Public Authorities Have Failed the Public

[Jim Ostrowski]

I've decided to post this Free Buffalo News Alert for pre-publication comment.

Here it is. I'll probably publish it tomorrow.

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Public Authorities Have Failed the Public

It is time to recognize that the authority system of public administration in New York has failed.

We spend too much time critiquing the particular acts of particular authorities—the Power Authority, Peace Bridge Authority, NFTA, BMHA and Thruway Authority--without grasping why these secretive agencies so often disappoint us but always manage to serve themselves. It’s not an accident; it’s their very nature.

The authority system failed because authorities are not subject to the discipline of the free marketplace or the ballot box. When things go wrong, those in charge are neither voted out of office nor do they lose their investment.

Authorities fancy themselves as more akin to private business than to bureaucratic government. In truth, they do not remotely resemble private firms. Those who manage and control authorities do not own their capital value. Those who in some abstract sense “own” the capital value—“the public”—have no control over it. The notion that the public owns the capital value of authority property is a fiction. “The public” is an abstraction representing the people as individuals. Yet, if any one of us tried to sell our share of the authority, we would surely be arrested for fraud or ordered to seek psychiatric counseling.

Thus, for all intents and purposes, no one owns the capital value of an authority. Many have complained that nothing has been done on the Buffalo waterfront for fifty years. It was left to Free Buffalo to explain why—the owners and managers, whether they are the NFTA, the City, or the Coast Guard—do not own in any real sense the capital value of their assets. Thus, they suffer no personal loss from the waste of those assets. Ironically, our leaders now inform us that yet another secretive, unaccountable public authority controlled by Albany—the Erie Canal Harbor Development Corp.—whose members also do not own the capital value of the waterfront, are going to come to the rescue. In truth, we need to be rescued from them.

Authorities also differ from private firms in that they raise a large portion of their revenue by coercive means including taxes and user fees artificially inflated through the advantage of legal monopolies. For example, the Niagara Frontier Transpiration Authority (NFTA) cannot force customers to ride its buses; however, those buses are relatively free from competition by law. Thus, authorities have a greatly reduced incentive to satisfy customers.

In fact, authorities, like all government agencies, are bureaucracies, that is, organizations governed by rules and not by the desire to earn profits by satisfying customers. Authorities share with other government agencies all the defects of bureaucratic management but have one major additional defect: you can’t vote the managers out of office.

Authorities are managed by boards whose members are generally appointed by politicians—governors, legislators and local executives. However, they are appointed for terms and not removable without cause. One might think that the public can hold politicians responsible for making poor appointments to authority boards. However, few members of the public are even aware of which politicians appoint which board members. There is no evidence that politicians suffer any loss of popularity because of their authority appointments.

What actually happens is far different. Generally, politicians appoint those who supported their campaigns. Such appointments not only reward supporters, but they also ensure that the politicians will exercise influence over authorities they do not legally control. Such influence is useful in ensuring that authority jobs and contracts go to the supporters and contributors of politicians who appoint the board members. In colloquial terms, authorities are political patronage dumping grounds. It is quite naïve to suggest that politicians should hold authorities accountable for their wasteful spending and patronage and pork barrel politics. By engaging in such practices, the authorities are doing precisely what the politicians expect them to do.

Once authorities are up and running and employing a significant number of patronage workers and doing business with politically-connected contractors, the relation between politicians and authorities is turned upside down. Instead of politicians picking authority bureaucrats, the bureaucrats take an active role in picking the politicians who will ensure continued employment.

In summary, politicians exercise little effective control over wasteful spending by authorities and voters exercise little effective control over the politicians who distantly preside over the system.

The result of these dynamics is that authorities have become largely autonomous, secretive, powerful and self-perpetuating political patronage empires that not only impose huge costs on the public but also skew the results of elections away from those who favor the public good to those who favor the authorities’ good.
Since the authorities thrive under the present political regime in New York, authorities collectively represent a strong force to preserve the dreadful status quo in New York politics.

[DelawareDistrict]

Even now, politicians, such as Brian Higgins, working for waterfront development are not doing it out of a sense of altruism. At the top of their agenda are some insidious goals -

• getting re-elected
• increasing the size and scope of government
• creating more patronage positions
• perpetuating the status quo

The alluring outcome of a developed waterfront is nothing but a red herring designed to dupe the public into complicity and stupidity. There is an old adage that applies quite well - "be careful what you wish for, you just might get it."

[Jim Ostrowski]

I guess people would rather comment after the fact. So be it.

[SolarEclipse]

On this issue, Jim, I completely agree.

