State debt management in New York involves the issuance of bonds and other financial instruments to fund capital infrastructure projects and manage the state's cash flow. This page covers CBC’s work on constitutional debt caps, executive borrowing authority, short-term revenue anticipation notes, capital planning processes, and fiscal oversight of state authorities.
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The State should modify its capital plan for the current period of fiscal stress and eliminate unproductive economic development capital spending.
Eliminating 50 percent of most Empire State Development (ESD) economic development capital spending decreases projected debt service between $36 million and $134 million annually during the financial plan period.
Prioritizing essential projects should allow an additional 10 percent reduction in capital spending, reducing annual debt service by $36 million to $132 million annually during the plan period.
Using debt to finance the remaining 90 percent of capital projects now funded on a pay-as-you-go (paygo) basis would save a net $3.2 billion in fiscal year 2021, decreasing to $2.1 billion in fiscal year 2024.
The tax revenues or legal settlement funds used now to fund these capital projects could instead be used to close budget gaps and preserve intergenerational equity by funding investments over the useful life of the project.
Key Data
In March 2026, the CBC and other watchdogs urged the rejection of a proposal to grant the Executive permanent authority to issue revenue anticipation notes totaling $3 billion annually outside of the normal budget process.
In December 2022, the CBC reported that while the Debt Reform Act of 2000 caps outstanding State-supported debt at 4% of personal income, the State bypassed this limit during the pandemic, creating roughly $19 billion in additional uncapped outstanding debt and pushing projected State-supported debt to $88 billion by fiscal year 2027.
As of December 2022, the Authorities Budget Office (ABO) oversaw close to 600 State and local authorities that held a combined total of $273 billion in public debt.
In February 2021, the CBC criticized a proposal to grant the State authority to issue up to $11 billion of debt for operations, warning that borrowing for operating expenses increases long-term costs and obligates future taxpayers.
In May 2020, the CBC explained that at then-current interest rates for 30-year bonds, avoiding $100 million in capital spending would yield approximately $6.5 million in annual debt service savings for the operating budget.
New York State's proposed executive budget includes provisions that would grant the executive branch broad, unnecessary control over borrowing and spending, including the authority to issue $3 billion in revenue anticipation notes annually. These measures, along with proposed reductions in oversight for state contracts and emergency appropriations, should be rejected to maintain fiscal accountability and transparency.
Recommendations related to State Debt Management
The Legislature should reject the permanent executive authority to issue revenue anticipation notes totaling $3 billion annually, as in prior years.
The Legislature should reduce the “Special Emergency Appropriation” from $2 billion to $1 billion, its level prior to the pandemic.
The Legislature should reject the $1 billion transfer from the General Fund to the “Health Care Transformation Account,” unless its uses are defined in appropriations.
The Legislature should reject universal appropriation transfer and interchange authority included in the State Operations bill.
The Legislature should reject language that exempts individual appropriations from competitive bidding requirements and Comptroller pre-audit oversight.
Key Data
$3 billion
— The amount of revenue anticipation notes the executive branch is seeking permanent authority to issue annually.
$2 billion
— The current level of the 'Special Emergency Appropriation' that is proposed to be reduced.
$1 billion
— The proposed level for the 'Special Emergency Appropriation' and the amount of the transfer from the General Fund to the 'Health Care Transformation Account'.
Blake G. Washington is the Budget Director for the State of New York, appointed by Governor Kathy Hochul. Mr. Washington is responsible for the development and management of the New York State budget and leads a team of public servants to administer the fiscal duties of the state, including economic…
New York State faces a structural budget gap of $20 billion annually, requiring difficult choices to ensure long-term fiscal stability and effective service delivery. To improve financial accountability, the state should implement transparency measures such as enshrining the State’s debt cap in the Constitution.
Recommendations related to State Debt Management
State leaders should improve budget transparency and accountability by enshrining the State’s debt cap in the Constitution.
The Fiscal Year 2026 Executive Budget includes provisions that would grant the Governor unilateral authority to spend and borrow without legislative or comptroller oversight, which are unnecessary and fiscally risky. These measures, originally enacted as temporary pandemic responses, should be rejected to prevent unchecked executive control over state finances.
Recommendations related to State Debt Management
Reject universal appropriation transfer and interchange authority within the State Operations bill to prevent the unilateral re-programming of spending authorizations without legislative input.
Reject the Governor’s permanent authority to issue up to $4 billion in short-term revenue anticipation notes.
Reject a $1 billion transfer from the General Fund to the “Health Care Transformation Account” unless its uses are more clearly defined in appropriations.
Reject provisions added to individual appropriations that remove competitive bidding requirements and the Comptroller’s oversight.
Reduce the “Special Emergency Appropriation” from $2 billion to $1 billion.
Key Data
$4 billion
— The amount of short-term revenue anticipation notes the Governor is seeking permanent authority to issue.
$1 billion
— The amount of the transfer from the General Fund to the 'Health Care Transformation Account' that should be rejected unless uses are clearly defined.
$2 billion
— The current level of the 'Special Emergency Appropriation' that should be reduced.
$1 billion
— The reduced level to which the 'Special Emergency Appropriation' should be lowered.
New York State should reject proposals in the upcoming executive budget that grant the executive branch extraordinary fiscal authorities, such as limiting the Comptroller's oversight of bond transactions and authorizing billions in short-term borrowing. These powers, originally enacted for pandemic-era flexibility, are no longer necessary and undermine essential checks and balances on state spending and debt management.
Recommendations related to State Debt Management
The budget should not remove competitive bidding requirements and the Comptroller’s oversight via provisions added to individual appropriations.
The budget should not limit the scope of Comptroller review of certain bond transactions, as proposed for the first time in last year’s Executive Budget.
The budget should not allow universal appropriation transfer and interchange authority within the State Operations bill.
The budget should not authorize up to $4 billion in short-term revenue anticipation notes.
The budget should not authorize transfer of $1 billion from the General Fund to the “Health Care Transformation Account” absent more clearly defined uses in appropriations.
The budget should not increase the “Special Emergency Appropriation” from $1 billion to $2 billion.
Key Data
$4 billion
— The amount of short-term revenue anticipation notes the budget should not authorize.
$1 billion
— The amount of funds the budget should not authorize for transfer from the General Fund to the 'Health Care Transformation Account'.
$1 billion
— The current level of the 'Special Emergency Appropriation' that should not be increased.
$2 billion
— The proposed level of the 'Special Emergency Appropriation' that should not be enacted.
The state should reject proposals that grant the Governor unchecked authority to manage budgets and issue debt, as these extraordinary powers are no longer necessary four years after the pandemic. Legislative leaders are urged to maintain oversight on bond transactions, competitive bidding, and emergency appropriations to ensure fiscal accountability.
Recommendations related to State Debt Management
Reject the proposal to limit the scope of Comptroller review of certain bond transactions, as proposed in sections 49 and 50 of Part X of the Public Protection and General Government bill.
Reject universal appropriation transfer and interchange authority within the State Operations bill.
Reject the Governor’s permanent authority to issue up to $4 billion in short-term revenue anticipation notes.
Reject a $1 billion transfer from the General Fund to the “Health Care Transformation Account,” unless its uses are more clearly defined in appropriations.
Reject provisions added to individual appropriations that remove competitive bidding requirements and the Comptroller’s oversight.
