New York's public debt is the nation's second highest on a per capita basis, 88 percent above the national average - which means that more government borrowing to address New York's coming fiscal challenge would be unwise, a new fiscal analysis from The Public Policy Institute of New York State shows.
"As with our taxes, public debt in New York is already far too high," the report, "Like Taxes and Spending, Government Debt In New York State Is Far Too High," said. The report, which The Institute released Dec. 6, is part of The Institute's Budget Watch '03 series. The report is posted at www.ppinys.org/budget/budget_watch_03_issue8_debt.pdf.
To close a budget gap estimated at $5 billion or more, Albany can raise taxes, but that would further increase a tax burden that is already the nation's highest and drive jobs away as the state tries to regain economic momentum, the report said.
"The second, and politically easiest, approach: Borrow still more billions from the taxpayers of tomorrow," the report said.
"Unfortunately, as with our taxes, public debt in New York is already far too high," the report said. "State and local elected officials have given taxpayers in the Empire State a debt burden of $9,357 per capita-second in the nation behind Alaska."
The report noted that:
- State
debt alone has more than doubled since 1990, which means
state taxpayers this year are spending $3.6 billion on principal
and interest from previous borrowing.
- A
cap on state supported debt enacted in 2000 only applies
to new issuances and will not effectively limit borrowing
for at least another decade.
- State
and local debt in New York is 60 percent higher per capita
than New Jersey's, and more than twice the level of Michigan,
another industrialized and heavily unionized state.
- Barely one in nine dollars of state debt was approved by voters. Most state debt was accumulated through so-called "back-door" borrowing by public authorities, which does not require voter approval.
"So, new taxes will only make our problems worse, and the state is already in too much debt to consider borrowing more. The third option-and the only real solution-for closing the budget gap?
"Control spending. There is no other choice," the report concluded.
The Institute, the research affiliate of The Business Council, launched Budget Watch '03 Nov. 7 to focus attention on spending issues that are at the root of the state's looming fiscal challenge. If the state had held overall state-funds spending to the rate of inflation over the last five years, the state could have saved $7.9 billion.
Additional reports in the series will be issued as the state budget debate unfolds. They can all be accessed from www.ppinys.org/bwatch03.htm.