New York City and New York State manage debt limits to regulate how much they can borrow to fund infrastructure and other long-term capital investments. This page covers CBC’s work on Transitional Finance Authority borrowing, constitutional debt limits, capital planning processes, debt service affordability, and strategies for managing long-term liabilities.
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Index the TFA Statutory limit to 2.5 percent of total personal income to ensure the City’s debt capacity grows with its underlying economic capacity.
Formalize the City’s long-standing practice of keeping annual debt service costs below 15 percent of tax revenue to protect its operating budget and credit ratings.
Conduct a comprehensive review of each capital project to determine if it is necessary, properly scoped, and priced, while dropping unnecessary projects.
Amend the Constitutional debt limit to be more holistic by creating one limit based on an appropriate economic metric that covers all City debt repaid with tax revenues.
Continue to make procedural improvements within the City's power and lobby Albany for legislative and regulatory changes that would make capital planning and project delivery more efficient and effective.
Key Data
In April 2024, the CBC reported that the New York State Constitution limits New York City's outstanding debt to 10% of the average full valuation of taxable real property in the prior five years. Under this limit, the City held $96.9 billion in outstanding debt against a debt limit of $127.5 billion, leaving $30 billion of remaining borrowing power.
In April 2024, the CBC noted that the Transitional Finance Authority (TFA) Statutory limit had fallen from 3.3% of total personal income when the cap was last raised to 1.9% due to increasing personal income. State law permits the City to issue up to $13.5 billion in TFA bonds under this statutory limit.
In April 2024, the CBC highlighted that New York City has a non-codified policy to keep annual debt service payments below 15% of tax revenue to protect its operating budget and credit ratings, though there are no enforcement mechanisms for breaching this cap.
In September 2013, the CBC explained that under the Debt Reform Act of 2000, New York State's total outstanding state-supported debt is capped at 4% of personal income, while annual debt service is limited to 5% of total governmental fund receipts.
In September 2013, the CBC reported that for fiscal years ending in State fiscal year 2011-12, the state agencies and authorities had $180.3 billion in debt outstanding, with state-supported debt under the statutory limit at $52.8 billion and 13 public authorities holding $123.9 billion in debt outstanding.
This year, voters will choose the next New York City Comptroller, who will play a critical role holding the City Administration accountable, managing five pension funds with $280 billion in assets, and partnering in the issuance of billions of dollars of City debt. The Comptroller is important to New York City's fiscal…
New York City's current approach to managing its debt limit relies on arbitrary, negotiated increases that fail to account for long-term fiscal sustainability. Instead, the city should adopt a holistic framework that indexes debt capacity to personal income, formalizes debt service limits, and consolidates debt oversight to ensure capital projects remain affordable and prioritized.
Recommendations related to Debt Limit
Index the TFA Statutory limit to 2.5 percent of total personal income to ensure the City’s debt capacity grows with its underlying economic capacity.
Formalize the City’s long-standing practice of keeping annual debt service costs below 15 percent of tax revenue to protect its operating budget and credit ratings.
Conduct a comprehensive review of each capital project to determine if it is necessary, properly scoped, and priced, while dropping unnecessary projects.
Amend the Constitutional debt limit to be more holistic by creating one limit based on an appropriate economic metric that covers all City debt repaid with tax revenues.
Continue to make procedural improvements within the City's power and lobby Albany for legislative and regulatory changes that would make capital planning and project delivery more efficient and effective.
Key Data
$18.5 billion
— The amount of the increase to the TFA Statutory limit requested by New York City.
$12 billion
— The cumulative increase in debt capacity proposed by the State Executive Budget.
$13.5 billion
— The current TFA Statutory limit as of fiscal year 2023.
$152.2 billion
— The total cost of the current 10-year City-funded capital plan.
$17 billion
— The amount of additional spending on major capital projects identified by the City but not yet incorporated into its plan.
$96.9 billion
— The amount of outstanding debt held by the City against its Constitutional debt limit.