Reduce the “Special Emergency Appropriation” from $2 billion to $1 billion.
Key Data
$4 billion
— The Governor's permanent authority to issue short-term revenue anticipation notes.
$1 billion
— The proposed transfer from the General Fund to the 'Health Care Transformation Account' that requires clearer definition.
$2 billion
— The current level of the 'Special Emergency Appropriation' that should be reduced.
$1 billion
— The reduced level to which the 'Special Emergency Appropriation' should be lowered.
The Fiscal Year 2025 Executive Budget includes provisions that grant the Governor broad, unilateral spending and borrowing authorities, which threaten fiscal oversight and risk ballooning future debt service costs. Watchdog groups urge the Legislature to reject these measures, including limits on Comptroller review of bond transactions and excessive emergency appropriations, to maintain necessary fiscal checks and balances.
Recommendations related to State Debt Management
Reject universal appropriation transfer and interchange authority within the State Operations bill.
Reject the Governor’s permanent authority to issue up to $4 billion in short-term revenue anticipation notes.
Reject a $1 billion transfer from the General Fund to the “Health Care Transformation Account” unless its uses are more clearly defined in appropriations.
Reject provisions added to individual appropriations that remove competitive bidding requirements and the Comptroller’s oversight.
Reduce the "Special Emergency Appropriation" from $2 billion to $1 billion.
Reject the proposal to limit the scope of Comptroller review of certain bond transactions, as proposed in sections 49 and 50 of Part X of the Public Protection and General Government bill.
Key Data
$4 billion
— The amount of short-term revenue anticipation notes the Governor seeks permanent authority to issue.
$1 billion
— The amount of the proposed transfer from the General Fund to the “Health Care Transformation Account”.
$2 billion
— The current size of the "Special Emergency Appropriation" that is proposed to be reduced.
$1 billion
— The reduced amount proposed for the "Special Emergency Appropriation".
Blake G. Washington is the Budget Director for the State of New York, appointed by Governor Kathy Hochul. Mr. Washington is responsible for the development and management of the New York State budget and leads a team of public servants to administer the fiscal duties of the state, including economic…
New York State has made minimal progress in implementing structural reforms to improve fiscal stability, transparency, and accountability, with only one of twelve recommended changes enacted. The state continues to lack necessary oversight mechanisms, such as an independent fiscal analyst's office and comprehensive long-term capital planning, while failing to adequately address debt management and budget transparency.
Recommendations related to State Debt Management
The State should strengthen the debt cap by applying it more comprehensively and codifying it in the Constitution, as the existing cap is too easily subverted.
The State should fully fund the Authorities Budget Office to at least $5 million annually, as it provides necessary oversight of hundreds of authorities with billions of dollars in debt and spending.
Key Data
$2.9 million
— Previous annual funding for the Authorities Budget Office.
$3.4 million
— Current annual funding for the Authorities Budget Office.
$5 million
— Recommended annual funding for the Authorities Budget Office to provide appropriate oversight of authorities with billions in debt.
New York State's proposed budget includes unnecessary and risky executive powers that grant unilateral authority to borrow funds and bypass competitive bidding or oversight. Legislators are urged to reject these provisions, specifically the authorization for $3 billion in revenue anticipation notes and a $2 billion line of credit, to restore fiscal accountability.
Recommendations related to State Debt Management
The Legislature should reject the authority to issue up to $3 billion in revenue anticipation notes to prevent unnecessary short-term borrowing.
The Legislature should reject the authority to utilize a $2 billion line of credit, which grants the Executive unchecked borrowing power.
The Legislature should reject short-term borrowing authorities that were originally enacted as a temporary response to the COVID-19 pandemic.
Key Data
$3 billion
— The amount of revenue anticipation notes the Executive is seeking authority to issue.
$2 billion
— The value of the line of credit the Executive is seeking authority to utilize.
New York State's current debt cap is easily subverted and excludes certain types of debt, necessitating reforms to ensure long-term fiscal sustainability. The State should broaden the debt cap to include all State-supported debt and codify it in the Constitution to prevent future circumvention and ensure debt remains affordable.
Recommendations related to State Debt Management
The State should broaden the debt cap to include all State-supported debt to ensure debt and debt service are affordable.
The State should codify the debt cap in the Constitution to prevent it from being easily subverted through regular legislation.
The State should allow only limited exceptions to the debt cap in the event of emergencies and natural disasters.
Key Data
$88 billion
— Projected State-supported debt by fiscal year 2027.
$71 billion
— Expected State-supported debt by fiscal year 2027 prior to debt cap exemptions.
$51.8 billion
— Outstanding debt subject to the cap prior to the pandemic.
$55.5 billion
— The debt cap limit prior to pandemic-related exemptions.
$30 million
— Amount of State-guaranteed debt not subject to the cap.
New York State added $1.6 billion in capital projects to the fiscal year 2023 budget without prior evaluation, relying on lump sum appropriations that lack transparency and consume limited state debt capacity. These practices undermine sound budgeting by prioritizing political considerations over rigorous planning and threaten the state's ability to finance future critical infrastructure needs.
Recommendations related to State Debt Management
The State should utilize a comprehensive capital planning process that identifies needs and project benefits, allocates funds to projects that meet the greatest needs and deliver value, reasonably specifies projects in appropriations, and provides transparency on the spending of previously appropriated lump sums.
Going forward, the Governor and Legislature should not authorize lump sum appropriations for capital projects or otherwise, as they pose a fiscal risk and lack oversight.
The Executive should provide transparency on disbursements of existing lump sum pots by reporting details of spending, including the timing, amount, recipient, and purpose of awards.
Key Data
$1.6 billion
— The amount of new capital appropriations added to the fiscal year 2023 enacted budget that were not included in prior proposals.
$920 million
— The portion of the $1.6 billion in late capital additions that was appropriated in a few lump sums.
$656 million
— The portion of the $1.6 billion in late capital additions that was allocated for specific projects.
$1.2 billion
— The amount of the new capital projects that may be financed through bonds, thereby consuming State debt capacity.
$418 million
— The amount of funding for the Buffalo Bills Stadium that will be paid for with current money rather than long-term bonds.
The state's fiscal outlook is stable, rendering broad, unilateral executive spending and borrowing powers unnecessary and fiscally risky. Legislators should reject or amend these proposals to ensure proper oversight and transparency, as the emergency conditions that originally justified such flexibility have passed.
Recommendations related to State Debt Management
The Legislature should reject the $6 billion “Special Public Health Emergency Appropriation” to prevent unnecessary spending.
The Legislature should reject the universal appropriation transfer and interchange authority within the State Operations bill to maintain legislative oversight.
The Legislature should reject the authority to issue up to $3 billion in revenue anticipation notes to limit unchecked borrowing.
The Legislature should reject the authority to utilize a $2 billion line of credit to avoid unnecessary fiscal risk.
The Legislature should amend the $2 billion “Special Emergency Appropriation” to restore it to its original $1 billion level and reinstate Comptroller oversight.
The Legislature should amend the $2 billion appropriation for “Reserve For COVID-19 Public Health Response” to require clearly defined line items with oversight.
The Legislature should amend the $1 billion transfer from the General Fund to the “Health Care Transformation Account” to ensure the funds are appropriated as clearly defined line items.
