New York City has finally wriggled off the hook for what’s left of that ‘70s debt. Under last week’s ruling by the state’s highest court, $2 billion the city was obligated to pay the Municipal Assistance Corp. (MAC) over the next four years will be transformed into roughly $5 billion in state payments to yet another financing entity over the next 30 years.

Forcing another generation of taxpayers to atone for the fiscal sins of John Lindsay and Abe Beame is bad enough. But Mayor Bloomberg’s dubious court victory could be the start of something far worse: This deal is a blueprint for plundering the public’s credit on a far broader scale.

We should have seen something like this coming. New York state has fairly stringent constitutional and statutory restrictions on public debt — but for decades now, New York politicians have been finding new ways to get around them, and the state’s courts have almost always backed the pols. The result: New York’s per-capita state and local debt is 80 percent above the national average.

The loophole leading to the MAC-refinancing law was opened by the creation in 1991 of an obscure authority known as the Local Government Assistance Corp. LGAC’s sole purpose was to issue long-term bonds to wipe out the annual spring borrowing — state government’s own equivalent of a long-standing, high-interest credit card balance.

LGAC bonds are being paid off out of a special fund, consisting of the first percentage point of the state’s sales tax. Since that dedicated revenue totals $2.4 billion, about eight times the amount needed to pay interest and principal on the LGAC bonds, most of the money ends up in the regular state budget.

It was only a matter of time before someone tapped into the LGAC tax stream in order to leverage new forms of debt. That someone turned out to be Mike Bloomberg, aided by his friends in the Legislature.

The MAC deal calls for the diversion of another $170 million a year from the LGAC sales-tax fund directly to the city. The mayor in turn will assign this money to an all-new entity (the Sales Tax Asset Receivable Corp., STARC), which will use whatever it needs to issue bonds to pay off the MAC debt. Anything STARC doesn’t need will be returned to the city budget, creating the very real possibility that the city will actually make money on the deal.

The Legislature authorized this Byzantine arrangement last spring in a broader package of budget bills passed over Gov. Pataki’s objections. When his vetoes were overridden, the Republican governor joined forces with the Democratic comptroller, Alan Hevesi, to sue to block the deal.

The issues in the lawsuit defy simple explanation, but the 6-0 Court of Appeals decision boils down to this: Outrageous as it may seem, the MAC Refinancing Act of 2003 is legally airtight.

In the wake of last week’s ruling, several distressed New York cities now bumping up against their debt caps — including Buffalo, Rochester, Syracuse, Binghamton, Rome and Auburn — can be expected to seek similar financing packages. After taxing their constituents’ grandchildren to provide a windfall for Bloomberg, how can upstate legislators say no to their own mayors?

Today we’re talking about $170 million a year to pay off $5 billion in debt by 2034. But in a few more years, we could wake up to find another half-billion dollars in annual state aid payments, and tens of billions more in debt, tied up in STARC-style bond deals all over New York.

Now more than ever, New York needs to amend its Constitution to:

Prohibit the use of public authorities and other off-budget entities such as STARC to issue appropriation-backed debt on behalf of any level of government.

Ensure that all forms of state-subsidized financial relief for distressed municipalities must be subject to financial-performance standards with strict state oversight.

Prevent the refinancing of municipal-bailout bonds, such as the original MAC bonds, for periods beyond their original terms.

Absent such reforms, all it will take for the state and its cities to exploit the MAC-refinancing precedent is a little more imaginative draftsmanship by today’s successors to the late John Mitchell, the Wall Street lawyer who invented “moral obligation” bonds for Gov. Nelson Rockefeller. Mitchell would later serve as Richard Nixon’s attorney general and was ultimately tarred by the Watergate scandal, but he remains the patron saint of politically savvy bond counsels everywhere.

There’s no telling where all this will end. But somewhere, Mitchell must be smiling.