NYS Debt Facts
- Total debt. State debt has grown from $14.4 billion in 1990 to $48.5 billion in 2006 and a projected $52 billion in 2007.
- Back-door borrowing. Voter-approved debt has decreased from 40 percent of the State’s debt portfolio in 1985 to seven percent today. Under the State’s constitution, General Obligation borrowing must be approved by voters.
- Public Authority Debt. Most State-Funded debt is issued through authorities, $44.6 billion of the $48.5 billion. In addition, public authorities have another $81.5 billion of debt that is not supported by State revenues.
- Debt per capita. New York ranks second highest in combined state and local debt per capita after Alaska, a state that benefits from its huge oil reserves.
- Loopholes in 2000 reform. Because the Debt
Reform Act of 2000 was riddled with loopholes, New York State has
actually issued debt at a faster rate since the Act’s passage
than it did before.
- Since 2000, State debt has grown by $11.7 billion, bringing total State debt to $48.5 billion in 2006 from $36.8 billion in 1999-2000.
- The Act set a goal of limiting debt to four percent of personal income, but since the law passed debt has actually increased from six percent to 6.6 percent of personal income. That’s because the Act does not count towards its limit all debt issued before 2000 and still outstanding and most of the debt issued since then.
- Debt not counted in limits. Since 2000, $7.7 billion in new debt issued is not counted as State debt, even though it is a State obligation: $4.6 billion tobacco borrowing, $2.6 billion to stretch out debt of New York City’s Municipal Assistance Corp., and $500 million to finance payments to 19 school districts for old school aid claims. This debt represents 15 percent of the State’s $48.5 billion in outstanding debt.
- Debt for operating costs. The 2000 Act properly mandated no borrowing for operating expenses. Despite that, the same $7.7 billion was borrowed to pay for operating expenses for the State, New York City and 19 school districts.
- Borrowing in good times. Between 1996 and 2001, the State had annual surpluses of between $450 million and $3 billion. Instead of using those surpluses to reduce debt, the State actually increased borrowing. During that time, outstanding debt increased an average of 5.1 percent a year, while State spending increased an average of 4.4 percent a year.
- Borrowing for legislative initiatives. The State separately authorized $5.7 billion for member items and local economic development from fiscal 1997 through fiscal 2007. These projects may be worthwhile and some are for local capital projects, but they often do not create State-owned capital assets and should be paid for without borrowing, especially when the State has a surplus.
- Pay-as-you-go. New York slashed its pay-as-you-go cash support to the capital program by almost half from 1994 to 2004, a period during which the State often had surpluses.
- Bond rating. The State's General Obligation bonds are rated in the AA category with stable outlook by all three rating agencies as detailed in the table below. All three agencies base their General Obligation ratings on the State's strong and diverse economic base, with its high debt levels, persistent out-year gaps and a politically charged budget process. Rating agencies place emphasis on consistenty maintaining adequate reserves and overcoming fiscal challenges posed by local spending pressures.
General Obligation Credit Ratings
(as of October 22, 2008)
|Moody's Investors Service||Aa3||Stable|
|Standard and Poor's Ratings Services||AA||Stable|
- Irresponsible Debt. The sale of Attica prison is a case study in the irresponsible use of debt. The State borrowed $200 million to sell the prison to itself in 1990 and used the funds for operating expenses. Since 1990, the State has paid $242 million in debt service on the Attica debt, but due to refinancings, it still owes over $300 million in principal and interest. So the total cost of providing $200 million in one-shot budget relief in 1990 will be at least $565 million, assuming the debt is not refinanced again.