Senate Bill S2377

                                 
BILL NUMBER: S2377

SPONSOR: MATTERA
 
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:

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 PROVISIONS:

This bill would amend section 2827-a of the Public Authorities Law, to
eliminate the exception to the general prohibition against public
authorities establishing any new subsidiary corporation without prior
statutory authority.

              

 
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 accom-
plish 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 chal-
lenging, 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 where 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, capi-
tal 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 opera-
tional 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 prohibit-
ing 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 spir-
it of the constitution, but also permits a questionable delegation and
abrogation of state legislative authority.

 
PRIOR LEGISLATIVE HISTORY:

2015: S.2054 - PASSED SENATE/Corporations

2016: S .6591/A.4729 - CORPORATIONS/Corporations

2017: S.4280/A.7049 - PASSED SENATE/Corporations

2018: S.4280/A.7049 - RULES/Corporations

2021: S5137A - Passed Senate

2022: S5137A - Passed Senate

2023: S979 Passed Senate

 
FISCAL IMPLICATIONS:

None noted.

 
EFFECTIVE DATE:
Immediately.