As one might guess—with our state’s reputation for spending—the state debt load is among the highest in the nation. Our outstanding debt is nearly $54 billion—second only to California.
Also, it may not come as a surprise that the state budget only scratches at the surface of paying down that debt. Of the nearly $54 billion in outstanding debt, the 2018-19 state budget only authorized paying back $5.6 billion of what is owed. In essence, if the state were a household with credit card debt, it would only be paying its minimum balance along with some interest charges. On top of this massive borrowing, the Division of Budget estimates outstanding debt will grow. Projections indicate that by the fiscal year 2020, the outstanding debt will reach $57 billion and as much as $64 billion by 2023.
The state constitution limits using debt without voter approval to help ensure that New York does not over borrow. Unfortunately, for several decades, the state, for a variety of reasons, has circumvented the state constitution by having public authorities and agencies borrow on behalf of the state. This borrowing is referred to as “backdoor borrowing” and it accounts for almost all of our state debt--$51.4 billion of the nearly $54 billion of state debt. Regardless of who issues this debt, the state—meaning you and me as a taxpayer—are still on the hook to pay it back.
Using debt as financing isn’t on its face improper or even bad public policy provided it is used sparingly and for capital projects. Problems arise when debt is overused, used for operational expenses, and is difficult to track. Unfortunately, this accurately describes much of our state’s backdoor borrowing.
To curb our state’s addiction to debt, this upcoming session I plan to introduce legislation that will limit our state’s overreliance on debt and backdoor borrowing. Just like any household, the state must learn to live within its mean. My legislation will require all backdoor borrowing to be lined out and be primarily issued for capital projects that help finance our roads, sewers or other public works projects. In addition, we need to increase transparency among all authorities and require by law that each authority submit an annual report to members of the legislature and to the Governor. I co-sponsor legislation that would increase these debt reporting requirements that would help during budget negotiations. In addition, the state should also begin using a portion of any future settlement dollars it receives to pay down its debts to save taxpayers in the long run. This just makes good financial sense and would help protect future generations of New Yorkers.
If you have any questions or comments on this or any other state issue, or if you would like to be added to my mailing list or receive my newsletter, please contact my office. My office can be reached by mail at 200 North Second Street, Fulton, New York 13069, by e-mail at [email protected] or by calling (315) 598-5185. You may also friend me, Assemblyman Barclay, on Facebook.