DiNapoli Report Warns of $63.7 Billion Growing State Debt
New York Ranks Second in Nation in Total State Debt
New York’s state-funded debt is projected to reach $63.7 billion at the end of the current fiscal year and to increase over the following four years to $71.8 billion, according to a report issued today by New York State Comptroller Thomas P. DiNapoli. The comptroller once again called
for reforms to New York’s use of debt, including voter approval of borrowing and better capital planning for infrastructure projects.
New York faces tremendous infrastructure challenges and the wise use of debt can be an essential part of the financing picture, DiNapoli said. Still, backdoor borrowing imposes significant costs on taxpayers, lacks transparency and may limit flexibility in providing important services and programs. My debt reform proposal would help ensure effective capital planning and manageable debt levels.
The Debt Reform Act of 2000 imposed statutory limits on the levels of outstanding debt and debt service. Current projections indicate the state’s available borrowing capacity under the limit on debt outstanding will shrink to only $58 million in 2020-21. The state, he said, has used various mechanisms, including public authorities, to circumvent both the constitutional and statutory restrictions on borrowing.
State-funded debt is a measure developed by the Office of the State Comptroller to provide a more comprehensive description of the state’s debt burden than the statutory measure of state-supported debt. The $61.4 billion in state-funded debt outstanding at the end of SFY 2016-17
included $49.6 billion of state-supported debt. Examples of such additional debt include bonds issued by the Tobacco Settlement Financing Corp. and certain bonds issued in recent years to pay for State University of New York dormitories.
Total state-funded debt is projected to increase by $10.4 billion, or 17 percent, over the state’s current five-year capital plan period.
DiNapoli’s proposal for debt reform includes statutory and constitutional provisions that would:
• Amend the state constitution to limit all state-funded debt to 5 percent of personal income, starting in SFY 2027-28 to allow appropriate time for planning purposes, and to prohibit the use of state-funded debt for non-capital purposes.