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  #481  
Old 11-27-2017, 10:02 AM
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viscous? oily politics, maybe?
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  #482  
Old 11-29-2017, 05:58 PM
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CONNECTICUT

https://ctmirror.org/2017/11/27/leng...m-low-on-cash/

Quote:
Lengthy CT budget debate leaves capital program low on cash

Spoiler:
It’s been nearly three years since Connecticut has had to dip into funds for capital projects to pay its operating bills.

But thanks to the long-running state budget impasse, the state’s cash flow problems could be back — in a slightly different way.

State Treasurer Denise L. Nappier warned in her most recent monthly debt report that this time around, Connecticut might need to temporarily transfer operating funds to cover its capital program.

The state uses this program to finance municipal school construction, road and other infrastructure upgrades, building programs at public colleges and universities, state building repairs and other projects.

Even with adoption of the new biennial budget in late October, “additional time will be required to properly stage and complete … bond sales,” Nappier wrote. “As a result, temporary transfers between bond proceeds investment accounts and the cash pool may be necessary over the coming months.”

Connecticut operates from a common pool that mingles tax revenues, federal grants and receipts from fees and licenses with borrowed funds. The treasurer’s office is allowed to transfer funds between operating and capital programs.

Though it is done infrequently, this flexibility was employed on several occasions both in 2009 during the last recession and again between 2012 and 2014 when bills exceeded available tax and other operating fund receipts.

A combination of a sluggish, post-recession economy coupled with decades’ worth of budgetary accounting gimmicks had drained operating cash substantially five years ago. At one point in May 2012, the state had $121 million in its common cash pool — while weekly disbursements were averaging about $540 million.

Gov. Dannel P. Malloy and the legislature ultimately solved this problem in 2013 when they approved borrowing roughly $560 million to improve the cash flow situation.

The latest challenge, though, involves capital spending and the bonds issued on Wall Street to finance various projects.

When the regular 2017 legislative session ended in early June without adoption of a state budget, it also meant Connecticut did not have the new revenue schedule it routinely would provide to potential bond investors.

State bond sales were postponed as the budget battle dragged into late October. Meanwhile, capital programs had to proceed, as best as possible, drawing upon already borrowed funds.

The state has issued no bonds to date this fiscal year to support its capital program, compared to the $1.3 billion it had issued at this point one year ago.

The next State Bond Commission meeting is scheduled for Nov. 29 and could pave the way for a bond sale in the near future.
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  #483  
Old 12-06-2017, 11:22 AM
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WESTCHESTER COUNTY, NEW YORK

http://northsalem.dailyvoice.com/bus...th-salem-24391

Quote:
S&P Downgrades Westchester Debt Outlook To Negative

Spoiler:
Westchester continues to receive the highest credit ratings of any New York State county after three credit agencies independently affirmed the county’s strong credit rating, with both Fitch Ratings and S&P maintaining ‘AAA’ ratings and Moody’s maintaining an Aa1, County Executive Rob Astorino announced on Thursday, Nov. 30.

However, Standard and Poor's global ratings downgraded its outlook for Westchester's debt from "stable" to "negative," while citing a reliance on so-called "one-shot" revenues to balance its annual county budgets. S&P said there was about a 30 percent chance of a negative scenario playing out in the future,.

Moody’s and Fitch, meanwhile. both gave Westchester County a stable outlook.

Astorino, who served for eight years as county executive, kept the property tax levy flat, but needed to rely on borrowing for operating expenses. State Sen. George Latimer, a Democrat who defeated Astorino for the top county job on Nov. 7, criticized Astorino for using short-term budget gimmicks to balance annual operating costs.

“Three independent groups have looked at the county’s finances and have re-affirmed that we are on solid fiscal footing because of our responsible fiscal management,” Astorino said. “Westchester County remains the highest rated county in New York State for good reason, and that enables us to save money for taxpayers.”

The county’s high bond ratings allow taxpayers to save millions of dollars a year on interest costs associated with borrowing along with refinancing bonds, according to Jerry McKinstry, a spokesman for Astorino.

While all three ratings agencies noted the challenges faced by the county, such as uncertain sales tax revenue and high pension expenses, they each praised the county’s careful management of its finances.

Fitch, in its affirmation, noted that its AAA rating reflected the county’s superior financial resilience given its stable general fund reserves along with Westchester’s strong regional economy and relatively low unemployment when compared with state and national averages. Fitch also cited Westchester’s strong ability to close budget gaps afforded by the county’s highly stable reserves.

