What's New

Zack Hutchins
Director of Communications

December 20, 200)

State Comptroller warns of New York's heavy debt burden, looming property-tax increases in cities

Citing significant new debt obligations incurred by the state Legislature in the 2005-06 fiscal year,a new report from the state Comptroller's office warns that state-funded debt is expected to grow by one-third to nearly $65 billion over the next five years.

In a separate report, the Comptroller said an evaluation of new financial plans that New York's 62 cities are required to prepare suggests that many of them face significant property-tax increases in the immediate future.

The December 20 report on debt said that the massive new state-funded debt issued over the last 12 years will play a significant role in budget development during the new administration. "Debt service alone in 2011 will grow to more than $7 billion from $4.3 billion this year," the Comptroller's release said.

The Legislature last year created as much as $9.4 billion in new debt that is not counted in the debt limits established in the Debt Reform Act of 2000, Hevesi said.

"Even more troubling than the amount of debt is the $9.4 billion debt the legislature authorized to circumvent the debt limits in law, showing that the commitment to real reform of borrowing practices remains nonexistent," Hevesi said.

"This isn’t the first time we’ve seen this kind of debt, but I hope it’s the last. This shows that the need for strong reform that curbs the growth of debt is more crucial than ever."

The study analyzes New York’s debt using three measures of debt affordability: debt per capita, debt as a percent of personal income, and debt service as a percentage of state all-funds revenue. These measures suggest that debt will become significantly less affordable over the next four years based on current trends, the report said.

The study also showed that:

“Debt is essential for capital construction, but taxpayers will be paying for this debt for many years to come on the more than $9 billion the state has borrowed for operating expenses and deficit financing,” Hevesi said. “Every dollar we spend on debt service is one less dollar available for all the other critical services the State provides to taxpayers. It is especially troubling when the State’s debt capacity is eroded by borrowing for operating expenses.”

In a December 19 report, the comptroller said that many New York State cities "are facing very difficult fiscal problems, and if current trends continue, even more of our cities are likely to experience severe fiscal stress. In difficult times such as these it is essential that cities plan ahead."

The report is based on an examination of 48 financial plans that New York's 62 cities were required to prepare as a condition of last year's increase in state aid to cities.

Overall findings of the 48 cities analyzed (excluding New York City) include:

For a release on the report on debt, with a link to the full report, visit www.osc.state.ny.us/press/releases/dec06/122006a.htm. For a release on the report on cities' financial reports, with a link to the full Comptroller's report, visit www.osc.state.ny.us/press/releases/dec06/121906.htm.