Talks to Return NYRA to Private Hands Implode

A tentative deal to return the New York Racing Association to private hands ran aground April 5 when a broader package of state budget bills that included the NYRA component fell apart at the state Capitol in Albany.

Looking to end the state's takeover of NYRA, which Gov. Andrew Cuomo pushed through in 2012, the governor and lawmakers had an agreement on the table to move NYRA from public to private control, according to sources with knowledge of the talks and documents obtained that were not publicly released.

Cuomo and lawmakers have been divided on unrelated issues over criminal justice, education, and housing for weeks now and they missed an April 1 deadline for a new state budget. Talks had continued through last weekend and this week and some of the less controversial budget bills started being passed April 4.

And then talks imploded Wednesday night, sending angry lawmakers home. While the NYRA governance changes were already done, they were not finalized because the NYRA provisions were included in a massive "revenue" bill that was the subject of the breakdown of budget talks. Senators went back to their districts Wednesday and the Assembly was expected to follow suit soon for a scheduled two-week vacation.

An "extender" bill, letting the government stay in operation until a full budget is adopted, was given a long, May 31 lifespan—meaning the NYRA piece could remain unsettled until at least then.

The state, through Cuomo appointees on the board, has been in charge of NYRA since 2012. It was promised at the time by state officials that the control period—or "reorganization" period as Albany called it—was to last three years. But disputes between Cuomo and lawmakers over the governance structure, state oversight powers and a bid last year by Cuomo to take back some Aqueduct Racetrack casino revenue sharing funds from NYRA ended up forcing continuation of the state's control. Legally, New York is in charge of NYRA until late this year.

The tentative NYRA deal includes weaker powers of a state oversight panel than what Cuomo proposed in January and seats on the new board for representatives of the New York Horsemen's Association and the New York Breeders Inc.

The new NYRA board, under what now goes back to being called a draft plan after the budget blowup on Wednesday, would be composed of 17 members. Eight are to be chosen by the current board's executive committee and Cuomo and future governors get six appointees, two of whom are named by the leaders of the Senate and Assembly. The NYRA chief executive officer, currently Chris Kay, gets a seat and the horsemen and breeders groups each get a seat with full voting powers. 

The governor's plan had called for the two industry groups to have seats on the new board, but without voting powers.

Additionally, Cuomo's plan to supercharge the authority of the Franchise Oversight Board, a state panel created in 2008 to monitor NYRA's finances, was rejected by lawmakers in the final deal. In January, Cuomo called for giving the oversight board the power to impound NYRA's funds, such as money it gets from the Aqueduct casino for operating aid and purses, along with powers to appoint an outside financial advisor along with other "corrective" actions if the board, in its opinion, believes there were "significant" risks to NYRA's finances.

Lawmakers over the months have said the Cuomo plan would have given such legal strength to the oversight board that it would have ended up serving as a de facto NYRA board. The oversight board is dominated by Cuomo appointees.

The proposed powers for the board were weakened in the now-tentative bill. For instance, certain actions the board could take against NYRA would, under the measure, have to be approved unanimously by its members. That could favor NYRA because the unanimous votes would have to come from members appointed by the Legislature, which has had its many problems with NYRA but tends to look upon the racing corporation more favorably than a long list of New York governors over time.

If one thing was certain after the budget blow-up, it was that no one wanted to predict when the larger budget dispute—affecting hundreds of non-controversial items already given tentative approval—will end.