S&P cited the county’s economy, financial policies and practices, budgetary flexibility, liquidity and institutional framework, though raised concerns about how the county would be affected by federal tax reform – should it be passed by Congress – potentially affecting state and local income tax and mortgage deductions. S&P rated Westchester County well compared with the federal government.


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  #484  
Old 12-08-2017, 02:20 PM
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MOODY'S
RATING

https://www.moodys.com/research/Mood...ies--PR_376118

Quote:
Announcement: Moody's proposes revised methodology for US states and territories
Global Credit Research - 05 Dec 2017
Spoiler:
New York, December 05, 2017 -- Moody's Investors Service requests comments from market participants on a proposed update to its methodology for rating general obligation debt of US states and territories. Among other changes, a new scorecard would be expanded to the lower end of the ratings scale to better reflect the weaker credit quality of US territories relative to states.

The revised methodology would be titled "US States and Territories." If the proposed methodology is adopted, no ratings will be placed on review for a possible rating change.

Proposed changes include reducing the weight of the governance factor to 20% from 30% and increasing the weight of the economy factor and the debt and pensions factor to 25% each from 20% each, to reflect the relative influence of the state or territory economy and the effect of long-term liabilities on credit assessments.

The proposed methodology, however, does not offer an exhaustive treatment of all factors that Moody's reflects in its ratings, but should enable the reader to understand the considerations that are usually most important for ratings in this sector.

Moody's invites market participants to comment by 18 January 2018 by submitting comments on the Request for Comment page on Request for Comment page on www.moodys.com.

The Request for Comment is available at

https://www.moodys.com/researchdocum...id=PBM_1084469


http://www.pionline.com/article/2017...ting-decisions

Quote:
Moody’s proposes upping pension debt weighting in credit-rating decisions


Spoiler:
Moody's Investors Service is seeking comments from market participants on proposed changes to its methodology for states' general obligation credit ratings, which would include an increased emphasis on states' debt and pension obligations.

Under the proposed changes, debt and pension obligations will have a 25% weight on state credit ratings, up from 20% currently. The individual state's economy, another factor in Moody's ratings, will also have a 25% weight, up from 20%. Governance will fall to 20% from 30% and finances will be maintained at 30%.

The debt and pension factor "is critical because debt and pension obligations are the primary long-term liabilities that states have," Moody's said in an announcement on the proposed changes Tuesday. "As these liabilities grow, states face rising expenses to pay debt and pension benefits. High fixed debt service and pension costs can crowd out other budgetary priorities and force states to raise taxes in order to meet them. Debt and pensions can curtail a state's budgetary flexibility and heighten the risk that it will seek to deleverage through a debt restructuring."

Comments should be submitted on Moody's website by Jan. 18.


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  #485  
Old 12-11-2017, 04:03 PM
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HARTFORD, CONNECTICUT

http://www.courant.com/community/har...208-story.html

Quote:
Hartford Mayor Luke Bronin Seeks Permission To Apply For State Oversight
Spoiler:
Mayor Luke Bronin has requested permission from the city council to move ahead with an application for state oversight.

In exchange for monitoring by a state-appointed panel, Hartford is expected to receive tens of millions of dollars in additional aid this fiscal year to help offset a $65 million budget deficit.

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The state spending plan adopted in October allows distressed Connecticut municipalities to apply for extra funds from a special account. Cities and towns also can request debt assistance from the state.

Hartford has asked for at least $40 million more on top of the $270 million it is supposed to get. Some of that would come from the special account and some would come in the form of state-subsidized debt payments. The city’s annual debt contributions are projected to top $60 million by 2021.

Connecticut’s newly formed oversight board, which will monitor finances in any municipality that applies for the extra aid, ranks cities based on their fiscal outlook. Tier one is the least serious, while a tier four ranking is the most dire.

Hartford would start out at a tier three.

Ben Barnes, a co-chair of the municipal oversight board,
Ben Barnes, a co-chair of the municipal oversight board, (Courant file photo)
Under that status, the board must approve any new debt, may require the city or its school board to give notice of any contracts exceeding $100,000, and will monitor city budgets.

The panel can also reject — as many as two times — each new labor contract and arbitration award.

Council President Thomas “TJ” Clarke II said Friday that council members support the mayor’s bid for oversight. While some had expressed reservation about it months ago, they are now focused on securing the additional state funds, he said.

A vote on the proposal is expected Monday.

