Bonding With Pataki

Governor Pataki and the state's comptroller, Alan Hevesi, deserve the taxpayers' thanks for saying no to an outlandish bonding scheme, supported by Mayor Bloomberg, that would have taken the city's lingering debt from the fiscal crisis of the 1970s and made it the whole state's problem. The Legislature overrode the governor to pass the plan, which refinanced New York City's "MAC debt" by spreading it out over 30 years, instead of five, and doubling the cost to taxpayers, to $5.1 billion from $2.5 billion.

"It is clearly wrong to have taxpayers of New York State 30 years from now paying off operating losses that occurred 25 years ago," the governor said last week. Now he has backed up his words with action by having the Local Government Assistance Corp., which he controls, approve a resolution denying use of $170 million a year in state sales tax revenue to finance the bonds. The mayor isn't happy, predictably. The board's "irresponsible and illegal ac tions threaten to blow a $500 million hole in New York City's current budget,"he said, announcing litigation to challenge the constitutionality of the governor's move.

While the outcome of any court case is yet uncertain, the Manhattan Institute's fiscal policy expert, E.J. McMahon pointed out on these pages last month one reason why Mr. Pataki can be optimistic. The governor pointed out in his veto message that the New York State Constitution says that "[n]o money shall ever be paid out of the state treasury or any of its funds, or any of the funds out of its management, except in pursuance of an appropriation by law."The Legislature, according to Mr. McMahon, failed to actually appropriate the $170 million a year it has promised to send the city to back up the bonds. The Legislature likely would have to appropriate this money now, and the governor won't be helping them. If Mr. Bloomberg finds himself with a $500 million hole, he has himself to blame for waiting on a handout from the rest of the state instead of cutting.