Key Data
$6 billion
— Proposed “Special Public Health Emergency Appropriation” that should be rejected.
$3 billion
— Proposed authority to issue revenue anticipation notes that should be rejected.
$2 billion
— Proposed authority to utilize a line of credit that should be rejected.
$4.5 billion
— Amount of short-term “liquidity financing” borrowing utilized by the State during the pandemic.
$15 billion
— Average annual tax receipts losses estimated during the initial pandemic response.
New York State should avoid using long-term debt to fund operating expenses, treating it as a last resort only after exhausting other fiscal strategies and implementing strict oversight. Any necessary borrowing must be part of a comprehensive, GAAP-compliant fiscal stability plan that prevents unsustainable spending increases and ensures long-term financial health.
Recommendations related to State Debt Management
The State should balance this year’s budget without long-term borrowing for operating expenses.
The amount of debt used should be limited to what is needed after the State exhausts other gap-closing strategies and uses new federal aid to reduce budget gaps.
Borrowing should not be used to increase state operating spending, inclusive of any federal stimulus aid, more than 2 percent or the inflation rate, whichever is lower.
Borrowing should be part of a comprehensive and feasible multiyear plan that leads to fiscal stability and is presented in accordance with GAAP.
The State Comptroller should assess whether the fiscal stability plan is realistic and feasible, and approve each instance of borrowing for operations only if it comports with a realistic and feasible plan.
The State should adopt, in law and practice, fiscal integrity and transparency measures that include the transition to an annual State operating funds budget that is balanced in proposal, adoption and at year end in accordance with GAAP.
Key Data
$11 billion
— The amount of debt the State is proposed to have the authority to issue for operations.
$1.7 billion
— The amount of Medicaid payments shifted by three days to obscure the program's fiscal outlook.
2 percent
— The maximum rate by which state operating spending should increase when borrowing is used.
$8 billion
— The amount of short-term debt the State is proposed to have the authority to issue for one year.
$3 billion
— The amount of a line of credit for state agencies proposed in the Fiscal Year 2022 Executive Budget.
New York State faces significant fiscal pressure, with the potential to misuse short-term debt by converting it into long-term obligations to fund current operations. To maintain fiscal health, the state should prioritize borrowing only for essential capital investments and avoid using debt to cover recurring operational expenses.
Recommendations related to State Debt Management
The Fiscal Year 2022 Executive Budget should increase use of debt to finance capital expenses and limit capital expenses to investments that are necessary to maintain critical infrastructure, preserve public health and safety, and provide demonstrable economic benefits.
Borrowing for operations should be a last resort, used only after the State exhausts less harmful strategies, and should be accompanied by a multi-year fiscal stability plan and increased transparency and oversight.
The State should not convert this short-term debt to long-term debt.
Key Data
$11 billion
— The amount of short-term debt the Division of the Budget was authorized to issue as part of the Fiscal Year 2021 Budget.
$4.5 billion
— The amount of debt the State issued to cover delayed personal income tax filings from April 15 to July 15.
$3.5 billion
— The amount of short-term debt the State reportedly plans to repay within the fiscal year, which it could otherwise choose to delay and convert to long-term debt.
$1 billion
— The amount of short-term debt the State repaid in December.
New York State should address its fiscal stress by eliminating unproductive economic development capital spending and prioritizing essential projects to reduce debt service costs. Furthermore, shifting the financing of capital projects from pay-as-you-go to debt can generate billions in savings, preserving intergenerational equity by aligning funding with the useful life of the projects.
Recommendations related to State Debt Management
The State should modify its capital plan for the current period of fiscal stress and eliminate unproductive economic development capital spending.
Eliminating 50 percent of most Empire State Development (ESD) economic development capital spending decreases projected debt service between $36 million and $134 million annually during the financial plan period.
Prioritizing essential projects should allow an additional 10 percent reduction in capital spending, reducing annual debt service by $36 million to $132 million annually during the plan period.
Using debt to finance the remaining 90 percent of capital projects now funded on a pay-as-you-go (paygo) basis would save a net $3.2 billion in fiscal year 2021, decreasing to $2.1 billion in fiscal year 2024.
The tax revenues or legal settlement funds used now to fund these capital projects could instead be used to close budget gaps and preserve intergenerational equity by funding investments over the useful life of the project.
Key Data
$36 million to $134 million
— Annual debt service savings from eliminating 50 percent of Empire State Development economic development capital spending.
$36 million to $132 million
— Annual debt service savings from a 10 percent reduction in capital spending.
$3.2 billion
— Net savings in fiscal year 2021 from using debt to finance 90 percent of capital projects currently funded on a pay-as-you-go basis.
$2.1 billion
— Net savings in fiscal year 2024 from using debt to finance 90 percent of capital projects currently funded on a pay-as-you-go basis.
Governments facing fiscal stress should prioritize intergenerational equity by avoiding long-term borrowing for operating expenses and ensuring capital investments are financed over the useful life of the asset. Strategies for balancing budgets should focus on sustainable measures like using reserves and efficient expenditure reductions rather than relying on debt restructuring or borrowing that burdens future taxpayers.
Recommendations related to State Debt Management
Avoid long-term borrowing for operations because it violates the principle of intergenerational equity by requiring future taxpayers to pay for services consumed by current residents.
Finance capital investments with bonds of a duration equal to the useful life of the asset to ensure debt service is equal across years.
Use proceeds from asset sales to create equivalent value on the balance sheet by funding capital investments or maintaining reserves rather than supporting operations.
Minimize the negative impacts of reducing capital investments by cutting non-essential infrastructure projects or postponing desirable expansions that are not critical.
Use no more than two-thirds of any rainy day fund in the first year to ensure resources remain available for future needs.
Key Data
$100 million
— Amount of capital spending avoided that saves about $6.5 million annually in debt service at current interest rates for 30-year bonds.
$6.5 million
— Annual savings in debt service achieved by avoiding $100 million of capital spending at current interest rates for 30-year bonds.
The New York State Fiscal Year 2021 budget relies on significant short-term borrowing to address revenue shortfalls, with authorization for $8 billion in borrowing and a $3 billion line of credit. While some borrowing is necessary due to tax filing extensions, using long-term debt to fund operating expenses risks burdening future generations and should be avoided as a last resort.
Recommendations related to State Debt Management
The new midyear modification process lacks sufficient transparency and accountability; this should be rectified in practice.
The Executive should make its plan publicly available so that the Legislature and public can review and debate.
The Legislature should generate its own contingency plans as soon as possible, so that it can productively respond within the 10-day period if it so chooses.
The State should not extend or repay short-term debt with long-term debt.
Using long-term debt for operating purposes should only be done as a last resort.
Key Data
$7 billion
— Budget gap faced by New York State even before the current economic disruption.
$15 billion
— Estimated revenue loss in the current fiscal year due to economic disruption.
$1.1 billion
— Increased federal aid provided for education in fiscal year 2021.
$4.5 billion
— Increased federal aid provided for Medicaid in fiscal year 2021.
$250 million
— Cost of support for distressed hospitals shifted to local governments.
$8 billion
— Amount of short-term borrowing authorized to cover liquidity needs due to the extension of the income tax filing deadline.
