BILL NUMBER:S4690               REVISED 10/03/11

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 therefore; to
grandfather all legally created subsidiaries established prior to
July 1, 2012; 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, 2013.

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 &
         Commission Committee
2008:    Passed Senate/Assembly Ways and Means Committee
2009-10: S.3919 Corporations, Authorities & Commissions Committee

FISCAL IMPLICATIONS:
None noted.

EFFECTIVE DATE:
Immediately.