The proposal to increase New York City's borrowing capacity is premature because the city is projected to have $12.1 billion in debt capacity by the end of fiscal year 2026. Instead of raising the limit, the city should focus on improving capital planning, prioritization, and execution to ensure cost-effective investments.
Recommendations related to Debt Limit
The State should reject the proposal to increase the New York City Transitional Finance Authority’s (TFA) borrowing capacity that is outside of the City’s constitutional debt limit.
The City should improve its capital planning, prioritization, and execution to ensure that New Yorkers are being provided with cost-effective, targeted capital investments serving their City’s long-run needs.
The State should wait to reconsider the debt limit until the City has undertaken comprehensive efforts to improve its capital planning and execution and identifies needs that may be appropriately met with higher debt levels.
Key Data
$12.1 billion
— Expected debt capacity at the end of fiscal year 2026.
$95 billion
— The City's full 5-year capital plan.
CBC hosted a special panel discussion of prominent fiscal experts who helped New York overcome some of the most dire crises of the past. They provided insights and lessons from past experiences to help us understand and navigate the looming crisis. Stephen Berger Chairman, Odyssey Investment Partners; Former Executive Director,…
On February 22, 2017, New York State Budget Director Robert Mujica presented highlights from the New York State Executive Budget for Fiscal Year 2018 to the Citizens Budget Commission.
The New York State Executive Budget for fiscal year 2016-2017 is evaluated across several fiscal categories, noting that proposed capital projects could potentially push the state dangerously close to its statutory debt limit by fiscal year 2018. The budget proposal lacks a coordinated capital planning process, raising concerns about the state's ability to manage its long-term financial obligations.
This discussion took place as part of the CBC's Conference, The Most Important Economic and Fiscal Decisions Facing the Next Mayor, held on December 6, 2013 in New York City. Presenter: Maria Doulis Moderator: Anita Laremont Panelists: Rohit Aggarwala, Denise Richardson, Marcia Van Wagner, and Christopher Ward
New York City's capital spending has resulted in a high and growing debt burden, with debt service costs currently consuming 12 percent of city-funded expenditures and projected to rise to 13.7 percent by fiscal year 2017. To address this, the city should implement a 'fix it first' strategy, establish clear investment standards for debt and pay-as-you-go capital, and reform contracting rules to improve efficiency and reduce costs.
Recommendations related to Debt Limit
The next administration should articulate a standard for keeping debt from becoming unaffordable.
The administration should develop criteria for paying for some capital expenses from the operating budget to help keep the long-run debt burden manageable.
The City should adopt a 'fix it first' strategy, in which state of good repair projects receive priority at each agency.
The City should renew its Project Labor Agreements to reduce labor costs and improve managerial flexibility.
City leaders should advocate for a repeal of Wicks Law and an expansion of the city’s toolbox for effective contracting.
Key Data
$100 billion
— The amount of city-related debt outstanding as of fiscal year 2014.
12 percent
— The share of city-funded expenditures currently consumed by debt service.
13.7 percent
— The projected share of city-funded expenditures that will be consumed by debt service by fiscal year 2017.
$67.6 billion
— The city's total debt in fiscal year 2013.
$108.4 billion
— The projected city debt in fiscal year 2017, including the Water Authority.
New York State's capital plan faces challenges regarding affordability and debt capacity, with projections indicating that debt outstanding will be just $641 million below the statutory debt limit by fiscal year 2016-17. To improve financial oversight, the state should adopt a framework similar to New York City's Annual Statement of Debt Affordability to better assess the long-term impact of capital investments on debt levels.
Recommendations related to Debt Limit
The state should establish a framework for assessing the affordability of the capital plan, using New York City’s Annual Statement of Debt Affordability as a potential model.
The state should reconcile discrepancies in reporting and standardize the approach to commitments versus financing and disbursements to ensure accurate debt and spending assessments.
Future capital plans should include a fuller picture of how the state plans to pay for its investments to better manage debt and affordability.
Key Data
$641 million
— Projected amount that debt outstanding will be below the debt limit by fiscal year 2016-17.
