By claiming sole power to commit billions of dollars for decades to come, Mayor Bloomberg glides above every traditional check and balance. And just as United’s pilots may fret over their pensions thanks to a bankruptcy court, New Yorkers may fret over their PILOTS, thanks to the mayor’s solo flight.

PILOTS are “payments in lieu of taxes” made by occupants of real estate not technically on the tax rolls to compensate for loss of ordinary city revenues – sometimes by tax-exempt government units, like the Port Authority; more frequently, by taxpaying companies with deals under a program for “economic development.” Typically, the city takes title to property, removing it from the tax rolls, then “leases” back virtual ownership to the company, which agrees to make payments “in lieu of” taxes, usually less than taxes otherwise due. For example, the city may use PILOTS to permit a company to pay a sliding scale percentage of full taxes over several decades, and in doing so, retain (or attract) businesses otherwise threatening to leave town (or not come), owing to high city taxes.

PILOTS are negotiated by the city under published guidelines, but they are, at bottom, discretionary awards. Discretionary taxes and exemptions have long been criticized. In the 19th century, e.g., corporations frequently obtained legislative charters granting perpetual tax exemptions, unrepealable without violating the Contract Clause of the Constitution. The state constitution was amended – prohibiting “private” bills granting tax exemptions, requiring all exemptions to be by “general” laws, and preventing the state Legislature from “contracting away” its power to tax.

State laws imposing taxes and granting exemptions are now required to be “general,” in that the objects of taxation (and the beneficiaries of exemptions) must be defined as a class, not as a specific individual or company. Because PILOT deals are not formal “tax exemptions,” however, they need not be the product of general legislation – one of the many ways in which 21st-century techniques avoid 19th-century efforts to limit government subsidies.

PILOTS are defended as an indispensable economic-development tool for an entrepreneurial mayor-CEO – like low-interest loans reducing financing costs and sales-tax exemptions reducing construction costs. In fact, localities everywhere compete by offering such incentives. Let’s focus, however, on the use of PILOT proceeds.

Until recently, most of us assumed PILOTS were substitutes for tax payments. Indeed, that’s what the acronym means: a payment “in lieu of” a tax. A taxing jurisdiction like the city may be paid less than normal tax rates – presumably in exchange for receiving payments at all, instead of losing the enterprise – but at least the city would receive the PILOTS as normal revenues.

Last month, however, the mayor urged a different view: His corporation counsel testified that all PILOTS may be spent and committed however the mayor acting alone directs, rather than through the normal budget process, which requires annual City Council appropriation. In other words, the city’s chief lawyer believes that PILOTS are not city revenues, but instead are something else. Exactly what is not altogether clear. He suggests that PILOTS are “non-surplus” city personal property, i.e., purely contractual revenue streams (not coerced payments) that can be sold to third parties by the mayor alone.

Now, consider the consequences of so classifying PILOTS: The mayor has a pet project – say, a macro-aquarium for macro-porpoises in the Flatiron district that he’d like to build over community objection. He has no money in the capital budget. Borrowing has exceeded the city’s debt limit. He needs over $100 million to finance the project. Annual debt service exceeds $5 million for 30 years. Simple: He identifies property producing the requisite level of debt service in taxes, instructs an agency to negotiate a PILOT arrangement (or allocates existing PILOTS), and then “assigns” the PILOTS to bondholders willing to finance the project.

Done deal – outside all city tax and debt limits, outside the city budget and appropriation process, and outside any other check, balance or voter approval – not for one year, but for 30 years. Exactly the reason for state constitutional limits in the first place. Sound familiar?

The City Council has resolved that PILOTS are city revenues, subject to annual appropriation before being spent. The city’s corporation counsel argues instead that state law and the City Charter provide total mayoral control, but despite his awesome juridical pedigree, counsel appears to overreach on both counts. The mayor may well crash-land if he tries to fly solo with PILOTS.

Mr. Harper practices law in New York City.