While much has been made of a deficit-borrowing proposal in New York, less attention has been paid to how those bonds would force fiscal discipline through bond covenants.

“The reason I proposed borrowing, some borrowing, was that if they don’t limit it, there’s a good chance the Legislature will want to do a hell of a lot more,” Lieut. Gov. Richard Ravitch said in an interview. “Second of all, I am suggesting that the best credit the state has — which is the [personal income tax] bonds — be used and we have to do a borrowing to get this covenant in place.”

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