$180.3 billion
— Total debt outstanding for agencies and authorities included in the capital plan for fiscal years ending in 2011-12.
$52.8 billion
— State-supported debt under the Debt Reform Act (DRA) debt limit.
$123.9 billion
— Debt outstanding for thirteen public authorities, including the Dormitory Authority, Empire State Development, the MTA, and the Port Authority of New York and New Jersey.
$3.6 billion
— State-related debt not counted under the DRA limit but backed by State guarantees.
New York City faces a high and growing debt burden, with debt service projected to rise to 17 percent of city-funded expenditures by fiscal year 2017. The next administration must navigate difficult trade-offs between essential infrastructure maintenance, climate resiliency investments, and maintaining debt affordability.
Recommendations related to Debt Limit
The next mayor must make difficult trade-offs between competing priorities while ensuring the city’s debt does not become unaffordable.
The next mayor will have to determine a level of long-term capital investment that takes into account the city’s already high debt burden.
Future capital planning must incorporate proposals to make the city more resilient in the face of threats from climate change.
The next mayor must prioritize difficult trade-offs among infrastructure needs and resiliency efforts to keep debt from becoming unaffordable.
Key Data
$67.9 billion
— City debt outstanding in fiscal year 2013.
45 percent
— Growth in city debt outstanding since 2003.
11 percent
— Projected growth in city debt to $75.5 billion by fiscal year 2017.
14 percent
— Ratio of debt outstanding to personal income in fiscal year 2013.
17 percent
— Projected debt service as a share of city-funded expenditures by fiscal year 2017.
30 percent
— Projected growth in debt service from $6.1 billion to $7.8 billion by fiscal year 2017.
The fiscal year 2012-13 New York State budget includes a necessary increase to the Metropolitan Transportation Authority's debt cap and provides $770 million in capital support to help the agency complete its five-year capital plan. While the budget reflects positive fiscal discipline and limited reliance on gimmicks, the Metropolitan Transportation Authority continues to face resource challenges that require ongoing attention.
Recommendations related to Debt Limit
The Metropolitan Transportation Authority (MTA) requires the Legislature to raise its debt cap and provide sufficient capital support to complete its current five-year capital plan.
Key Data
$770 million
— Capital support provided to the Metropolitan Transportation Authority to help complete its current five-year capital plan.
$150 million
— Capital grant provided to the Metropolitan Transportation Authority as part of its capital support.
New York State's debt burden is in a "danger zone," ranking fourth highest among all states with a debt-to-resource ratio of 1.099. To exit this danger zone, the state would need to reduce its long-term liabilities, specifically its $120.0 billion in 2008 obligations, by $20.4 billion.
Recommendations related to Debt Limit
In order for New York to be below the danger zone threshold, it would have to lower its long-term liabilities from the 2008 level of $120.0 billion by $20.4 billion.
If all the reduction were in long-term bonds, then that debt would have to be lowered from $71.9 billion to $51.5 billion.
Governments should add unfunded pension obligations and unfunded obligations for other post-employment benefits (OPEB) to the state's bonded debt when considering the ability of an entity to repay its debt.
Key Data
$120.0 billion
— New York's long-term liabilities in 2008.
$20.4 billion
— The amount New York would need to reduce its long-term liabilities by to exit the danger zone.
$71.9 billion
— New York's long-term bond debt in 2008.
$51.5 billion
— The target level for New York's long-term bond debt to exit the danger zone.
1.099
— New York's debt-to-resource ratio, which ranks fourth highest among all states.
4
— New York's rank among states for the highest debt-to-resource ratio.
New York State's debt has reached a historic high of $50 billion, with approximately 20 percent of that debt used to cover operating deficits rather than capital projects. To address this, the state must implement reforms to stop using debt for operating expenses, integrate authority borrowing into the capital plan, and establish rigorous financial reviews for authority debt.
Recommendations related to Debt Limit
The state should stop issuing state-funded debt to cover operating deficits.
The state should make authorities' borrowing part of the state's capital plan.
The state should institutionalize rigorous financial review of authority borrowing.
