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Enactment of meaningful debt reform is one of the Business Council's top priorities for the end of the 2006 session, and we strongly support these bills which, through statutory and constitutional amendments, would impose significant new limitations on state debt.
The Business Council — and many others — recognize that the state's mounting debt poses real risks to the state's financial and economic well being. Our excessively high, and rapidly rising, state debt is imposing significant costs on the state's budget, and ultimately on the state's business and residential taxpayers.
New York's debt grew from $36.8 billion to $48.2 billion between 2000 and 2005, increasing per capita debt from $1,937 to $2,509 (more than double the national average), and increasing debt as a percentage of personal income from 5 to 7 percent. New York's debt burden is among the nation's highest. When compared to the largest 10 states, New York has the highest level of debt service as a percentage of revenue, and the second-highest level of debt on both a per capita and percentage of income basis.
The Business Council believes that the reforms contained in these bills will impose desperately needed fiscal discipline on New York State, mandate a much-needed reduction in the state's overall debt burden, and make it difficult for the state to engage in "backdoor borrowing."
Key reforms include:
- through a constitutional amendment
contained in A.11516, limiting the state's debt to 5 percent
of personal income, and – starting immediately through statutory
changes – limiting debt issuance
to 95 percent of the previous year's level. These caps will apply
to all "state funded debt," which
includes all debt for which the state makes direct or indirect payments.
the issuance of state debt for purposes other than funding capital
projects, and precludes issuance of debt with a maturity period of
more than 30 years.
- requires that a portion of any end-of-fiscal year cash surplus be devoted to state debt reduction.
We cannot expect to achieve significant improvements in the state's economic climate if we continue to mortgage our future away through run-away government debt. Our efforts to attract and retain businesses and individuals in New York will be more difficult if we allow rising debt – which translates into higher tax burdens.
For these reasons, The Business Council urges the State Legislature to enact meaningful debt reform in 2006, and supports approval of A.11515 and A.11516.
This legislation will be included as one of the scoring measurements
of The Business Council's
“Vote for Jobs Index 2006". This is The Business Council's annual assessment of legislators'
actions on key issues of concern to the state's business community.