“You load sixteen tons, what do you get
Another day older and deeper in debt
Saint Peter don”™t you call me ”™cause I can”™t go
I owe my soul to the company store.”
In this case the company store is New York state.
And getting out of debt appears to be a Sisyphean endeavor.
After you account for business tax, MTA tax, property tax, school tax, mortgage payments, and the host of other debts we all owe, don”™t forget to tack on $3,089.
That is the debt every man, woman and child owes to the state”™s borrowing. And what”™s really astounding is that most of it is borrowing that we never got to vote on.
A debt impact study just released by state Comptroller Thomas DiNapoli faults the state on its methods of borrowing. The state uses borrowing by public authorities to cover a large chunk of the capital plan. This backdoor borrowing, which cuts out any voter approval, “has become so commonplace that authority debt accounts for 94 percent of the state”™s current debt burden.” Compare that with 1985 when it accounted for 60 percent.
DiNapoli points out in his report that since the Debt Reform Act of 2000 was enacted, “a significant portion of the debt has been for non-capital purposes.” The purpose of the legislation was to prohibit such borrowing.
So, what happened?
Backdoor borrowing happened.
Since 2000, $17 billion in state-funded debt has been authorized and $7.6 billion was issued for deficit financing or budget relief.
The state today owes $57 billion for debt issued on behalf of the state by public authorities.
Ouch! Time to curtail this outrageous borrowing, no?
Well, that”™s what most business owners would say.
As far as the state goes, that”™s another story.
Stepping up to the plate to attack the state”™s financial morass is Lt. Gov. Richard Ravitch.
What does he suggest?
A five-year plan that includes borrowing billions to close budget gaps.
Remember he was the author of the MTA payroll tax.
“This plan is founded on two fundamental propositions: first, fiscal integrity, which means the acknowledgement that for too long we have found ways to cover up a structural imbalance between recurring revenues and recurring expenses,” Ravitch said. “We should adopt new laws that assure we spend only those monies we are willing to raise, and never again pretend our budgets are in balance when they are not. Second, is the avoidance of the inevitable increase in taxes that will result unless our political system finds the will to make the spending reductions necessary to close our growing structural deficit.”
The debt assessed to every single resident of the state is more than three times the national average.
“Borrowing billions is part of the reason we”™re in the current crisis,” DiNapoli says of Ravitch”™s plan.
“Borrowing to plug a deficit has serious consequences. For every dollar the state borrows, we end up paying two dollars back. And all those dollars we spend paying off debt are dollars that can”™t be used to teach our children, keep us safe, provide health care or give taxpayers some relief. ”¦ More debt would become part of the problem, not the solution.”
In his study, the comptroller calls for a ban on backdoor borrowing. His plan is also a bit radical in that it calls for letting voters determine whether a specific project should be approved for borrowing.
He also suggests imposing a real debt cap on all state-funded debt, create a capital asset/infrastructure council, and create a statewide capital needs assessment. He points out that there is “no comprehensive planning structure” to identify needs for transportation, education, environment and energy.
Maybe that”™s why the Tappan Zee Bridge plan doesn”™t yet exist.
