Should New York State voters be asked to approve a $5 billion “Clean Water, Clean Air & Green Jobs Bond Act” this year?  That question will be the focus of a public hearing the state Assembly will hold on May 27 in Albany.

The Assembly hearing notice says such a bond proposal “has been suggested,” but doesn’t say by whom**, and offers no other details of how the money would be spent, or why so much is needed.  A $5 billion general obligation bond issue would be the largest (in nominal terms) in the state’s history.  The “Clean Water/Clean Air Bond Act,” approved by voters in 1996, was just $1.75 billion.  The last transportation bond issue, approved in 2005, was $2.9 billion.

New York already ranks second in the nation in state debt.  The state comptroller’s office says outstanding state-supported debt in New York will exceed $66.8 billion by 2013-14 — up from $52 billion as of two years ago — and debt service will reach $7.9 billion, up 47 percent from the fiscal 2008-09 level.  Roughly 94 percent of state debt was issued by public authorities with legislative authorization, but without public approval.

The 2009-10 budget merely adds to the problem — misusing environmentally related debt, in particular.  As  the comptroller’s latest state budget report notes:

The SFY 2009-10 Enacted Budget authorizes the issuance of approximately $200 million in bonds for spending that would normally be covered with current cash resources, including $95 million for the Environmental Protection Fund (EPF). The Enacted Budget utilizes a sweep of $95 million from the EPF in order to balance the General Fund, all of which may be replaced with bond proceeds, thus creating additional debt costs in out-years. While debt is an essential tool for financing capital needs, the annual out-year impact of additional debt service may be significant. In this case, out-year debt service costs will increase total costs of environmental and other purposes by over $20 million, as a result of the additional bonding in SFY 2009-10.

** UPDATE: The bond act idea is being pushed by this coalition of labor union, environmental and business groups.

About the Author

E.J. McMahon

Edmund J. McMahon is Empire Center's founder and a senior fellow.

Read more by E.J. McMahon

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