When governors deliver their annual budget proposals to the state Legislature, as Gov. Kathy Hochul will do today, they traditionally tend to focus on how they’re planning to spend the taxpayers’ money.
Spending — on schools, infrastructure, housing, economic development, crime — is what generates applause from the crowd and from her campaign contributors.
But the governor would best serve New York taxpayers if she used the stage today to focus on how her budget reins in spending, reduces taxes and brings down the state’s growing debt.
She could start by heeding a warning presented by state Comptroller Thomas DiNapoli in a report issued Tuesday. In the report, the comptroller detailed how state spending practices and an unwillingness by governors and lawmakers to face the state’s fiscal problems over the last several years have subverted caps and other restrictions designed to restrain the debt.
In the report, the comptroller said state supported outstanding debt has increased by $25 billion since 2000, and that the debt is expected to grow by 42%, to $88 billion, by the 2026-27 fiscal year.
In September 2022, Moody’s listed New York as having the highest debt of any state in the country behind California.
As a percentage of state operating funds, New York’s debt is expected to grow from 5.4% to 5.9% in just the next five years.
So why should New Yorkers care, and why should the governor make addressing the debt a major element of her budget presentation?
The debt as a percentage of operating funds is money that could otherwise be used to fund programs and address other needs like long-term infrastructure improvements. The more debt the state is forced to carry, the less it has available to spend on other necessities.
Maintaining such high debt also keeps the state from attaining a higher credit rating. A lower credit rating translates into higher costs for borrowing.
The good news is that there are steps that can be taken to address the growing debt.
Recommendations from the comptroller include passing a constitutional amendment to cap existing future debt, tied to a rolling average of personal income growth. To ensure voters have a say in how much debt the state accumulates, he recommends having voters approve debt limits.
To prevent the governor and lawmakers from using gimmicks to increase debt, he recommends the comptroller issue all state debt.
And he recommends establishing sustainable budgeting practices that include limiting debts to 30 years, issuing debt with a level or declining service structure and precluding debt from being used solely to benefit private enterprise — a practice that has put taxpayers on the hook for numerous failed business ventures.
At some point soon, the state’s debt is going to become insurmountable.
For the benefit of taxpayers, we hope the governor forgoes a little applause in her budget presentation and offers a serious, comprehensive plan to address the state’s growing debt problem.
That would be something to cheer about.
GAZETTE COVERAGE
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