Report: New York among top states with bonded debt burdens
(The Center Square) – On a per-capita basis, New York ranked the seventh highest state across the country with long-range bonded debt burdens, according to a recently released study.
The American Legislative Exchange Council, or ALEC, recently released its annual report on states’ bonded debt obligations, based on available data through Dec. 31, 2020.
Nationwide, all states collectively have bonded debt burdens in excess of $1.25 trillion, according to ALEC, equating to an annual obligation of $3,800 per person.
But the Virginia-based organization, which advocates for fiscal reform in the government sector, points to policy disparities from one state to the next as an underlying reason current bonded debt obligations vary widely across the country.
“Many states are continuing to use bonds to increase government spending and pass the buck to future generations of taxpayers,” Jonathan Williams, ALEC chief economist and executive vice president of policy, said in a statement.
Williams added, “Even in the near term, states that neglect to reform their budgeting practices will eventually see taxpayers leave for states with less burdensome tax and fiscal policies.”
The latest ALEC report looked at seven different categories related to bonded debt.
In the overarching one, ranking states on total debt obligations on a per-capita basis, New York ranked No. 43, with a current per-person burden of $6,287. By contrast, Wyoming, which ranked No. 1, had a per-person burden of $67.
Looked at through another prism – the total amount of bonded debt obligations without population as a factor – New York had a near-last finish, ranking No. 49, with $122.3 million in bonds on the books.
Last-place finisher California has outstanding bonded debt obligations of $209.2 million on its books, while first-place state Wyoming currently holds a total debt burden of $38.9 million.
While many of the lower-ranked states have higher populations, Williams said there are some notables that do have large urban cores, yet have held the line on the amount of debt taken out. He singled out Indiana, which ranked No. 2 on the per-capita analysis with a per-person debt burden of $200.
Williams pointed to legislative policy in the Hoosier State – as well as Nebraska – as areas that have controls in place to limit the amount of bonded debt taken out.
“Fortunately, states like Indiana and Nebraska have constitutional amendments to keep debt limits relatively low and provide valuable lessons for policymakers in states suffering from significant debt burdens,” Williams said.
New York’s bonded debt load has been a frequent topic of conversation within Albany, particularly for state Comptroller Thomas DiNapoli, who oftentimes weighs in on the topic after Gov. Andrew Cuomo’s budget address each January.
DiNapoli also periodically issues debt impact studies through his office, most recently in 2017.
“Debt is often a basic part of the financing picture, whether the focus is on school buildings, highways, water and sewer systems or other facilities,” DiNapoli wrote in the report. “However, we need to use debt wisely.”
In the report DiNapoli called on state officials to “keep a careful eye on how much the state borrows, the purposes of such debt and its affordability.”
Even with short-term federal stimulus funds in the mix, some New York state lawmakers are calling for continued caution in fiscal spending.
In April, when the 2021-22 budget was enacted, State Assemblyman William Barclay, R-Pulaski, took aim at the Majority Conferences’ approval of $18.7 billion more in spending compared to a year ago.
“New York state is now planning to spend $212 billion across the board, which represents a 9.7 percent increase over last year and blows the state’s 2-percent spending cap out of the water,” Barclay said.
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