New York State is nearing its statutory debt limit, which restricts its ability to finance capital projects through borrowing. To avoid hitting this ceiling, the state should prioritize essential infrastructure investments over discretionary spending and ensure all capital allocations are decided during the formal budget process.
Recommendations related to State Debt Management
The State should limit capital spending to investments justified on the basis of need or rate of return, particularly since it is approaching its statutory debt limit.
The State should be very cautious about adding more debt to finance capital spending.
If the State is going to add debt-funded capital appropriations, the additional spending should be limited to significant state infrastructure investments.
Absent an emergency, State spending should be allocated during the budget process, where state leaders can adequately consider priorities and tradeoffs.
The legislature should close out session without passing any capital pork.
Key Data
$1.4 billion
— Debt capacity available in fiscal year 2021.
$107 million
— Available debt capacity remaining by fiscal year 2024.
$1.9 billion
— Amount the State and Municipal (SAM) Facilities Program is authorized to provide in small grants.
$157 million
— Reappropriation from 2008 for the New York State Capital Assistance Program.
$475 million
— Amount of SAM funding in the fiscal year 2019 budget.
4 percent
— Cap on state debt as a percentage of personal income established by the Debt Reform Act of 2000.
New York's state-funded debt and debt service have stabilized over the last nine years, with debt outstanding increasing 8 percent to $66.7 billion and debt service rising 11 percent to $7.3 billion since fiscal year 2011. Despite this stabilization, the state's debt burden remains high, ranking 9th in debt per capita and 15th for state debt as a share of personal income as of 2015.
Key Data
$66.7 billion
— Total state debt outstanding as of the most recent fiscal year, representing an 8 percent increase since fiscal year 2011.
$7.3 billion
— Annual state debt service costs, which have increased 11 percent since fiscal year 2011.
9th
— New York's ranking for debt per capita among states as of 2015.
15th
— New York's ranking for state debt as a share of state personal income as of 2015.
3.1 miles is the length of the newly constructed Governor Mario M. Cuomo Bridge. At a cost of $4 billion dollars, the bridge was financed with debt, but no new tolls have been announced to repay it. CBC's Patrick Orecki explains why the toll may need to double from current…
The state's reliance on speculative, nonrecurring revenue from health insurer conversions to fund ongoing Medicaid costs creates significant budget risks and is fiscally imprudent. Instead, such finite resources should be reserved for one-time expenses, such as capital investments or repaying debt, rather than supporting recurring state operations.
Recommendations related to State Debt Management
Nonrecurring resources are best used to repay debt, support capital investments, increase reserves, or make possible other desirable one-time expenses.
The State budget and financial plan should not depend on revenue from speculative health insurer conversions.
Any proceeds earned by the State should be used to bolster reserves or fund one-time costs after proceeds are received by the State.
The State should avoid using nonrecurring windfall revenues to pay for ongoing activities like the Medicaid program.
The State should not rely on speculative, nonrecurring windfall revenues to support State operations.
Key Data
$4.6 billion
— Total conversion proceeds generated for the State from fiscal year 2006 to fiscal year 2010.
$3.75 billion
— Publicized price for the acquisition of nonprofit Fidelis by for-profit Centene.
$95 million
— Actual conversion proceeds received by the State from fiscal year 2009 to fiscal year 2012, despite a $2.4 billion projection.
$2.7 billion
— Peak receipts from conversions of insurers from nonprofit to for-profit status in a single year over a decade ago.
$500 million
— Amount of annual revenue the Governor's plan proposes to use to help pay for the Medicaid program.
$250 million
— Amount of annual revenue the Governor's plan proposes to put into a reserve to offset future federal cuts in health programs.
The Mario M. Cuomo Bridge project requires a significant toll increase to cover approximately $2.9 billion in long-term debt service costs, as current plans to freeze tolls through 2020 delay necessary revenue collection. Rather than implementing a systemwide toll hike that would inequitably burden drivers who do not use the new bridge, the state should increase tolls on the bridge itself to ensure those benefiting from the infrastructure cover its construction and maintenance costs.
Recommendations related to State Debt Management
Increasing the toll on the new Cuomo Bridge alone is the appropriate approach, and the new toll should cover all of the bridge’s debt and maintenance costs.
The Thruway Authority should reconsider the toll freeze and increase tolls by the rate necessary to service the debt when the costs are payable.
There should be transparency and public discussion on the toll increase now, as the bridge is opened for use.
The state should effectuate a toll increase that covers all of the increased debt service costs when the asset begins serving users.
Key Data
$2.9 Billion
— Amount in long-term loans and bonds that will need to be repaid for the bridge project.
$174 Million
— Average annual debt service costs for the Cuomo Bridge's loans and bonds.
24%
— Increase on all Thruway tolls required to fund the increase in debt service if the bridge debt is spread across the entire system.
$10.61
— Projected high-end toll for passenger vehicles using E-Z Pass.
$4 Billion
— Total projected cost of the Cuomo Bridge.
$1.6 Billion
— Federal TIFIA loan amount granted for the bridge replacement.
New York State's transportation capital planning is constrained by statewide debt limits, which are capped at 4 percent of personal income and 5 percent of the state budget. While projections suggest the state will approach these debt caps in the coming years, historical experience indicates that the state often maintains more debt capacity than initially forecasted.
Key Data
$59.5 billion
— Projected debt outstanding by fiscal year 2022.
$60 billion
— Projected debt cap for the state.
$6.2 billion
— Actual remaining debt capacity at the end of fiscal year 2017.
$772 million
— Projected remaining debt capacity for fiscal year 2017 as estimated in the fiscal year 2014 budget.
New York's fiscal health is ranked 39th nationally, largely due to high long-term debt and significant unfunded postemployment benefit liabilities. To improve this standing, the state should prioritize funding capital projects through pay-as-you-go methods and implement reforms to post-retirement health benefits.
Recommendations related to State Debt Management
To improve the State’s financial health, New York’s leaders should focus on decreasing long-term debt and reducing the State’s OPEB liabilities.
New York must do a better job of funding its capital expenses on a pay-as-you-go basis and look to innovative development tools, such as public-private partnerships, to expand capital investment more efficiently without increasing the State’s debt burden.
The State created a new postemployment benefit trust fund in the Enacted Budget for Fiscal Year 2018 and should go further to adopt proposals to reform post-retirement health benefits rejected by the Legislature and begin contributing toward the new trust fund.
Key Data
39th
— New York's fiscal health rank out of 50 states.
$9.4 billion
— New York's All Funds cash balance at the end of March 2015.
$14.8 billion
— New York's All Funds cash balance at the end of June 2015.
$23.6 billion
— Cash, cash equivalents, and investments on hand at the end of fiscal year 2015.
45th
— New York's rank for outstanding OPEB liability per thousand dollars of income.
10 to 1
— Average state ratio of pension liabilities to OPEB liabilities.
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 controversy surrounding the Sales Tax Asset Receivable Corporation (STARC) involves a dispute over $600 million in sales tax revenue after the City borrowed $637 million more than necessary during a bond refunding. Rather than splitting these funds, the contested money should be used to pay off outstanding long-term debt to provide lasting relief for taxpayers.
Recommendations related to State Debt Management
The best outcome of this dispute would be to return the contested money to City and State taxpayers in the form of long-term savings.
The money should be put to a use that yields longer term savings for taxpayers, an appropriate goal of a bond refunding.