Meanwhile, the state oversight board held its first meeting Friday. Eight people have been appointed to the 11-member panel. More are expected to follow.

Members are Thomas Hamilton, chief financial officer of Norwalk Public Schools; Patrick J. Egan, former president of the New Haven Firefighters IAFF Local 825; John B. Nolan, a lawyer for Day Pitney; Scott D. Jackson, the state’s labor commissioner and former mayor of Hamden; and Mark Waxenberg, former executive director of the Connecticut Education Association.

The board is co-chaired by state Treasurer Denise Nappier and Ben Barnes, secretary of Connecticut’s Office of Policy and Management.

Members on Friday discussed the new law governing the panel and set a schedule for its 2018 meetings.

Barnes said that while the board has been “anxiety producing” for a lot of people, especially labor groups, members will use its power with “great reserve” and listen to input from the public.

The group was appointed by Gov. Dannel P. Malloy and legislative leaders.


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  #486  
Old 12-13-2017, 10:48 AM
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CONNECTICUT



Quote:
Connecticut to issue a new type of bond for a new economic reality

Spoiler:
Connecticut’s bond commission just approved another $1 billion in general obligation bonds to be issued for schools, capital projects and tax credits to businesses, but beginning in 2018 the state will begin to issue a new type of bond.

Included in the bipartisan budget package was a provision to issue new revenue bonds tied directly to Connecticut’s income tax, which the Treasurer’s office described as “stable and strong.”
According to the proposed legislation from the Office of the State Treasurer, “this structure capitalizes on the State’s high wealth levels and insulates the bonds from budget and pension concerns, thereby earning higher credit ratings and lowering borrowing costs.”


“Experts say that this new type of bond better insulates the bond holder because it is backed by a specific revenue source,” David Barrett, spokesman for the State Treasurer’s Office, said in an email.
General Obligation bonds allow the state to pay its debt service through any means – or revenue source – available, but the new revenue bonds will be paid for exclusively out of Connecticut’s income tax stream.

Connecticut experienced a series of credit downgrades throughout 2017, which will raise borrowing costs in the future. Chief among rating agencies’ concerns was the growth of Connecticut’s fixed costs such as unfunded pension liabilities and, of course, debt costs.

S&P Global Ratings warned of a negative outlook on Connecticut’s most recent round of bonding. “Above-average debt, high unfunded pension liabilities, and large unfunded other post-employment benefit liabilities … create what we believe are significant and growing fixed-cost pressures that restrain Connecticut’s budgetary flexibility,” the ratings agency wrote.
Adding to the state’s debt pressures, Gov. Dannel Malloy issued a warning last week that Connecticut’s Special Transportation Fund faces insolvency due to its ever-growing debt burden. The state will not be able to issue transportation bonds for new projects until the STF is balanced.

One of the potential solutions offered by the Office of Policy and Management is to issue General Obligation bonds for transportation projects, “to offset the reduced bonding capacity in the STF.”
Payments for Connecticut’s debt is one of the fast-growing “fixed costs” which have been driving up government expenses. Connecticut’s bonding has nearly doubled since 2000, and debt service has grown from 1.3 billion to $2 billion during that same time, according to CTStateFinance.org.

Connecticut is not the first to try to improve its borrowing situation by tying bonds to a specific revenue source. New York began issuing personal income tax bonds in 2001 as a way to save money. The PIT bonds – as they are referred to – achieved a better credit rating than the state of New York’s general obligation bonds.
New York also issues bonds tied to the state’s sales tax, as well.

According the Treasurer’s office, Connecticut’s income tax bonds will have a better credit rating and lower borrowing costs. The savings will be transferred into the state’s rainy day fund to help with future budget issues.

Although Nappier described the state income tax as “stable and strong,” State Comptroller Kevin Lembo described the tax as “volatile” in his report on the budget reserve fund.

“Connecticut’s high concentrations of individual wealth and significant number of corporate headquarters result in large fluctuations in revenue as economic conditions change. Revenue fluctuations result in significant revenue shortfalls when the economy is under-performing, requiring cuts in programs, reductions in aid to cities and towns, tax increases or all of the above,” he wrote.

Lembo’s report advocated for increasing the cap on the rainy day fund from 10 to 15 percent of the budget in order to better meet budget needs when revenues fall short.

Income tax bond-holders will have will have the first cut of Connecticut’s income tax revenue, but that revenue has historically come up short, leaving state lawmakers scrambling for last-minute fixes and raiding the rainy day fund to make ends meet. The budget reserve fund was almost emptied in 2017 when income tax revenues came in lower than projected and left a $390 million deficit.

