OPINION: Cuomo’s partnerships should raise a red flag [The Buffalo News, N.Y.]

Dec. 12--WASHINGTON -- The fine print in Gov. Andrew M. Cuomo's plan for "public-private partnerships" to pay for highways and bridges isn't out yet. So far, the state outline looks like a rip-off of President Obama's stillborn plan to pay for construction.

Obama's Stimulus II initiative was pushed hard by Lawrence Summers, a Wall Street player who was a disaster as Harvard president and as Obama's chief economics adviser.

A bunch of somebodies in the State Legislature ought to put up a big, flashing yellow light on this one. New York's finances are in a big enough tangle.

The mess in Albany started when Gov. Nelson Rockefeller launched the state on a binge of tricky, indirect financing to build the monument to big government in Albany, the Empire State Plaza, and the State University.

In addition, he vastly expanded the role of the State Dormitory Authority, created by Gov. Thomas Dewey to build dorms for what were then the teachers colleges. The authority now builds housing for "private" colleges and football stadiums.

Each one of these authorities has its own political patronage system that includes consultants, lawyers, architects, landscapers, bond salesmen and other arrangements that are fodder for the teams of lobbyists who prowl the capital.

An authority's accountability-- financial and ethical -- is essentially zero. Nobody complains. All the players, meaning legislators and their fellow travelers, get a piece of the action by referring contributors for jobs.

Another result, in addition to soft corruption, is that all of these authorities wind up costing users and citizens more money in fees and hidden taxation.

Even so, the Legislature always had the upper hand because it could dissolve these authorities and pay off their debts.

But "public-private partnerships" are yet another disturbing step away from accountability. PPPs were favored in Italy in the 1920s, according to an article in the Executive Intelligence Review. The facsists called it "corporatism."

Cuomo's partnerships could use private funds to rebuild, for example, a school or a rusting bridge. The state would guarantee repayment to the corporation, by means of tax money. If a road, then tolls might be charged, as in new lanes being built on the Washington Beltway. A special entity, or authority, would be created to collect, pay and hold the money. The last investor into the scheme -- the non-governmental player -- would be given most of the power over the PPP.

Fannie Mae, which nearly went belly-up in the 2008 mortgage crisis, is essentially a PPP. The U. S. taxpayer is now directly paying its 13-figure debt.

Right now, state construction is handled this way: A request for bids is published, a contractor is picked and a private insurance company guarantees the bid price. Federal and state tax money pays for it. All very transparent. By contrast, just try to find out how the Empire State Plaza was paid for.

It seems Cuomo may take his PPPs into an even more controversial direction. By a number of credible published reports, he is considering union pension funds as the "private" partner for new construction entities. This could be very popular with labor, since there would be zero risk to the unions because taxpayers would be the guarantors of a union-controlled PPP. The problem is that unions already dominate the economics, tax policy and negative business climate in the People's Republic of New York.

The governor doesn't need to do this. The state's credit rating is excellent. Raise the debt ceiling, if necessary; borrow the money and do it through the front door with the existing system and with transparency.

dturner@buffnews.com

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