New York's Endangered Future
Debt Beyond Our Means
New York State has too much debt. Its obligations will require current and future taxpayers to bear a burden that creates a competitive disadvantage with the other states. Not only is the absolute amount of New York’s debt high, but the burden is excessive even after the State’s relatively large tax base and other relevant factors are taken into account.
The core issue is that New York has no effective legal limits on the amount of debt it can assume. Constitutional provisions intended to limit debt are outdated and are circumvented regularly. Statutory limits – passed in 2000 – are also being circumvented. Simply put, it has become too easy for State leaders to borrow. In addition, they have misused debt, which should be restricted to paying for longterm capital projects, by financing annual operating expenses.
Short-run and long-run measures are needed. In the near term, voters should reject bond referendums such as the Transportation Bond Act of 2005 until debt is brought under control. That act would authorize only $2.9 billion of an additional $13 billion in planned State borrowing, but it is the only opportunity that voters have to express their opposition to excessive borrowing.
In the long-run the State must strike a balance between adequate infrastructure investment and a competitive debt burden. The State needs a new constitutional limit that does not require voter approval for every debt issuance, but does impose a binding limit that is linked to ability to pay.