State-funded debt increased to nearly $51 billion in the last fiscal year, a 31 percent increase since the 2002-03 fiscal year, according to new report from state Comptroller Thomas DiNapoli.
DiNapoli urged state lawmakers to enact a new debt cap, saying the dramatic increase "raises concerns about the sustainability of New York's borrowing practices."
"Debt is not a cost-free option. Every dollar we spend on paying off debt is another dollar that can't be used for other public needs and services," DiNapoli said.
He added that the Debt Reform Act of 2000 "simply wasn't real," and said New York needs "a meaningful cap that includes all state-funded debt and sets parameters based on how much the State can afford."
The Debt Reform Act of 2000 defines state-supported debt too narrowly, excluding about $33 billion of $51 billion of state-funded debt that was outstanding as of last March 31, DiNapoli said. If all state-funded debt is counted, New York's current outstanding debt is 6.45 percent of personal income, more than 50 percent higher than the cap, he added.
Annual state-funded debt service is projected to increase from $4.6 billion in the current fiscal year to nearly $7.1 billion by 2012, an average annual growth of nearly 9 percent.
DiNapoli said all new and existing outstanding state-funded debt should be under the cap, and that state-funded debt should be limited to 5 percent of personal income. The cap would be phased in over nine years, and debt would be allowed only for capital projects.
The new report also showed that:
- State-funded debt as a percentage of personal income
increased to 6.5 percent in SFY 2006-07 from 5.7 percent
in SFY 2002-03.
- The state's reliance on debt rather than current
resources to support capital projects has increased over
time.
- Voter-approved general obligation debt accounts for
$3.3 billion of all state-funded outstanding debt or only
6.5 percent, significantly limiting the public role in
determining the overall level of borrowing.
- The per capita state-funded debt burden reached $2,641 by the end of SFY 2006-07 and is forecast to grow to $3,263 by SFY 2011-12, an increase of 23.6 percent.