This can be achieved by paying off outstanding debt that requires debt service payments over a period longer than three years and closer to the duration of the STARC bonds.
A negotiated division between the City and State should be reached, to give relief to city and state taxpayers over the longer term.
The resolution of the current controversy should be neither in favor of State’s or City’s claim to the contested $600 million, nor a “splitting of the baby” to give half to each.
Key Data
$600 million
— The amount of New York City’s sales tax revenue the Governor’s Executive Budget proposes to divert to the State.
$2.5 billion
— The amount of debt outstanding for the Municipal Assistance Corporation (MAC) in 2003.
$500 million
— The City’s annual debt service burden that would be eliminated over five years under the STARC proposal.
$170 million
— The amount the State guaranteed annually to repay the STARC debt.
$2.7 billion
— The amount borrowed in 2004 to repay the City for MAC debt service, pay off remaining MAC bonds, cover interest, and underwriting fees.
$637 million
— The amount the City borrowed in excess of what was needed to pay off outstanding bonds during the 2014 STARC refunding.
New York faces a $63 billion long-term unfunded liability for retiree health benefits, which the Governor’s proposed reforms aim to reduce by approximately $17.5 billion. These measures, including ending IRMAA reimbursements and adjusting premium subsidies for future retirees, are projected to generate $42 million in annual savings by fiscal year 2020.
Recommendations related to State Debt Management
The Legislature should adopt the Governor’s proposal to reduce the growing costs of state retiree health insurance benefits.
The State should end reimbursement for the Income Related Monthly Adjustment Amount (IRMAA) to align with federal policy and ensure a more progressive subsidy structure.
The State should freeze reimbursement for the regular Medicare Part B premium at the 2015 rate of $105 monthly to limit future cost growth.
The State should moderately reduce the premium subsidy for future retirees with less than 30 years of service while maintaining current benefits for existing retirees.
Key Data
$1.3 billion
— Cost for retiree health benefits in fiscal year 2016.
$1.7 billion
— Projected cost for retiree health benefits by fiscal year 2020.
$8,171
— 2016 total annual premium for an individual Empire Plan.
$16,234
— 2016 total annual premium for a family Empire Plan.
$6 million
— Annual savings from ending reimbursement for the Income Related Monthly Adjustment Amount (IRMAA).
$1 million
— Fiscal year 2017 savings from freezing reimbursement for the regular Medicare Part B premium.
New York State should utilize its $5 billion bank settlement windfall to improve long-term fiscal health by paying down debt, replacing planned borrowing with pay-go capital, and shoring up reserves rather than funding recurring costs. Additionally, the state should extend design-build procurement authority to reduce infrastructure project costs, which has been shown to lower expenses by 27 percent.
Recommendations related to State Debt Management
New York should place a high priority on proposals to permanently reduce the cost of providing services or prepare the State for future challenges, such as paying down debt, replacing planned borrowing with pay-go capital, shoring up the Rainy Day Fund, and fully funding the State’s pension funds.
State leaders should use the opportunity presented by a special session to extend design-build procurement authority, which would reduce the time to complete construction, lower project costs, and permit a greater number of projects to be funded.
Key Data
$5 billion
— The amount of the State's windfall from bank settlements.
$138 billion
— The State's annual budget context for the windfall.
27 percent
— The reduction in project costs found by the Department of Transportation when using design-build procurement.
New York State is nearing its statutory debt cap, and issuing an additional $2 billion in bonds for school technology would severely limit the state's capacity to fund other critical infrastructure needs. Given that research does not support the idea that these technology investments yield substantial benefits, the state should prioritize its limited borrowing capacity for higher-priority capital projects.
Recommendations related to State Debt Management
The borrowing capacity remaining under the debt cap should be reserved for these high-priority investments, not used to fund yet unjustified one-time technology purchases.
New Yorkers should reject the Smart Schools Bond Act.
Any list of capital needs to be funded with state-supported debt should be established through the new statewide capital planning process.
New York State is approaching its statutory debt cap and should prioritize its capital spending.
Key Data
$2 billion
— The amount of general obligation bonds authorized by the Smart Schools Bond Act to fund school technology infrastructure.
4 percent
— The statutory debt cap imposed by the Debt Reform Act of 2000, limiting debt issued after April 1, 2000.
$366 million
— The projected unused debt capacity in fiscal year 2016-17 if the Smart Schools Bond Act passes.
$89 billion
— The state and local infrastructure funding shortfall detailed in a December 2012 State Comptroller report over the next 20 years.
$174 billion
— The total capital needs identified in the 2013 statewide capital plan for 48 state agencies and authorities.
96 percent
— The portion of New York State's outstanding debt that consists of authority bonds, which do not require voter approval.
New York State should utilize its $4 billion in legal settlement funds to improve its long-term fiscal health by paying down debt, funding capital projects without borrowing, and addressing unfunded pension and retiree health liabilities. These actions would reduce interest expenses and prevent future fiscal crises by bolstering reserve funds and investing in multiyear benefits.
Recommendations related to State Debt Management
The state should reduce long-term debt by using settlement funds to pay down the $52.2 billion total, thereby saving on annual debt service.
New York should increase pay-as-you-go capital investments to fund needed projects without borrowing, which avoids incurring additional debt service.
The state should reduce other long-term liabilities, such as unfunded pension obligations and retiree health insurance, to improve its fiscal standing.
New York should increase the Rainy-Day Reserve Fund to help prevent drastic service cuts and tax hikes during future economic downturns.
The state should make one-time investments that provide multiyear benefits, such as information-technology systems or revolving-loan funds, to support recurring cost-savings.
Key Data
$52.2 billion
— New York state's total long-term debt.
$231 million
— Annual savings from paying off $4 billion of 30-year bonds with 4% interest.
$174 billion
— Total 10-year statewide capital needs across 47 state agencies and public authorities.
$2.8 billion
— Cost to make pension funds whole for the borrowed amount.
$66.5 billion
— New York's estimated other-post-employment-benefit (OPEB) liability.
$350 million
— Amount currently in the Rainy Day Reserve Fund.
New York State faces significant budget gaps that require concrete savings plans, as relying on placeholder savings and accounting tricks to stay under the 2 percent spending cap is unsustainable. Achieving this cap while managing fixed costs like school aid, Medicaid, pension contributions, and debt service will necessitate substantial spending reductions in other areas of the budget.
Key Data
$2.1 billion
— The amount of unspecified future savings in fiscal year 2016 used to plug budget gaps.
$4.9 billion
— The amount of unspecified future savings in fiscal year 2018 used to plug budget gaps.
$1.8 billion
— The lower end of the state's projected budget gap by fiscal year 2018.
$3.4 billion
— The higher end of the state's projected budget gap by fiscal year 2018.
$7.6 billion
— New bond authorizations included in the adopted budget that will add to debt service costs.
$1.3 billion
— The amount by which agency personal service would need to be reduced to comply with the 2 percent spending cap.
New York State's first 10-year capital plan commits $174.4 billion to infrastructure projects, but requires improved transparency regarding asset conditions, project tracking, and long-term debt affordability. Establishing a comprehensive framework for assessing debt capacity and standardizing financing reporting is essential to ensure the plan remains sustainable and accountable.
