Angry New Yorker

Wednesday, May 19, 2004
[ed. note - Absolutely shameful. By the time NY pays this debt off from the 70's NYC financial debacle three generations of New Yorker's will have born the burden.]


"May 19, 2004 -- NewYork City has finally wriggled off the hook for what's left of that '70s debt. Under last week's ruling by the state's highest court, $2 billion the city was obligated to pay the Municipal Assistance Corp. (MAC) over the next four years will be transformed into roughly $5 billion in state payments to yet another financing entity over the next 30 years.

Forcing another generation of taxpayers to atone for the fiscal sins of John Lindsay and Abe Beame is bad enough. But Mayor Bloomberg's dubious court victory could be the start of something far worse: This deal is a blueprint for plundering the public's credit on a far broader scale.

* * *
The MAC deal calls for the diversion of another $170 million a year from the LGAC sales-tax fund directly to the city. The mayor in turn will assign this money to an all-new entity (the Sales Tax Asset Receivable Corp., STARC), which will use whatever it needs to issue bonds to pay off the MAC debt. Anything STARC doesn't need will be returned to the city budget, creating the very real possibility that the city will actually make money on the deal.

* * *
The issues in the lawsuit defy simple explanation, but the 6-0 Court of Appeals decision boils down to this: Outrageous as it may seem, the MAC Refinancing Act of 2003 is legally airtight.

In the wake of last week's ruling, several distressed New York cities now bumping up against their debt caps — including Buffalo, Rochester, Syracuse, Binghamton, Rome and Auburn — can be expected to seek similar financing packages. After taxing their constituents' grandchildren to provide a windfall for Bloomberg, how can upstate legislators say no to their own mayors?

* * *
Now more than ever, New York needs to amend its Constitution to:

* Prohibit the use of public authorities and other off-budget entities such as STARC to issue appropriation-backed debt on behalf of any level of government.

* Ensure that all forms of state-subsidized financial relief for distressed municipalities must be subject to financial-performance standards with strict state oversight.

* Prevent the refinancing of municipal-bailout bonds, such as the original MAC bonds, for periods beyond their original terms."

Read the entire article here.

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