New York’s debt burden is the second largest in the nation and near the legal limit for borrowing, potentially putting critical infrastructure projects at risk, a report released Monday by the Office of the State Comptroller indicates.
The state’s outstanding debt totaled $63.3 billion on March 31, 2012, up $24.3 billion, or 62.2 percent, from the fiscal year ending in 2003, the report states.
The debt, averaging $3,253 per state resident, is nearly three times the national median average, second to California and 80 percent higher than New Jersey, which is third in state debt.
“New York’s past borrowing is limiting our future options,” Comptroller Thomas DiNapoli said in a statement.
“We spend billions each year to repay existing debt, so fewer resources are available for more pressing needs. This comes at a challenging time when our state needs to rebuild and repair critical infrastructure and has growing capital needs.”
The state’s debt capacity is projected to decline to $509 million by the end of fiscal 2013-14, the report states.
The timing of new construction, maintenance of state highways and bridges, school and transportation projects, and capital investments funded by state economic development initiatives could be affected if adequate money cannot be borrowed, DiNapoli said. Funding is further compromised by damage caused by Hurricane Sandy.
Nearly 95 percent of state borrowing in the last 10 years has been done through public authorities, the report states. Debt issued by authorities increased by $14.2 billion, or 40.6 percent, in the last 10 years.
“Taxpayers have little or no say in how much the state borrows, but they’re the ones that have to foot the bill,” DiNapoli said. “It is time to return to voter approval of borrowing.”
New York paid $6.8 billion in state-funded debt service in 2011-12, the report states.
The state’s debt and capital planning practices must be reformed, DiNapoli said, including a cap of 5 percent of personal income phased in over nine years, restrictions on the use of long-term debt for capital purposes and a ban on “back-door borrowing” by authorities, DiNapoli said.
(c) 2012 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email firstname.lastname@example.org.