New York’s local governments must adhere to strict rules regarding spending, ethics, transparency and accountability.
The rules are designed to keep government bodies accountable to the citizens.
But there’s a practice government bodies are increasingly using to avoid accountability — contracting with private organizations to finance government operations and pay for projects.
These government-affiliated nonprofits — such as local development corporations (LDCs) and limited liability companies (LLCs) — act on behalf of government agencies and many times perform some of the very same functions.
But because of their private nature, these organizations aren’t subject to the same rules and scrutiny for borrowing and bidding as government bodies are.
That opens the door to excessive spending and debt accumulation at the taxpayers’ expense, potential fraud and financial mismanagement, and the opportunity for conflicts of interest.
According to several government watchdog groups, there are at least 295 LDCs across the state, an increase of 200 percent since 2000. In 2017 alone, LDCs in New York issued $20.3 billion in debt on behalf of taxpayers, the groups reported.
One piece of legislation, overwhelmingly passed earlier this year in the Legislature and currently awaiting Gov. Andrew Cuomo’s signature, would help swing the pendulum back in favor of the citizens by greatly expanding the power of the state Comptroller’s Office to audit their activities.
Right now, the comptroller’s authority over LDCs and other such groups is limited to examining the relationship between the government agencies and the non-government agencies as part of an audit of the government body. And even then, the comptroller isn’t allowed to investigate the overall finances and operations of the non-government organization.
That’s hardly what one would consider effective oversight.
The bill under consideration by the governor (A7476/S5445) would essentially recognize the governmental functions these organizations perform by allowing the comptroller to conduct direct audits of private organizations under the control of one or more local government bodies, including municipal corporations, industrial development agencies (IDAs), districts, fire companies and agencies.
Among the good-government groups supporting this legislation are Reinvent Albany, the Fiscal Policy Institute, Common Cause New York, the League of Women Voters of New York State, the New York Public Interest Research Group (NYPIRG) and Citizens Union of the City of New York.
This legislation will help increase accountability and make organizations performing government functions more transparent and more responsive to the taxpayers.
Gov. Cuomo should sign this bill.