New York City's debt has more than tripled since 1990, according to city Comptroller Scott Stringer, who said related costs stress the city's operating budget.
"While such spending is necessary, it is costly because of the city's varied and aging infrastructure," said Stringer, in his fiscal 2015
The debt rose from $2,951 per capita in fiscal 1990 to $9,665 in fiscal 2014 a 228% increase. Over the same 24 year period, said Stringer, the region's consumer price index went up by 89%.
According to the report, which Stringer issued late Friday, this growth in the city's capital spending for infrastructure is a corollary of the neglect of the 1970s in the early part of this period. In the latter part of this period, he said, new capital needs and the ongoing maintenance of its complex infrastructure triggered the capital spending increase.
As of June 30, the city has $41.7 billion in general obligation debt outstanding. Gross debt outstanding, including Transitional Finance Authority, Tobacco Settlement Asset Securitization Corp., Star Corp., capital lease obligations and other miscellaneous debt, amounts to $81.1 billion.
To diversify its interest rate risk, gross debt consists of both fixed- and variable-rate debt, with the bulk in fixed-rate borrowing. In fiscal 2014, fixed-rate debt accounted for 86.5% gross debt outstanding.
Moody's Investors Service, which assigns an Aa2 rating on the city's general obligation bonds, cited the city's "high and growing" debt burden. "Despite its strong budgetary controls, mounting costs for debt service, pensions and retiree health care will continue to be a challenge for the city," Moody's said.
According to Moody's, New York's rating could rise or fall depending upon how it slows the pace of rising debt and other non-discretionary spending.
Fitch Ratings and Standard & Poor's assign the GO bonds AA.
"While New York City has a large amount of outstanding debt and great capital needs, its credit rating remains strong," said Stringer. "Rating agencies cite the city's large and diverse economy, strong financial management, and liquidity among positive credit attribute that support GO ratings."
High ratings for the TFA and the New York City Municipal Water Finance Authority reflect their strong legal frameworks and debt service coverage by pledged revenues, according to Stringer.
The city may issue long-term debt only for capital purposes -- assets with useful lives of five years or greater.
The report said 47.2% percent of the outstanding debt of the three primary issuers of debt backed by city general fund revenues - GO, TFA and tobacco settlement - is scheduled to come due over the next 10 years.
Despite its magnitude, the amount of outstanding city debt counted against the city's debt limit is well under the city's statutory debt-incurring power for the current year, said Stringer.
New York's general debt limit, which the state Constitution established, is 10% of the five-year rolling average of the full value of taxable city real property. The city's fiscal 2015 general debt-incurring power of $81.36 billion is projected to increase to $84.81 billion, $88.59 billion and $90.73 billion over the following three fiscal years.
