New York State's debt has risen sharply in recent years to pay for "unsustainable levels of government spending," Comptroller Alan G. Hevesi said in proposing tight new limits on state borrowing.
State leaders even increased borrowing and reduced pay-as-you-go spending on capital projects when there were annual surpluses of up to $3 billion during the late 1990s, Comptroller Hevesi said.
"For too long, we have used debt to permit unsustainable levels of government spending," the comptroller said. "This is simply wrong.
"It is especially dangerous that the state continues to use massive amounts of debt to pay for day-to-day operating expenses," he added. "That's what led to the near-bankruptcy of New York City in the 1970s."
The comptroller proposed a Constitutional amendment that would close loopholes in a debt-limitation law Governor Pataki and the Legislature enacted in 2000, while limiting all state-funded debt to 5 percent of New Yorkers' personal income.
Daniel B. Walsh, president/CEO of The Business Council, praised the comptroller's proposals.
"New York State's high and rising debt is a symptom of high and rising spending," Walsh said. "The debt limit and other reforms proposed by Comptroller Hevesi would force the state to hold its borrowing to more responsible and affordable levels. That's the kind of reform New York needs."
Comptroller Hevesi said the state's debt "has grown at an alarming rate" — from $14.4 billion in 1990 to an estimated $49 billion in 2005. Although the state Constitution demands voter approval for borrowing, only 8 percent of this total has been approved at the polls. Governors and legislators have issued most of the debt in "backdoor" fashion through the state's public authorities, whose borrowing does not require voter approval.
Since 1997, Governor Pataki and the Legislature have authorized $2.8 billion in debt for "member initiatives" and local economic-development projects, Comptroller Hevesi said. Most of those initiatives leave the state with no capital asset to offset the debt, he said.
In 1985, the state financed more than 75 percent of non-federal capital spending with cash, according to the comptroller. In 2001, the figure was 40 percent.
"New York's $2,420 debt per capita is over two and one-half times the national average of $944," the comptroller said. "If left unchecked, debt per capita could rise to almost $12,000 by 2024."
Comptroller Hevesi proposed limiting new borrowing, over each of nine years, to 95 percent of debt issued in the preceding year. By 2014, that would bring total outstanding debt down to 5 percent of state personal income, compared to the current 6.5 percent.
The state would need voter approval for any state-funded borrowing over $1 billion in a given year, including debt of public authorities. State leaders would be empowered to issue additional debt in the case of terrorist attack or other emergencies.
Comptroller Hevesi's announcement and report are available at http://www.osc.state.ny.us/press/releases/feb05/020105.htm.