| On April 3rd, I attended the Hudson Valley Pattern for Progress “Policies and Plans – A Conversation with County Leaders” Annual Breakfast Event. The featured speakers were County Executives Metzger (Ulster), Nehaus (Orange), Rajsz (Sullivan) and Serino (Dutchess) and the conversation covered a variety of issues (most notably the outward migration of New Yorkers due to the rising cost of living and a lack of affordable housing) and each County’s plans to respond to the issues. Not surprisingly, there were a number of comments about Governor Hochul’s ongoing budget negotiations. The comment about the budget that resonated with me was made by Steve Nehaus when he called State Comptroller Tom DiNapoli “the most trusted person in Albany” and pointed to DiNapoli’s warning on the structure of NYS’ borrowing to support its operations. (The fact that New York is one of the nation’s most highly indebted states is troublesome enough, but the structural issue that the Comptroller has called attention to presents an even bigger red flag.) Mr. DiNapoli’s warning is in a recent posting to his office’s website.
Here is the link to the article: https://www.osc.ny.gov/files/reports/pdf/importance-of-responsible-debt-management.pdf
The Comptroller has a problem with the State’s willingness to borrow money for a very long period of time (50 years) and shift the majority of the burden of paying it back on future taxpayers who may not get to enjoy the benefit of the project being built with the borrowed money. DiNapoli writes “Like many states, New York borrows to finance many of its capital projects, including those to build and improve roads, bridges, parks and buildings. This type of borrowing is appropriate because current and future users share in the cost of an asset from which they benefit. However, while there are long standing norms about the best ways to structure such borrowing, municipal governments and public authorities have latitude to make bond structuring decisions, and these decisions can have significant long-term fiscal impacts. In the throes of the economic uncertainty and fiscal turbulence caused by the COVID crisis, legislation was enacted as part of the SFY 2021-22 budget authorizing the use of State supported bonding with final maturities up to 50 years for capital purposes for the Metropolitan Transportation Authority (MTA). This legislation has been reauthorized annually despite the State’s much improved and stabilized fiscal condition, and has been proposed again in the State Fiscal Year (SFY) 2024-25 Executive Budget. The State has conducted three borrowings under this authorization in a manner that diverges from long standing State debt financing norms and trades marginal short-term budget relief for greatly increased outyear costs. To date, the result has been nearly $1.2 billion in increased costs, while providing financial plan relief of less than $78 million. These results are particularly troublesome when considering the broader context of the State’s high debt burdens.”
I encourage you to read the rest of the Comptroller’s March 2024 article and add pushing more than their share of the payback of long term debt onto the next generation of New Yorkers to the list of troubling financial practices by NYS.
Nat Prentice
President, Putnam County Business Council |
