DiNapoli Recommends Guiding Principles to Protect Taxpayer Interests in Public-Private Partnerships

eHezi Archives 6 Comments

DiNapoli_with flag As New York State grapples with cost-effective solutions for its estimated $250 billion in infrastructure needs over the next 20 years, the state should examine both the opportunities that public-private partnerships offer as well as the underlying financial risks associated with forming those partnerships, according to a report released today by State Comptroller Thomas P. DiNapoli. 

“Our public infrastructure needs a lot of improvements – $250 billion in improvements over the next 20 years,” DiNapoli said. “The big question is, how are we going to pay for that? Public-private partnerships are a good option to look at, but those partnerships don’t come risk-free.  It makes good sense for the state to look at public-private partnerships based on experience in other states, but we have to ensure public assets are not squandered and taxpayers are protected.” 

Public-private partnerships are contracts between a public agency and a private sector entity that result in greater private sector participation in the financing and delivery of public services and facilities than is normal under traditional procurement practices.   

DiNapoli’s report noted that in order for public-private agreements to successfully enable the state to move forward with much-needed capital projects, there are four underlying financial risks in public-private partnerships that must be fully addressed: 

·        Failure to identify the full value of public property. Public-private partnerships may underestimate the value of public assets and in doing so, short-change the public. 

·        Unfavorable pricing mechanisms. Public-private agreements may include pricing mechanisms that burden the public with unwarranted costs such as excessive fees and toll increases. 

·        Unrealistic expectations and poorly drafted agreements. Public-private partnerships may create unattainable expectations when the private entity promises more than it can deliver or contracts fail to detail the private partner’s obligations adequately. 

·        Budget gimmickry. Public-private agreements sometimes provide short-term fiscal relief that ultimately pushes increasing costs to the future while increasing the public’s debt burden. 
To avoid the underlying financial pitfalls of public-private agreements, DiNapoli recommends policy makers must first: 

·        Identify the best practices for valuation of public assets and make sure taxpayers are not short-changed by an artificially low valuation; 

·        Keep private sector profits within reason and ensure resulting services are affordably priced for its public users throughout the life of the public-private agreement; 

·        Carefully draft agreements that specify what the private entity promises to deliver in exchange for the opportunity to participate in the partnership while not including unrealistic or inaccurate financial projections; and 

·        Adopt financing rules that prevent any disproportionate shift of current capital costs to future generations of taxpayers. 

DiNapoli’s report focused on the financial implications of public-private partnerships. The report noted there are many additional policy concerns that may be raised by public-private partnership agreements, such as regulatory oversight, workforce impact, and the effect on local communities, which are beyond the scope of the report but require comparable consideration. 

In November, DiNapoli released a report detailing specific reforms to the state’s capital planning process by placing increased restrictions on the use of debt and capital spending. These reforms included imposing a strict and effective cap on public debt, restoring control of debt to voters, ending off-budget capital spending and using a comprehensive, statewide approach to prioritizing capital projects. 

To view DiNapoli’s report on public-private partnerships, visit: http://www.osc.state.ny.us/reports/infrastructure/pppjan61202.pdf

To view DiNapoli’s report on long-term capital planning, visit: http://www.osc.state.ny.us/press/releases/nov10/113010.htm

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eHeziDiNapoli Recommends Guiding Principles to Protect Taxpayer Interests in Public-Private Partnerships

Comments 6

  1. Is everyone aware that Lawyers are constantly exploiting Civil Rights Laws designed to help people that have truly been ”damaged” to line not only their pockets but the pockets of their ”clients” that HAVE NOT been ”damaged.” Case in point is a so Called Civil Rights Attorney that has made a living off the Tax Payers and he’s going back to the good old Well in Yonkers. It seems that several Highly Paid members of the Yonkers Federation of Teachers (YFT) have been reassigned to other schools and they ”claim” it’s because of their age. I ask you…even if this were true where and what are the ”Damages?” Each of those teachers retained their Salaries and Benefits. Yet, this Lawyer will ”Twist and Manipulate” the Law to STEAL MILLIONS of YOUR Tax Dollars to line the pockets of his ”clients” and himself. Nice Gig!!! COMPLAIN TO SOMEONE ALREADY!!! SMARTEN UP AND STOP OBSESSING OVER SPORTS AND REALITY TV and take CONTROL of YOUR HARD EARNED TAX DOLLARS!!

  2. public private partnerships are just another way to steal our money
    start by eliminating eminent domain for private companies and take government out of business.

  3. Get rid of 90% of the recycled political faces and names. Stop people like amiclown, annabie, restiano and the endless corrupt names in our government from making deals to give away Millions if not billions of OUR money. Yonkers is a perfect example of how to destroy this country. Downtown has been in flux for almost ten years with no end in sight. Signed over to a developer who said publicly he would not build, Ridge hill, N-Vally, the list is endless and the FEDs have done squat! cars, phones, parking…………………It takes these fools 1.1 million to create a job it takes the private sector 100 thousand……go figure???????

  4. but there is a way to prevent this state as well
    as others from going broke..look what california
    just did they dessimated services for the poor and
    proposed raising taxes..the largest cost is split
    between medicaid….and pension obligations…
    the governor has already empowered a commission to make
    recommendations about medicaid…it has to be cut
    but you can’t totally deprive those in need of essential medical care that would simply be totally
    unacceptable morally and every other way…states should declare a controlled bankruptcy in which they
    do not default on their credit obligations but they
    allow a referee to reform all of the public employee
    contracts and to resicind any and all pensions that
    are against public policy..like those where public
    employees make twice their highest base salary in
    retirment…I am not suggesting that the pensions be
    abolished ..simply modified to accomodate the change
    in circumstances….there can never be a legitimate
    expectation that if your highest yearly salary is
    85,000…that you will retire on 140,000 at age 52…
    this will not effect any pensions that are a percentage
    of the highest year or three years..those are legitimate and earned…going forward maybe we shouldnt
    be that generous and have defined benefit plans just
    like in the private sector where the employee actually
    has to contribute to his own retirement…gee what a
    novel idea

  5. Hey buddy, at $6.50 to cross the city bridges and tunnels you need to look at where all that money goes.
    Diminishing returns set in and I for one, will think twice before spending that money to cross these bridges, especially the Whitestone Bridge that has been in a constant state of repair for over 20 years, plus it will damage your car, after you had the pleasure of spending $6.50 to traverse it’s many potholes.
    NY State is going out of business and all that will be left here will be the super rich and the super poor.

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