget and accounting questions involving billions of
dollars of public monies require reform. Uncertainty over the fairness
and propriety of procurement contract awards must be overcome to again
regain the public's confidence and trust.  Accountability and
operational soundness must be clearly demonstrated by these entities
through public disclosure and access, with the ultimate oversight,
resting with the people's elected representatives in the State Senate
and Assembly.

This bill seeks to accomplish an important and major reform by
prohibiting the formation of a subsidiary of a public authority
without prior permission of the legislature. Several public
authorities have gotten themselves into trouble due to lack of
oversight and an express set of guidelines of their subsidiaries.

This bill seeks to correct this situation, and remain true to the
spirit of §5 of Article 10 of the State Constitution which requires
that only the state legislature may create a public authority.  The
formation of a subsidiary by a public authority which itself must be
constitutionally created by the legislature, should not be allowed to
be created by the parent public authority. To permit otherwise not
only violates the spirit of the constitution, but also permits a
questionable delegation and abrogation of state legislative authority.

 PRIOR LEGISLATIVE HISTORY :

2005-06: S.5102-A/A.6757 - Veto
369.
2007: Passed Senate/Assembly Corporations, Authorities and Commissions
Cmte.
2008: Passed Senate/Assembly Ways and Means Cmte.

 FISCAL IMPLICATIONS :

None noted.

 EFFECTIVE DATE :
This bill would take effect immediately.