ALBANY, N.Y. — New York State Comptroller Thomas P. DiNapoli recently released a report calling attention to the state’s high debt levels and recommending reforms to tackle the problem. He says the state has one of the nation’s highest debt levels, primarily because “measures to restrict the excessive use of debt have been circumvented over […]
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ALBANY, N.Y. — New York State Comptroller Thomas P. DiNapoli recently released a report calling attention to the state’s high debt levels and recommending reforms to tackle the problem.
He says the state has one of the nation’s highest debt levels, primarily because “measures to restrict the excessive use of debt have been circumvented over the years in state budgets.” Since the Debt Reform Act was passed in 2000, state-supported debt outstanding increased by
$25 billion. The state Division of the Budget projects that over the next five years, this debt will increase by $26 billion, or 42 percent, from $61.9 billion in state fiscal year (SFY) 2021-22 to $88 billion in SFY 2026-27.
The DiNapoli report identifies policy and fiscal weaknesses that “have allowed state debt to grow to troubling levels and offers a roadmap for state debt reform to improve debt affordability and protect New York’s fiscal health.” His office projects that debt service will consume an increasing share of state operating-funds spending over the next five years, growing from 5.4 percent to 5.9 percent. This reduces flexibility in the operating budget and leaves fewer resources available for other priorities and programs, the comptroller contends.
“New York state has a history of misusing borrowing to pay for short-term needs while a backlog of long-term infrastructure projects languishes,” DiNapoli said. “Caps and other restrictions on debt set in statute have not worked to rein in our debt or stop inappropriate borrowing practices. New York needs comprehensive and binding debt reform to ensure more affordable borrowing levels, more responsible debt decisions, and greater accountability to the public.”
The state comptroller recommends the following debt-reform measures:
Establish comprehensive, binding debt limits. Meaningful debt reform needs to be addressed through a binding constitutional amendment to impose limits on all existing and future state debt. The calculation should be based on a rolling 10-year average of personal-income growth, which will provide enhanced stability and predictability for capital and debt-financing plans.
Provide accountability to voters. State debt limits should be subject to voter approval, and all state debt should be required to be issued by the state comptroller. “This would isolate long-term liabilities and their associated costs from the temptations of annual budget-cycle gimmicks and prevent short-sighted solutions for near-term budget relief,” DiNapoli contends.
Establish responsible and sustainable practices. All state debt should be required to be issued with a level or declining debt-service structure, be limited to a final maturity of 30 years or less, and must begin to be repaid within one year. The use of state debt should be precluded from solely benefiting private enterprise.
Give flexibility in times of emergency. The constitution’s emergency contingencies should be updated to account for the potential crises of the modern era, while establishing boundaries around such possible uses.
DiNapoli’s full report on state debt reform is available at: https://www.osc.state.ny.us/files/reports/pdf/roadmap-for-state-debt-reform.pdf