|
View
Report
New York City Comptroller William C. Thompson, Jr. today issued
a Charter-mandated Capital Debt and Obligations report indicating
that the City's capital budget requirements, which are funded primarily
with debt, continue to result in increasing levels of indebtedness
for the City. The resulting debt service costs continue to place
a significant burden on the City's operating budget.
“New York City has the largest population of any city in
the United States, and it is obligated to maintain a complex and
aging infrastructure,” Thompson said. “While it is critical
for the City to maintain its infrastructure, the capital program
must carefully be monitored in light of the City's growing rate
of debt.”
Section 232 of the City Charter requires the Comptroller to report
on the amount of debt the City may responsibly incur for capital
projects during the current fiscal year and each of the three succeeding
fiscal years. Debt is issued by the City, or on behalf of the City,
through a number of different vehicles, including General Obligation
(GO) debt, the New York City Transitional Finance Authority (NYCTFA)
and TSASC, Inc.
You can view the report at
www.comptroller.nyc.gov.
The City uses capital bond proceeds for the construction and rehabilitation
of school buildings, firehouses, health facilities, community colleges,
roads, bridges, libraries, and police precincts. Bond proceeds also
are used to finance shorter-lived capital items such as comprehensive
computer systems, Thompson said.
Debt per capita - the share of the burden on each of the city’s
eight million residents - grew to $7,096 by FY 2007 from $2,490
in FY 1990, a 185 percent increase. Over the same period, the cumulative
growth rate in debt per capita exceeded the rate of inflation by
118 percentage points, and the growth rate of City tax revenues
by 27 percentage points.
The City's general debt limit, as provided in the New York State
Constitution, is 10 percent of the five-year rolling average of
the full value of taxable City real property. The City’s FY
2008 general debt-incurring power of $60.10 billion is projected
to rise to $67.35 billion in FY 2009, $73.66 billion in FY 2010,
and $79.48 billion in FY 2011.
Thompson’s report noted that the City was below its general
debt limit by $20.6 billion on July 1, 2007 and is projected to
have remaining debt-incurring capacity of $20.44 billion on July
1, 2008, $19.98 billion on July 1, 2009, and $21.52 billion on July
1, 2010. In addition to these obligations, the City is responsible
for the interest on Hudson Yard Infrastructure Corporation (HYIC)
debt but not its related principal of $2 billion.
Additionally, the debt-incurring capacities of the NYCTFA and TSASC,
Inc. total $17.3 billion of which $14.8 billion has been utilized
to finance the City’s capital program and $2 billion for recovery
bonds issued for general fund expenses in the aftermath of the World
Trade Center disaster. The portion of NYCTFA whose credit is secured
by personal income tax receipts has exhausted its legislatively-determined
general debt-incurring power as of July 1, 2007.
The City of New York continues to have good access to the public
credit markets. The City’s General Obligation (GO) credit
ratings were upgraded by all three rating agencies in 2007, and
are rated AA by Standard & Poor’s, Aa3 by Moody’s
Investor Services, and AA- by Fitch Ratings.
The NYCTFA credit that is secured by personal income tax receipts
is rated even more favorably, however, with ratings of AAA by Standard
& Poor’s, AA+ by Fitch and Aa1 (for senior bonds) by Moody’s.
Accordingly, NYCTFA borrowings provide the City’s lowest
cost of funds, and Thompson noted that it would be beneficial to
the City to issue more of its debt in this form. The State Legislature,
he said, should extend NYCTFA's debt issuance authority to allow
the City to lower its financing costs.
###
|