Recommendations related to State Debt Management
The next version of the plan should include better information about asset condition and the match-up between planned levels of state of good repair (SOGR) spending and need.
The State should develop an improved financing plan that addresses the issue of affordability.
Future plans should include better project-level data to facilitate project tracking.
The State should set condition improvement targets and provide estimates of the cost of achieving the desired improvement for every asset.
A framework for assessing the affordability of the plan should be established, similar to New York City’s Annual Statement of Debt Affordability.
Key Data
$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.
$641 million
— Projected amount that debt outstanding will be below the debt limit by fiscal year 2016-17.
$177 billion
— Total amount the State expects to raise from all sources—bond financing, PAYGO, local contributions, and other funding—over the period of the capital plan.
$93 billion
— Amount the State and its authorities expect to borrow via bond financing over the 10-year period of the plan.
The SAGE Commission's final report offers a comprehensive roadmap for modernizing state government through agency consolidation, performance management initiatives, and civil service reform. Implementing these recommendations, including expanding design-build authority to manage capital costs and stay within statutory debt caps, is essential for achieving long-term fiscal sustainability.
Recommendations related to State Debt Management
The legislature should reconsider and approve the expansion of design-build and other public-private models to reduce capital costs as New York approaches its statutory debt cap.
The proposed fiscal year 2013-14 New York State budget should prioritize using unanticipated resources for non-recurring investments like debt reduction and rainy day fund deposits rather than expanding operating expenses. Additionally, the legislature should ensure that excess reserves from the State Insurance Fund are used prudently for capital investment and debt retirement rather than covering recurring operating costs.
Recommendations related to State Debt Management
If unanticipated resources materialize in the 2013-14 fiscal year, they should be treated as non-recurring and used prudently for investments, such as debt reduction and/or rainy day fund deposits, to help improve the State’s long-term financial standing and not to enlarge ongoing, operating expenses.
The Legislature should require that all of the SIF reserves be used prudently for purposes such as capital investment and debt retirement.
Key Data
$2 billion
— Amount of excess reserves identified in the State Insurance Fund.
$750 million
— Amount of State Insurance Fund reserves proposed to be used for one-time expenses in fiscal year 2013-14.
$500 million
— Portion of State Insurance Fund reserves allocated for capital projects.
$250
— Portion of State Insurance Fund reserves allocated for debt retirement.
The Metropolitan Transportation Authority faces a substantial debt burden that requires careful management, particularly when considering refunding strategies during periods of low interest rates. To protect future taxpayers and riders, the authority should adhere to strict guidelines that prioritize genuine cost savings over practices that merely defer financial obligations to later years.
Recommendations related to State Debt Management
The MTA should follow guidelines that promote the greatest total savings and prevent the unfair passing of costs onto future taxpayers and straphangers.
The MTA board should not seek any exemptions from the State Comptroller’s guidelines, which prohibit stretching of debt and require that each year of the period have nominal dollar savings in debt service.
The MTA should ensure that refunding saves money and spreads debt service costs fairly over time, rather than juggling the timing of debt service costs in a manner that lowers outlays in the short-term but increases the burden for managers and riders in later years.
Key Data
$32 billion
— The amount of long-term debt outstanding held by the Metropolitan Transportation Authority.
$2.1 billion
— The cost of debt service for the MTA in 2012.
$2.6 billion
— The projected debt service cost for the MTA by 2015.
$7 billion
— The amount of outstanding debt the MTA is considering for a large-scale refunding.
$39 billion
— The amount of outstanding debt the MTA is projected to have by 2015.
$180 million
— The minimum present value savings required for a $6 billion refunding under the MTA board's 2010 policy.
New York should consider alternative fiscal management strategies, such as establishing a more rigorous balanced budget requirement and imposing a new constitutional debt limit, rather than relying solely on formulaic spending caps. These measures could help align spending growth with the state's economy while avoiding the unintended consequences and political manipulation often associated with rigid spending caps.
Recommendations related to State Debt Management
Establish a more rigorous and comprehensive balanced budget requirement.
Move the executive and legislative budgets from a cash basis to an accrual system in accordance with generally accepted accounting principles.
Enhance the allowable size of the state’s rainy day fund and require that funds are dispersed only in an emergency.
Impose a new constitutional debt limit to rein in state borrowing.
Provide more timely and meaningful fiscal information to legislators and to the public.
Key Data
$1.1 billion
— Amount Connecticut borrowed at the end of the year to cover an unexpected deficit.
$1.1 billion
— Predicted surplus in fiscal year 2011-2012 under the proposed spending cap.
$17 billion
— Amount of state spending that would have been curbed in fiscal year 2007-08 had the proposed cap been in place since 2002-03.
$3.2 billion
— Total rebate checks sent to Colorado taxpayers between fiscal year 1996-97 and fiscal year 2000-01 due to the revenue limit.
$380 million
— Amount by which the Connecticut fiscal year 2005 budget exceeded the spending limit.
New York State faces significant fiscal challenges, with legislative budget proposals relying on speculative revenue and excessive borrowing rather than necessary spending reductions. To avoid long-term financial instability, the state must prioritize structural spending cuts, reject risky deficit financing, and ensure that any necessary borrowing is accompanied by strict balanced budget requirements and improved accounting reforms.
Recommendations related to State Debt Management
The State must get the borrowing total for this year down well under the Ravitch Plan's $2 billion maximum.
The Governor should ensure that reforms in the Ravitch Plan—specifically a balanced budget requirement and better accounting—accompany any agreed-upon borrowing.
The State should avoid restructuring tobacco bonds, as this would only stretch out the repayment of bonds taken on to finance operating expenses in the last downturn.
Key Data
$2 billion
— Deficit financing proposed in the Lt. Governor's five-year fiscal plan.
$3.3 billion
— Projected increase in employee compensation over the four-year term of the financial plan.
$5.1 billion
— Targeted spending reductions in the Executive Budget.
4 percent
— Scheduled raises for employee unions on April 1.
2 percent
— Proposed reduction in per-pupil spending in the Executive Budget.
New York State's debt burden is significantly higher than most other states, placing it in a 'danger zone' that requires a reduction of $20.4 billion in long-term liabilities to reach a safer threshold. This assessment incorporates bonded debt, unfunded pension obligations, and other post-employment benefits to provide a comprehensive view of the state's financial obligations.
Key Data
$120.0 billion
— The 2008 level of long-term liabilities for New York State.
$20.4 billion
— The amount New York would need to lower its long-term liabilities by to fall below the danger zone threshold.
$71.9 billion
— The current level of long-term bonds in New York that would need to be reduced to $51.5 billion to exit the danger zone.
$5.6 billion
— The amount New Yorkers are currently paying annually in debt service.
$7.1 billion
— The projected annual credit card obligation for the state in four years.
New York State's debt management is hindered by excessive borrowing, including the use of debt to cover operating deficits and a lack of coordination regarding public authority borrowing. To improve fiscal health, the state should restrict debt to capital projects, integrate authority borrowing into the state capital plan, and increase pay-as-you-go financing.
Recommendations related to State Debt Management
Discontinue issuance of State-funded debt to cover operating deficits.
Integrate public authorities’ proposed borrowing for capital investments with the State’s capital plan.
Subject public authority borrowing to more rigorous financial review by an enhanced Public Authorities Control Board or by the Division of Budget.