[steven]

I think you didnt get a lot of comments Jim because most of us, in truth really dont understand what a "Public Authority" is.

I can point and say that is a "Public Authority" or "Public benifit Co."

But honestly the history and purpose is tottaly lost on me. Where exactly do they fall in the peeking order of govt? For instance city leaders lament the NFTA's handling of the waterfront. I have often wondered if the city could just immenint domain it and take it away from the NFTA. For that matter why would a public authority or benifit co even be allowed to own land it wasnt using?

What is the history behind the concept that gave them life and what purpose do they serve now in relation to that history? Where exactly do they derive there power from?

[Jim Ostrowski]

"Authorities are managed by boards whose members are generally appointed by politicians—governors, legislators and local executives. However, they are appointed for terms and not removable without cause."

That's what an authority is in the version to be published, I list most of them too.

[WNYresident]

Authorities are not failing us, they are screwing us. Anything to keep thier authority thiefdom alive and well.

[steven]

Does anyone no what this history is behind public authoritys?

[DelawareDistrict]

Does anyone no what this history is behind public authoritys?

Public Authorities were created by this law, you can access the full law through this link.

AN ACT to compile in one chapter of the consolidated laws, for the
purpose of public convenience, the several acts in relation to public
authorities created or validated by the legislature, constituting
chapter forty-three-a of the consolidated laws
Became a law June 15, 1939, with the approval of the Governor. Passed,
three-fifths being present
The People of the State of New York, represented in Senate and
Assembly, do enact as follows:
PUBLIC AUTHORITIES LAW
CHAPTER 43-A OF THE CONSOLIDATED LAWS
Article 1. Short title (Sec. 1).
1-A. New York state public authorities control board (Secs.
50-51).
2. Park, parkway and highway authorities (Secs. 150-386).
3. Bridge and tunnel authorities (Secs. 525-735).
4. Market authorities (Secs. 825-919).
5. Public utility authorities (Secs. 1000-1348).
6. Port authorities (Secs. 1350-1399).
7. Parking authorities (Secs. 1400-1622-t).
8. Miscellaneous authorities (Secs. 1650-2799-tt).
9. General provisions (Secs. 2800-2985).
10. New York State Municipal Assistance Corporation Act (Secs.
3001-3060).
10-A. New York State Science and Technology Foundation (Secs.
3101-3110).
10-B. New York Local Government Assistance Corporation (Secs.
3231-3249).
10-C. New York Health Care Corporations (Secs. 3300-3621).
10-D. Miscellaneous authorities (Secs. 3650-3672).
11. Construction; laws repealed; when to take effect (Secs.
3700-3702).

This little tidbit is from Alan Hevesi's office -

Public authorities were created to finance, construct and operate revenue-producing facilities for the public benefit, and/or to coordinate the work needed to develop or manage resources that benefit the public. There are currently more than 700 public authorities in New York State.

Public authorities have the power to levy user fees and charges, but not taxes. Most public authorities have the ability to borrow funds by issuing debt. Total public authority debt reached over $120 billion in 2004, and continues to grow. $44.6 billion of this amount is State funded debt, which makes up a majority of the $48.2 billion total outstanding State debt.

Although debt service on State funded borrowing is paid by taxpayers, none of this debt is approved by the voters. Unfortunately, only 11 public authorities in New York have their borrowing reviewed by the Public Authorities Control Board.

[steven]

why thank you delaware you have given me some homework

[DelawareDistrict]

why thank you delaware you have given me some homework

You're welcome - The Power Authority is a major source of disgust for me and I have been doing some research on the subject.

[Jim Ostrowski]

This report is the opening salvo in a long war against the authorities. The history is complex and the solutions are as well. But, I thought it was important to make the basic case against first, then follow with the details later as soon as we can.

[count alucard]

Authorities take the heat off the legislature because they are the ones that have to make the tough decisions so the legislators don't have to. When their operations need more revenue they just tell the legislaure that they need money. The state legislature then rubber stamps it and blames the authority for the tax increase. The legislators look like victims and get re-elected. They have really set up a sweet way to deflect any blame.

[WNYresident]

Authorities take the heat off the legislature because they are the ones that have to make the tough decisions so the legislators don't have to. When their operations need more revenue they just tell the legislaure that they need money. The state legislature then rubber stamps it and blames the authority for the tax increase. The legislators look like victims and get re-elected. They have really set up a sweet way to deflect any blame.

And then they get jobs at authorities after they get booted

[Jim Ostrowski]

The report is online--

http://freebuffalo.org/articles/news...uthorities.pdf