Advertisement

New York State Exposed: Borrowed money leading to state debt

August 15, 2016 05:50 PM

It’s no secret that people in New York State pay some of the highest taxes in the country. So why is the state at the top of the list when it comes to debt?

New York State has the second most debt in the nation. The state has borrowed hundreds of millions of dollars to pay for projects. For example, the Solar City Project in Buffalo, an outlet mall on Staten Island and emergency vehicles in Rochester were all funded by the state.

Advertisement – Content Continues Below

The problem with the state having such high debt is that you, the taxpayers, will be responsible for paying it back. This could mean higher taxes, tolls and fees.

Jim Burlingame of East Rochester has four grandchildren and he's concerned the state is mortgaging their futures.

"We've gotten so far overextended," says Burlingame. "I think we're in over our heads. I don't think even our grandkids are going to see that much of an improvement."

According to a report by New York State Comptroller Thomas DiNapoli, state debt is now $63 billion -- a number so large it may be hard to understand. So we spoke with Kent Gardner, the president of the Rochester-based Center for Governmental Research.

Brett Davidsen: "What does that mean? Does it mean anything?"

Kent Gardner: "So what that means is that we have to pay that stuff back. Just like when you go out and borrow money for a car and you commit yourself to a car payment -- you're paying the car payment. It means maybe you can't take a vacation. Maybe you're going to have a tough time sending your kid to college."

In other words: "Being obligated to pay debt back means we have less money available for other things we might want to do," says Gardner.

Like fix roads or lower taxes... And get this: Most of the state's debt was never approved by voters as required by the state constitution. Instead, the governor and legislative leaders get around the law by using public authorities to borrow money by issuing bonds -- which keeps the debt outside the state budget. The practice has been going on for decades. The comptroller calls it "backdoor borrowing."

Gardner says, "I think the question is really about transparency."

We contacted the state Division of Budget for answers about the debt. They responded only with an emailed statement, a spokesperson defended it, saying, "Our bonding practices have three layers of public oversight and full transparency, State debt has declined for four consecutive years for the first time in modern times."

But in his own book, "The New New York Agenda -- released in 2010, Governor Cuomo criticized "backdoor borrowing," saying the public authorities lack "checks and balances" and sometimes "engage in imprudent practices."

We had hoped to speak to the governor at an event in Syracuse last week, but was told he had no press availability. We did catch up with Howard Zemsky, whose Empire State Development Corporation oversees a number of state projects funded with borrowed money.

Davidsen: "The comptroller has been critical of what he calls 'backdoor borrowing.' Should the state be ringing up debt to pay for these projects through public authorities?"

Howard Zemsky: "The state has its fiscal house in order from my perspective."

The state has also racked up the second most debt in the nation. Burlingame says Albany is just playing a numbers game.

"You're between a rock and a hard place," says Burlingame. "You lower the taxes, fine. But then you got to borrow more money to make the state work."

The state budget office contends the amount of debt is much lower than the comptroller suggests. Numbers provided by the office below show the debt has shrunk in recent years.

More info from the budget office

State debt:

($ in billions)

FY 2011: $55.664 (the last budget prior to Governor A. Cuomo)

FY 2012: $56.372

FY 2013: $55.692

FY 2014: $55.165

FY 2015: $54.190

FY 2016: $52.102

"All three major credit rating agencies— Standard and Poor's, Fitch, and Moody's—recognized New York's outstanding financial performance by upgrading the state to its highest credit rating since 1972. The state now enjoys the second highest investment-grade credit rating possible from all three raters on its General Obligation bonds (S&P rates the State's Personal Income Tax Bonds and Sales Tax Bonds at AAA, the highest rating possible)."

Unfinished Business: Fiscal Reform in New York State

Credits

Brett Davidsen

Copyright 2016 - WHEC-TV, LLC A Hubbard Broadcasting Company

Advertisement
Sponsored by Newsy
Advertisement
Advertisement
Advertisement