Reduce the State’s debt by lowering capital spending and/or increasing pay-as-you-go financing as a share of total capital spending.
Key Data
$105.8 billion
— Total debt outstanding for the State and its authorities at the end of fiscal year 2004–05.
$44.8 billion
— Portion of total debt backed by State revenues.
$30.4 billion
— Amount of debt borrowed by authorities and backed by project revenues.
$11.5 billion
— Amount of outstanding State-supported debt used to pay for operating expenses.
New York should prioritize using available federal stimulus funds to pay down its high state debt burden rather than relying on fiscal gimmicks or one-time revenue measures. By avoiding harmful tax increases and structural spending imbalances, the state can achieve recurring savings and improve its long-term fiscal stability.
Recommendations related to State Debt Management
Any funds that are available should be used to pay off State debt.
Don’t raid public authorities or rely on other one-shots, as temporary federal funds are better than one-shot State funds to close the gaps until other savings can be implemented.
Do eliminate programs that are ineffective or unnecessary, such as the Empire Zones program, to reduce the state's spending commitments.
Do adopt a new pension tier and other compensation changes for public employees to address the issue of overly generous pension systems.
Key Data
$18.7 billion
— The projected budget gap in year three of the financial plan.
$14.0 billion
— The revised budget gap for fiscal year 2009-10.
$24.6 billion
— The estimated amount of federal stimulus money New York will receive.
New York State has historically relied on excessive back-door borrowing through public authorities to fund operating expenses, circumventing constitutional limits and saddling future taxpayers with debt. To improve fiscal stewardship, the state should establish a clear, constitutional, and flexible debt limit that applies to all forms of state-supported obligations rather than relying on ineffective statutory caps.
Recommendations related to State Debt Management
The state should establish a constitutional debt limit rather than a statutory one to prevent legislative circumvention.
The debt limit must apply to all forms of state-supported debt, ensuring no back-door borrowing is left open via public authorities.
The state should adopt a flexible debt limit approach that allows an independent board to apply multiple criteria to account for changing economic circumstances.
Key Data
$39.4 billion
— Total amount of back-door debt outstanding as of the end of fiscal year 2007.
92%
— Percentage of all State-supported debt outstanding that was of the back-door type as of the end of fiscal year 2007.
$26.1 billion
— Total outstanding debt issued since 2000 as of the end of fiscal year 2007.
$24.3 billion
— Statutory debt cap for fiscal year 2007.
$8.3 billion
— Amount of debt classified as exempt from the statutory cap as of the end of fiscal year 2007.
$11.2 billion
— Total long-term borrowing authorized by the state since 1991 to help support operating expenses.
New York's state debt load is projected to exceed $60 billion, which is approximately $10 billion above affordable levels and contributes significantly to the state's ongoing budget challenges. To address this, the state must reform its broken debt limit to curb excess borrowing and reduce annual debt-service costs.
Recommendations related to State Debt Management
The state must fix the state's broken debt limit to address the excess borrowing that drives up annual debt-service costs.
Key Data
$60 billion
— New York's debt load that will soon be exceeded.
$10 billion
— The amount by which New York's debt load exceeds what is affordable under reasonable standards.
New York's state debt has surged to over $50 billion, with a significant portion used for operating expenses rather than capital investments. To address this, the state should pursue a constitutional amendment that limits debt based on affordability and restricts its use to long-term capital improvements.
Recommendations related to State Debt Management
The state should pursue an amendment to the state Constitution, limiting the amount of debt based on criteria for affordability and restricting its uses to long-term capital improvements.
Legislators should prioritize passing a debt-reform amendment over increasing their own budgetary powers.
The state must ensure quick and open passage of a debt-reform amendment to address the state's fiscal challenges.
Key Data
$50 billion
— The amount that state debt exceeded in the current fiscal year.
$60 billion
— The amount state debt is expected to reach within the next two years.
$11 billion
— The portion of outstanding debt used to support operating expenses rather than capital investments.
$4.2 billion
— The projected budget gap for fiscal year 2008.
$5.1 billion
— The projected budget gap for fiscal year 2009.
New York's state debt reached a historic high of $50 billion in 2007, with a significant portion used to cover operating deficits rather than capital investments. To address this, state leaders are urged to implement reforms that restrict debt-funded operating expenses and require more rigorous oversight of authority borrowing.
Recommendations related to State Debt Management
State leaders should stop issuing state-funded debt to cover operating deficits.
The state should make authorities' borrowing part of the state's capital plan to avoid unnecessary public expense.
New York should institutionalize rigorous financial review of authority borrowing via an enhanced Public Authorities Control Board or the governor's budget office.
The state should reduce future debt for capital spending by relying more on pay-as-you-go financing or budget surpluses.
Key Data
$50 billion
— New York's state debt hit this historic high during the fiscal year ending March 31, 2007.
20 percent
— Portion of state debt, or nearly $12 billion, that has gone toward operating costs.
$4 billion
— Amount of debt added in the past year, representing a growth rate of almost 8 percent.
$2,700
— Per-capita debt amount for every man, woman, and child in the state.
$2.2 billion
— Cash surplus the state ended with in the year it added $4 billion in debt.
New York State's debt burden is among the highest in the nation, with $105.8 billion in total debt outstanding as of fiscal year 2004–05. The state frequently relies on "backdoor borrowing" through public authorities, often using debt to cover operating deficits rather than long-term capital projects.
Recommendations related to State Debt Management
Discontinue issuance of State-funded debt to cover operating deficits.
Integrate public authorities’ proposed borrowing for capital investments with the State’s capital plan in order to prevent inefficient use of borrowing capacity.
Subject public authority borrowing to more rigorous financial review by an enhanced Public Authorities Control Board or by the Division of Budget.
Reduce the State’s future debt by lowering capital spending and/or increasing pay-as-you-go financing.
Key Data
$105.8 billion
— Total debt outstanding for the State and its authorities at the end of fiscal year 2004–05.
$44.8 billion
— Amount of debt backed by State revenues, representing 42 percent of the total debt outstanding.
$30.4 billion
— Amount of debt borrowed by authorities and backed by project revenues, representing 29 percent of the total.
$11.5 billion
— Amount of outstanding State-supported debt used to pay for operating expenses, accounting for 21 percent of that total.
$3.9 billion
— Amount of State-supported debt issued directly by the State.
New York's public authority debt has reached $166 billion, with authorities frequently bypassing voter approval to borrow funds for operating deficits rather than capital projects. Implementing a constitutional debt limit and requiring comprehensive, transparent capital planning are necessary steps to curb this excessive borrowing and protect taxpayers.
Recommendations related to State Debt Management
New York should adopt a new constitutional limit that would apply to all state-supported debt, including any debt issued by authorities.
The state should limit debt to true capital purposes, rather than using it to cover operating deficits.
Each local industrial-development authority should select among private parties based on criteria established in advance and in response to competitive proposals to ensure fair competition for tax-exempt benefits.
The governor and budget director should be responsible for preparing a comprehensive, multi-year capital plan that includes state agencies and authorities.
The Public Authorities Control Board, which has failed to provide adequate analyses of the feasibility of state authority projects, ought to be abolished.
Key Data
$166 billion
— Total outstanding debt of New York's public authorities.
$227 billion
— Total outstanding debt issued by New York state and local governments and their authorities.
