June 13, 2006
Lawmakers propose comprehensive debt reform legislation
Leading members of the state Senate and Assembly say they are introducing and pushing the comprehensive debt-reform packaged proposed by state Comptroller Alan Hevesi.
The legislation, which is being sponsored by state Senator Thomas Libous (R-Broome County) and Assemblyman Joseph Morelle (D-Monroe County), includes a proposed constitutional amendment to limit overall state debt, and a statutory requirement that would reduce new borrowing in coming years.
The Business Council strongly supports the comptroller's plan. The issue will be one of the priority issues included in the grading criteria on the Council’s next Vote for Jobs index.
Comptroller Hevesi applauded the legislation.
"Failure to enact meaningful debt reform will result in a state government increasingly unable to meet its obligations to its citizens and amounts to the mortgaging of our children's futures," Hevesi said. Comptroller Hevesi announced the state ended the latest fiscal year on March 31, 2006, with $48.5 billion in debt. That figure does not include $80 billion in debt held by the state's public authorities. New York is second only to California in total state debt, the comptroller said.
A February 2005 report by the comptroller said the state’s debt has risen sharply in recent years to pay for "unsustainable levels of government spending.”
A December 2005 report reiterated the Comptroller's call for comprehensive debt reform and outlined several proposals, including 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.
The legislation introduced would:
- Create a debt management board that would monitor the debt of
the state and public authorities, as well as publish an annual
report looking at the affordability of the state’s debt.
- Use budget surpluses to reduce the state’s debt level.
- Limit the debt public authorities can take on, thereby ending
the backdoor borrowing that allowed public authorities to take
on debt for the state. The legislation would also require the
comptroller to approve the terms and condition of bonds or notes
issued by public authorities.
- Limit state-funded debt to 5 percent of New Yorkers' personal income, as suggested by the comptroller.
"This legislation represents the type of fundamental, iron-clad fiscal reform this state needs," Business Council President Daniel B. Walsh said.
“It’s clear that the problem is real and getting worse,” Senator Libous said. “We need a responsible and disciplined approach to stem out-of-control spending. Capping state debt and creating a Fiscal Management Board is an open and accountable way to protect the future generations of New Yorkers from skyrocketing taxes to pay for today’s debt.”
“Comptroller Hevesi’s analysis makes it clear: New
York’s mounting debt threatens to undermine our hopes of economic
revival and will burden future generations with ever-increasing
taxation,” Assemblyman Morelle said. “I believe the
legislation we’ve proposed is a blueprint for fiscal responsibility
and a return to economic prosperity.”