July 21, 2005
Comptroller Hevesi rejects $2.9 billion 'back-door borrowing'
Comptroller Alan Hevesi has announced that he will block the state from a borrowing plan that his office calls a "fiscal gimmick" and "a $1.77 billion secret tax hike on businesses and taxpayers."
The proposed borrowing, which would have been run through the Thruway Authority, is one piece of an overall $17.9 billion five-year transportation capital plan the Legislature adopted this year. Another part of the plan is a $2.9 billion bond act that is going before the voters for approval in November.
But Hevesi said his action blocking the Thruway borrowing should not disrupt spending on roads and bridges. He said the proposed deal "is another case of the state using a public authority to do back-door borrowing and impose huge costs on an unaware public."
Under the plan Hevesi rejected, the Thruway Authority would borrow some $2.9 billion under terms that would require paying only the interest charges for the first five years of the 20-year bonds. This was intended to improve the cash flow for transportation projects by a total of $1.3 billion for those five years -- but Hevesi said it would result in an extra cost of $1.77 billion in the remaining 15 years of the bonds.
"This scheme ... steals from the future to pay for today's costs," Hevesi said. "It's Albany at its irresponsible worst and I will not approve it."
The Comptroller said the Transportation Bond Act on the November ballot, by contrast, "meets all the requirements of our debt reform guidelines." Allowing the voters to decide its fate, he said, "is the way it should be done" -- in contrast to what he called the "back-door borrowing" contemplated by the Thruway bond.
The release from the Comptroller's office is at www.osc.state.ny.us/press/releases/jul05/072105.htm.