583
— Total number of public authorities in New York.
$4 billion
— Amount of state-supported debt used for operating deficits, representing 9% of the total.
$45 billion
— Total amount of state-supported debt.
$10 billion
— Amount New York's elected leaders have borrowed in excess according to analysis.
New York State and its local governments have frequently used public authorities to bypass constitutional debt limits, resulting in excessive debt levels that are not reasonably affordable. The report recommends replacing current procedural debt limits with an affordability-based approach, improving oversight of authority borrowing, and enhancing governance and reporting standards.
Recommendations related to State Debt Management
Eliminate the misuse of authorities’ debt powers by setting comprehensive constitutional limits on the amount of State-supported and City-supported debt that can be issued by the State of New York and by the City of New York.
Improve the oversight of non-State-funded authority debt by eliminating the PACB review process and replacing it with more comprehensive capital planning and project feasibility studies subject to professional, transparent review.
Improve the effective use of tax-exempt conduit debt by requiring more explicit advance allocation of its purposes and more competition among private entities for its benefits.
Make authorities more accountable through more complete and accessible reporting of financial and other information.
Enhance the governance of authorities through greater independence and professionalism among board members.
Key Data
$227 billion
— Total estimated debt borrowed by state and local governments and their authorities in New York.
$41 billion
— Amount of 'backdoor' debt issued by authorities on behalf of the State that did not follow the constitutional procedure requiring voter approval.
$10 billion
— Amount by which State-supported debt in 2003 exceeded the State’s danger-zone threshold.
$166 billion
— Total amount borrowed by authorities in New York.
$43.1 billion
— Applicable constitutional debt limit for New York City at the end of fiscal year 2004.
$52.2 billion
— Actual City funded debt at the end of fiscal year 2004.
New York State faces a critical financial situation with $46.7 billion in outstanding debt, much of which is "backdoor" borrowing used to cover operating deficits rather than capital projects. To address this, the state must implement constitutional reforms that establish binding, affordability-based debt limits and restrict borrowing to long-term infrastructure investments.
Recommendations related to State Debt Management
Voters should reject bond referendums such as the Transportation Bond Act of 2005 until debt is brought under control.
The State must establish a new debt limit based on the concept of affordability as determined by an independent Debt Policy Committee.
The State must apply the limit to all forms of state-backed debt, including such bonds issued by authorities.
The State must eliminate the need for voter approval within that limit.
The State must 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 total state debt that constitutes "backdoor" borrowing not approved by voters.
$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 by the State over the next five years.
$7 billion
— Amount of borrowing exempted from the statutory limit in fiscal years 2003 and 2004.
$2.9 billion
— Amount of borrowing authorized by the Transportation Bond Act of 2005.
New York's budget process has become increasingly dysfunctional, characterized by persistent lateness and a shift in power toward a professionalized legislature that operates outside the original constitutional framework. To restore fiscal responsibility and accountability, the state must reform its budget process, adopt independent revenue estimating, and implement structural changes like redistricting commissions and public campaign financing.
Recommendations related to State Debt Management
New York should retain a constitutionally-based executive budget, but New York should also recognize and incorporate in its constitution the legitimate and hard-won role of the state legislature in budgeting.
A constitutionally defined staged process in the legislature for considering the executive budget, engaging key committees, with conference committees to resolve differences, may both build the legislative role and redistribute power within each house.
A consensus system for revenue estimating built into this process may be acceptable to the legislative houses, if their powers in budgeting are otherwise assured in the constitution.
Constitutionalization of the beginning of the fiscal year might be a first step toward establishing a real budget deadline.
Two less draconian but still fundamental steps are the adoption of legislative redistricting by commission and serious reform in campaign finance.
Public financing of legislative election campaigns, with concomitant limits on direct and indirect (through legislative campaign committees) private funding, would be salutary.
Key Data
$170 million
— In 2003, this amount was appropriated to fund projects advanced by Senate Republicans and Assembly Democrats, controlled by the leaders of each house.
$1.5 billion
— In the 1998 election year, this total was available to the Governor, Speaker, and Majority Leader to separately allocate.
$10,750,658
— The proposed budget for legislative fiscal staffs for 2003-2004, divided equally between the two houses.
$206,735,159
— The total budget proposed for the legislature for 2003-2004, divided equally between the two houses.
New York State faces significant fiscal challenges, including a high debt burden, recurring budget gaps, and a lack of transparency in its budget process. To address these issues, the state should implement structural reforms such as establishing a non-partisan budget office, adopting multi-year financial planning, and replacing voter-approved debt requirements with a statutory limit based on economic factors.
Recommendations related to State Debt Management
Require that the adopted budget be balanced in accord with generally accepted accounting principles.
Require a four-year financial plan with quarterly modifications.
Replace the constitutional requirement for voter approval of general obligation debt with a constitutional limit on the amount of all state debt that is set based on relevant, changing economic factors.
Create a professional, non-partisan Legislative Budget Office to provide fiscal information to both houses of the Legislature and to the public.
Require that independently prepared revenue projections be used in the adopted budget, if the Governor and Legislature do not agree on revenue projections in a timely way.
Require a “rainy day” fund larger than the current Tax Stabilization Reserve Fund.
Eliminate the use of “off-budget” accounts.
Change the budget calendar to allow more time for deliberation on the Executive Budget by the Legislature.
Strengthen the committee process of the State Legislature to allow more participation by members in budgetary decisions.
Key Data
$38 billion
— New York's long-term debt in fiscal year 1999-00.
$5 billion
— The amount by which New York's long-term debt exceeded second-place California's in fiscal year 1999-00.
$9.3 billion
— The budget gap faced by the State in the 2003-04 fiscal year.
$5.7 billion
— The amount of one-time actions and disappearing revenues the State relied upon to close the 2003-04 budget gap.
$170 million
— The amount appropriated for legislative 'member items' in 2003.
$26 million
— The amount appropriated for legislative 'member items' in 1984.
New York State currently ranks in the bottom tier for fiscal policy, burdened by the highest state and local tax and debt levels among its competitors. To achieve a top-tier competitive standing, the state would need to reduce its debt burden by approximately one-half and its tax burden by about one-third.
Recommendations related to State Debt Management
New York would have to cut its state and local tax burden by about one-third, and its debt burden by about one-half, in order to be in the top tier.
Key Data
19.4%
— New York's state and local debt as a percent of personal income and capital gains in 1997.
12.6%
— The five-year growth rate of New York's state and local debt as a percent of personal income and capital gains.
13.0%
— The United States average for state and local debt as a percent of personal income and capital gains in 1997.
New York State and New York City have accumulated significant debt that exceeds the levels of other jurisdictions, necessitating a new, more rigorous approach to defining and maintaining affordable debt limits. The current constitutional and statutory constraints have proven ineffective, and the state should adopt a policy that ties debt levels to available resources while establishing independent oversight committees to manage future borrowing.
Recommendations related to State Debt Management
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 that apply to all forms of debt drawing upon tax and other general governmental revenues.
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.
$36.8 billion
— State debt at the end of fiscal year 2000.
$36.6 billion
— City debt at the end of fiscal year 2000.
$29.2 billion
— State-supported debt threshold in 1997.
$33.1 billion
— Actual State-supported debt in 1997.
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