The state should reduce future debt for capital spending.
Key Data
$50 billion
— New York state's debt hit this historic high during the fiscal year ending March 31, 2007.
$2,700
— The per-capita debt amount for every man, woman, and child in the state.
$4 billion
— The amount of debt added in the past year.
8 percent
— The one-year growth rate of state debt.
$2.2 billion
— The cash surplus the state ended the year with.
20 percent
— The portion of state debt, or nearly $12 billion, that has gone for operating costs.
New York's outstanding debt issued by public authorities has reached $166 billion, largely due to "back door" borrowing that bypasses voter approval and constitutional limits. A new constitutional debt limit is necessary to ensure all state-supported debt is used for true capital purposes and to bring transparency to the state's borrowing practices.
Recommendations related to Debt Limit
The state should adopt a new constitutional limit that would apply to all state-supported debt, including any issued by authorities.
The constitution should limit this debt to true capital purposes.
The governor and the budget director should be given responsibility for preparing a comprehensive, multi-year capital plan that includes state agencies and authorities.
The Public Authorities Control Board ought to be abolished because it has not been doing its job adequately.
There should be more competition among private entities for tax-exempt benefits to prevent favoritism.
Key Data
$166 billion
— Outstanding debt of New York's public authorities.
$227 billion
— Total outstanding debt issued by New York state and local governments and their authorities.
$10 billion
— Amount New York's elected leaders borrow too much according to recent analysis.
$45 billion
— Current state-supported debt.
$4 billion
— Amount of "back door" debt, representing 9 percent of current state-supported debt.
New York State faces a critical financial situation with excessive debt levels that lack effective legal constraints, leading to significant "backdoor" borrowing to cover operating deficits. To address this, the state must implement constitutional reforms that establish binding, affordability-based debt limits and restrict the use of borrowed funds to long-term capital investments.
Recommendations related to Debt Limit
Voters should reject bond referendums such as the Transportation Bond Act of 2005 until debt is brought under control.
The State needs a new constitutional limit that does not require voter approval for every debt issuance, but does impose a binding limit that is linked to ability to pay.
Modern constitutional limits should establish a new debt limit based on the concept of affordability as determined by an independent Debt Policy Committee.
Modern constitutional limits should apply the limit to all forms of state-backed debt, including such bonds issued by authorities.
Modern constitutional limits should restrict the use of borrowed funds to true capital investments.
Key Data
$46.7 billion
— Total outstanding state-funded debt in New York State.
$43.0 billion
— Amount of 'backdoor' borrowing that does not require voter approval.
$11.5 billion
— Amount of backdoor borrowing used to underwrite annual operating deficits instead of long-term capital projects.
$19 billion
— Amount of new debt planned in the next five years.
$2.9 billion
— Amount of borrowing authorized by the Transportation Bond Act of 2005.
$7 billion
— Borrowing exempted from the statutory limit in fiscal years 2003 and 2004.
New York State and New York City have accumulated significant debt that exceeds prudent levels, necessitating a new approach to defining and managing debt affordability. By establishing independent debt policy committees and amending constitutional limits to reflect modern economic realities, the state and city can better align borrowing with actual fiscal capacity and protect their long-term economic competitiveness.
Recommendations related to Debt Limit
New York State's elected leaders should bring the State's debt burden below the danger zone threshold identified in this report, and New York City's leaders should keep their debt below the relevant danger zone threshold.
New York City and New York State should create Debt Policy Committees to recommend long-run debt strategies and annual debt issuance limits.
The State Constitution should be amended to establish new limits on State and City debt.
Key Data
$35.8 billion
— State debt at the end of the 1999 fiscal year.
$46.8 billion
— City debt at the end of the 1999 fiscal year.
$29.2 billion
— State-supported debt threshold in 1997, below which the state should have remained.
$33.1 billion
— Actual State-supported debt in 1997.
$36.6 billion
— New York City's actual debt at the end of fiscal year 2000.
$2.2 billion
— Amount New York City's actual debt was below the projected danger zone at the end of fiscal year 2000.
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