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Report: Hochul budget limits oversight of bond sales

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(The Center Square) – New York Comptroller Tom DiNapoli is criticizing Gov. Kathy Hochul for seeking to strip his office of oversight authority on the approval of tax bond sales.

DiNapoli said Hochul’s budget proposal for the next fiscal year includes provisions “that would diminish my office’s oversight, including new proposals to restrict my office’s approval of certain state bond issuances.”

“This independent oversight protects taxpayers from short-sighted decisions that can burden the state financially,” he said in a statement. “These proposals should be rejected.”

Stipulations attached approval of private sales of State Personal Income Tax and Sales Tax bonds by the comptroller’s office “ensures the costs of borrowing are reasonable and appropriate, providing a critical check on poor fiscal management and bond structuring choices that may otherwise occur.”

DiNapoli said Hochul’s budget proposal would “significantly curtail” his office’s oversight of those transactions and expand the executive’s powers. He said that could mean “costlier and riskier bonding choices with the bond issues, which he noted is the primary way the state conducts most of its borrowing.

“It would also create a dangerous precedent, likely to be sought by other public authority bond issuers, such as the Metropolitan Transportation Authority, which has a history of poor debt practices,” he said. “Limiting oversight by the comptroller would inevitably lead to bond structuring decisions that will increase costs to state taxpayers over the long run.”

Specifically, the governor’s budget would limit review of band sales to specified criteria that DiNapoli said would omit bond structuring considerations that “can have serious cost implications for taxpayers.”

“Restricting the comptroller’s long-standing oversight and approval role would permit a nearly unfettered ability to engage in more costly and more risky bonding choices,” he said.

DiNapoli, a Democrat, has been critical of laws shielding the state government from disclosing details of contracts totaling hundreds of millions of dollars a year. He has also called for the passage of a bill requiring state agencies to provide prospective bidders for state contracts with the ability to protest a contract award.

Hochul signed legislation restoring the comptroller office’s contract oversight powers that had been stripped by her predecessor, former Gov. Andrew Cuomo, several years ago.

The changes restored the comptroller’s power to review state contracts involving the State University of New York, the City University of New York, and the Office of General Services before they are signed, known as “pre-audit” authority.

DiNapoli says the contract review is “an essential and important deterrent to waste, fraud and abuse in the state’s procurement process.”

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