NEW YORK - New York would sell $5.9 billion of debt to finance capital projects in fiscal 2011, a $233.9 million increase over fiscal 2010, under the executive budget proposed today by Gov. David Paterson.
The proposed budget would close a $7.4 billion deficit through a series of spending cuts and tax and fee increases of which 92% would be recurring. All-funds spending in fiscal 2011 would total $134 billion under the proposal, a 0.6% increase over the current year. State operating spending would increase by $745 million to $79.9 billion, a 0.9% increase. Most of the state’s bonds, $5.27 billion, would be sold through public authorities rather than as general obligation.
In October, Paterson rejected a proposed $25.8 billion five-year bridge and highway capital plan as unaffordable. This budget calls for a $7 billion, two-year bridge and highway capital plan.
The budget would reauthorize the Empire State Development Corp. and the Dormitory Authority of the State New York to sell personal-income tax bonds for any eligible purpose. Under a proposal to consolidate state agencies, the ESDC would be merged with the Department of Economic Development and be renamed the Job Development Corp.
The proposal would also reauthorize the issuance of mental health bonds on the state’s PIT credit, which is higher rated than the state’s mental health facilities revenue credit that had been the debt vehicle for the bonds. Using PIT bonds for mental health projects will reduce debt service costs on planned issuance by $20 million to $30 million. The authorizations were first enacted last year.
Over the long term, Paterson called for capital spending cuts and an increase in pay-as-you-go spending relative to bonded debt. The capital reduction plan would lower projected bond issuance by $1.77 billion over five years, according to the proposal. Those decreases would first take effect in fiscal 2011, reducing projected spending on certain projects by $238 million.
Overall capital spending would increase to $10.8 billion from $9.99 billion, with the state’s outstanding debt rising by $2.7 billion to $57.5 billion.
