New York borrows way too much money

For another year, the state’s long-term, state-funded debt has exceeded $63 billion, with an additional $33 billion owed in interest. New York is the most indebted state behind California, according to the recently released Comptroller’s Financial Condition Report for the period ending March 31.

Less than six percent of this debt was approved by the voters. The Legislature skirts this constitutional requirement of voter approval by having public authorities, such as the MTA, the Dormitory Authority, the Empire State Development Corporation, the Thruway Authority, and the NYS Energy, Research, and Development Authority, sell bonds, which the state is obligated to re-pay, if necessary.

The state’s Pay-As-You-Go program to fund capital improvements met 51 percent of the costs in 1994 but only 31 percent for the last ten years. Every year the state has to pay for some of the operating expenses for a few of the public authorities such as the MTA, and the state also borrows from these authorities to balance its budgets. Numerous audits by the Comptroller’s office have found lax contracting practices, poor financial controls, and inadequate oversight by the executives of these corporations.

The state’s population and income projections are not always realistic, and its Moody’s Standard and Poor’s and Fitch bond ratings are below Texas, Florida, and Massachusetts. Unless the state passes a constitutional amendment requiring ALL bond debt to be approved by voters, and limiting these funds to capital projects, New York state cannot avoid serious financial consequences.