It seems to counter basic assumptions about  representative government, but Pataki's proposed Nassau Interim Finance  Authority would follow a long tradition in which New York has given  some of its most costly and controversial jobs to agencies that are  largely independent.

When local officials lack the political will to solve debilitating fiscal problems, state officials can send in an  authority to make crucial decisions on government services, personnel and taxes. A powerful state control board ran  Yonkers for 15 years before disbanding last year. When New York City and  Troy staggered at the brink of financial ruin, the state sent  control boards and financial authorities with broad borrowing powers  to the rescue.

For almost 80 years, the state has given public  authorities the financial and political power to build bridges and  dormitories, to run transit systems and utilities, even to aid  horse-breeding.

But the reach and clout of 55 state and regional  authorities have grown so extensive that some call them the fourth branch of government. And their operations are so obscure and so  removed from traditional oversight that others have called them the   "hidden government." "That's true-this makes a large amount of   government not accountable to people, and that's important given the  large number of things they do," says Frank Mauro, an influential  analyst here who directs the Fiscal Policy Institute.

"But that doesn't mean you should never create a public authority. There are things you want to do for which it  might be just the right approach." Lawmakers have struggled for years  to strike a difficult balance that gives authorities the   freedom to do difficult jobs while keeping them accountable.

The same conflict is playing out now as lawmakers in  Albany and Mineola negotiate the Nassau bailout plan.

As proposed by Pataki, the Nassau Interim Finance  Authority would have unprecedented potential power: It could restructure a quarter-billion dollars in county debt, pushing repayment  out over 20 or 30 years, while paying millions in commissions to bond  underwriters.

If local officials can't make deep budget cuts on a tight  deadline, the authority would have the power to build the  county's budget, negotiate with unions and raise taxes.

Few doubt that Nassau needs some sort of state  intervention. Its budget is as much as $200 million in the red this year, and  without drastic action the deficit could surpass $300 million in  coming years. Wall Street is threatening to cut its bonds to  junk-grade by June 30 unless it solves its problems.

While some local officials worry about aspects of the  deal, "there's no alternative," said Hy Grossman, managing  director for public finance at Standard & Poor's, the New York-based bond-rating agency. "You could raise taxes $500 million in  one year, but that's not practical or likely to happen." In their  earliest years, authorities were formed to do jobs that governments   could not do on their own. The Port Authority of New York and New  Jersey was founded 1921, streamlining the effort to develop the port  area sprawling around the Statue of Liberty.

Early authorities also were seen as a way to bypass  corrupt local governments, says Rochester attorney Patrick Malgieri,  former Monroe County attorney and a bond counsel to several  municipalities.

"The idea was that they could act autonomously...without  the local Republican chairman or Democratic chairman breathing  down their necks," he said.

In time, though, public officials recognized other  advantages.

New York law strictly limits state government borrowing  and requires voters to approve most big borrowing plans. But by  creating public authorities, state officials could bypass those  limits and borrow millions without public approval.

And the authorities give public officials a foil for for unpopular decisions.

"I'm pretty sure the mayor of Rochester is happy that  when the Rochester-Genesee Regional Transporation Authority raises  bus fares, the people aren't calling him to complain," says Malgieri.

Today, the state comptroller's office reports, state and  regional authorities hold almost $31.6 billion in state debt-86  percent of the total.

The Dormitory Authority, with $12.9 billion in state  debt, is the nation's biggest issuer of bonds. In 1998, the Long Island  Power Authority floated a $6.7-billion bond issue, the biggest  single municipal issue in U.S. history.

Once established, authorities follow unpredictable  courses. Sometimes, experts say, that has allowed them to complete  ambitious jobs that would overwhelm government. But it can also lead  to trouble.

From its relatively modest beginnings, the Port Authority  branched out into building bridges and tunnels, and later  running airports. More recently, it has built the World Trade  Center, industrial parks, even a satellite communications center.

It has no state debt. But in the mid-1990s, it was  staggered by a Newsday investigation that found misspending and  mismanagement on multi-million dollar projects and by a federal corruption  probe that netted convictions for bribery and other crimes.

Critics have insisted that such incidents, while  isolated, prove that tighter controls are needed.

Debt-reform proposals by State Comptroller H. Carl  McCall, a Democrat, target "back-door" borrowing and could make it  easier for the government to borrow money directly, said McCall  spokesman Jeffrey Gordon.

But top Republican officials say authorities are  adequately regulated by the three-member Public Authorities Control  Board, appointed by the governor and the leaders of each house.

Only 11 of the biggest authorities are under the board's jurisdiction.

Others answer directly to the governor, said Pataki  spokesman Michael McKeon.

"The governor expects authorities to perform at the  highest level," said McKeon, "and when they don't, they are  accountable to him, and he's accountable to the people." Similar issues of oversight and accountability have arisen in the state's  effort to bail out troubled local governments in Troy, Yonkers and New  York City.

When New York City was near bankruptcy in the 1970s, the  state created a control board to supervise its finances and an authority-the Municipal Assistance Corp.-to restructure its  debt.

While the city was barred from the financial markets,  "Big MAC" had power to borrow up to $10 billion by selling long-term  bonds, and could lend that money to the city for the repayment of  its short-term debt.

City tax receipts were channeled directly to the  authority, and it built up a $4-billion surplus. According to Mauro and  others, it used the promise of financial aid as leverage to affect  police, transit and school construction policy.

The problem, Mauro said, was that the authority "was not  under control of democratically elected officials," and yet was  "able to tell the city what to do on policy unrelated [to the  bail-out]." Similar accountability and debt issues are at the center of negotiations over the Nassau Interim Finance Authority.

With both a control board and a financial authority  combined in one agency, some Democratic officials say, it could be more  powerful than any previous municipal bail-out agency.

In an interview last week, Assemb. Thomas DiNapoli  (D-Thomaston) said negotiators want Pataki to separate the two functions.  Pataki aides say the structure would be "lean [and] efficient."  Other Democrats complain the plan gives Republicans control over  four of the five seats on the authority board, while McCall has been  left off the authority despite his central role in past bailouts. 

If Democrats are successful in local elections next year,  said Nassau Presiding Officer Judy Jacobs, "we could very easily  end up with a Democratic county executive and a Democratic  legislature and still be locked up with a Republican NIFA board.

"Is it the ideal? No...But it's Pataki's bail-out."  Pataki has signalled to Democratic leaders that his choices will be  based not on party affiliation, but on expertise.

Others raise concerns about the restructuring of Nassau's  debt. It would give the county a short-term cash-infusion, but it  would have to be paid back over 20 to 30 years with millions in  added interest costs.

DiNapoli and other Democrats are also questioning why  competitive bidding would not be required for selecting the bond  underwriter.

Said one municipal budget official: "There are literally  millions of dollars to be made on the backs of the taxpayers of  Nassau County. And all they're doing is pushing debt around."  Pataki aides say the restructuring is far more complex, and that  selecting an expert underwriter will ensure the success of the bond sale.  

Even skeptics agree that Nassau, with just weeks  remaining until the Wall Street deadline, may have little choice but to  accept the interim authority.