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2022 Financial Condition Report

For Fiscal Year Ended March 31, 2022

Debt

2022 Financial Condition Report
For Fiscal Year Ended March 31, 2022

The debt burden of a governmental entity creates fixed costs that directly affect its ability to provide current services, as well as its long-term fiscal health. High borrowing levels may:

  • Indicate reduced ability to support current programs with current revenues.
  • Force future program reductions, increased taxation or additional future borrowing.
  • Limit the capacity to finance future capital assets and grants.

New York State Ranks Second Highest in Outstanding Debt Nationwide

  • At the end of SFY 2021-22, the State reported the following debt levels:
    • $2 billion of constitutionally authorized, voter-approved general obligation debt, a decrease of 15.8 percent since SFY 2017-18.
    • $61.9 billion of State-Supported debt, as defined in State law, an increase of 20.8 percent since SFY 2017-18.
    • $70 billion of debt reported in accordance with Generally Accepted Accounting Principles (GAAP), an increase of just under 24.5 percent since SFY 2017-18.
    • $72 billion of State-Funded debt, an increase of 15.1 percent since SFY 2017-18. This is the State Comptroller’s more comprehensive measure of the State’s debt burden, which includes certain obligations that are not recognized within the measure of State-Supported debt. It recognizes debt for which the State makes payments with State resources, directly or indirectly, to a public authority, bank trustee or other municipal issuer. More than 97 percent of State-Funded debt has been issued by public authorities without voter approval.
  • In SFY 2020-21, New York State had the second highest debt burden, behind only California. It was sixth highest among all states in debt per capita.
  • At the end of SFY 2021-22, State-Funded debt outstanding per capita was $3,638. State-Funded debt was equivalent to 4.8 percent of State personal income.
Bar chart of State-Funded Debt Outstanding
Line chart of Projected State Debt Issuance and Retirement
  • The State’s accumulated deficit financing was $148.9 million in SFY 2021-22. This includes bonds issued by the Urban Development Corporation to refund certain Local Government Assistance Corporation (LGAC) bonds and the Municipal Bond Bank Agency.
  • New York issues State-Supported debt to fund certain capital purpose grants to other entities, which creates State liabilities without corresponding State assets.

New York State Projects Increasing Debt Levels in Coming Years

  • The SFY 2022-23 Enacted Budget Five-Year Capital Program and Financing Plan projects that the State will issue 238 percent more debt than it will retire over the next five years, with:
    • $44.5 billion of new issuances of State-Supported debt; and
    • $18.7 billion of State-Supported debt retirements.
  • The Debt Reform Act of 2000 defines State-Supported debt and sets limits on the amount of State-Supported debt outstanding and debt service, based on affordability measures such as State personal income and All Fund receipts. The State projects reduced statutory debt capacity over the next five years, declining to $309 million in SFY 2026-27. For both SFYs 2020-21 and 2021-22, new debt issuances were excluded from the caps on debt outstanding and debt service. The SFY 2022-23 Enacted Budget restored counting new debt issued in SFY 2022-23 and beyond under the caps, but continued to exclude debt resulting from the $17.9 billion issued in the previous two years. It also continued to authorize debt issuance for MTA purposes in excess of the 30-year maximum term limit, up to 50 years.
  • $7.6 billion in State-Supported debt service otherwise due during SFY 2022-23 through SFY 2026-27 was prepaid or defeased in SFY 2021-22. Prepayments typically do not reduce the State’s interest costs, and artificially reduce reported year-over-year growth in both debt service and overall spending levels.
Debt Service Expenditures in New York

New York State Bond Ratings

At the end of SFY 2021-22, the State’s general obligation bond ratings were assigned as follows:

  • AA+ by Fitch Ratings;
  • Aa2 by Moody’s Investors Service; and
  • AA+ by Standard & Poor’s (S&P) Rating Services.

These ratings are one to two steps below the highest investment grade ratings. In April 2022, Moody’s upgraded the State’s credit to Aa1, reflecting a significant increase in resources combined with agile financial management that projected balanced budgets through the State’s five-year financial plan. Ratings can influence interest rates and bond pricing. Higher ratings provide greater confidence to the investment community that the issuer is willing and able to meet the financial commitments of its obligations. The rating agencies have previously cited issuing additional debt for operating purposes as a potential risk factor that may lead to a downgrade of the State’s credit rating.