The 2017 budget crisis was made billions worse when the state failed to meet its revenue goals, and this year the Office of Fiscal Analysis and the Office of Policy and Management are predicting further declines in income tax revenue, leading to a $207 million deficit.

State projections indicate Connecticut will likely face a $4.6 billion deficit the next budget cycle at precisely the same time state employees are scheduled to receive raises.
However, if any problem exists with the new bond itself, but rather with what Connecticut’s need to switch to an income tax bond represents — namely, that the full faith and credit of the State of

Connecticut is no longer enough for bond-holders.

The Wall Street Journal’s editorial board labelled the new bond as a “debt trick” and claimed that bond-holders would be less secure in the event of a default because there would be “competing creditor claims.”

Sen. L. Scott Frantz, R-Greenwich, and chairman of the Finance, Revenue and Bonding Committee told Bond Buyer Magazine that the new bond “sends out a message that Connecticut is becoming more desperate to shore up its fiscal foundation, the state needs to do everything it can to reduce expenses and manage through its perpetual short-term cash crunch.”

Gov. Dannel Malloy – whose administration has overseen a steep increase in bonding – coined the phrase “new economic reality” to signify Connecticut’s stalled growth and growing expenses, which has led to a perpetual state of fiscal crisis and the need for cost-cutting measures.

The personal income tax bonds may be a new type of bond for the new economic reality – not something lawmakers necessarily want to do, but are left little choice due to Connecticut’s poor fiscal and economic position.

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  #487  
Old 12-13-2017, 09:16 PM
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https://www.bloomberg.com/news/artic...low-twitter-tv

Quote:
House's Brady Signals Tax Bill May Ease Curbs on Muni-Bond Sales
By Kaustuv Basu and William Selway
December 12, 2017, 12:30 PM EST
‘Private activity bonds can play an important role,’ he says
Risk of subsidy loss triggered a rush to sell debt this month
Spoiler:
Lawmakers are re-examining a provision that would roll back subsidies for a big chunk of the municipal-bond market beginning next year, according to House Ways and Means Chairman Kevin Brady.


The House bill calls for repealing the tax-exemption for so-called private activity bonds that allow hospitals, airports, housing developers and other businesses to finance projects at low interest rates. That provision has led to a flood of new bond issues that’s on track to set a record this month as issuers rush to sell billions of dollars of the securities while they still can. The Senate bill doesn’t curb sales of private activity bonds.

Brady, who’s overseeing the House-Senate conference committee that will iron out the differences in the chambers’ two bills, said lawmakers aren’t necessarily going to roll back the tax breaks for the bonds completely.

“I think there’s agreement that private activity bonds can play an important role,” he told reporters Tuesday. The bonds are important for infrastructure also, he said.

Brady said last week that GOP lawmakers were looking at a number of categories of the securities to determine whether the projects they finance justify the subsidy.

“We are going to have that discussion with the Senate to find a resolution there,” he said. “I think private activity bonds have drifted far afield from their original mission. There is a simple test: What are those activities that must be subsidized by every taxpayer?”

Whatever lawmakers decide on private activity bonds, the municipal market will still likely be affected by other provisions in the legislation: Both the Senate and the House bills would eliminate the use of tax-exempt bonds for advance refundings, a technique state and local governments use to refinance tens of billions of dollars of debt each year.
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Old 12-15-2017, 01:29 PM
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http://www.governing.com/week-in-fin...sion-fees.html

Quote:
The Week in Public Finance: Tax Reform Games, a Mad Rush to Issue Muni Bonds and Pension Fees

Spoiler:
A Scramble to Sell Muni Bonds
While there's still hope that federal tax revisions will retain a highly valued tax deduction for certain municipal bonds, governments that issue them aren’t taking any chances. Over the last few weeks, there’s been a surge in the number of requests for bond identification numbers, called CUSIPs, for two types of bonds potentially facing cutbacks.

A request for a bond identifier is a signal that a government is getting ready to issue new bonds. According to CUSIP Global Services, a total of 1,220 municipal bond identifier requests were made in November, an increase of 20 percent from October. The firm attributes much of the increase to proposals by Congress to eliminate advanced refunding and private activity bonds.

Private activity bonds, which represented between 25 and 35 percent of issuance last year, allow governments to take out tax-exempt municipal bonds for projects built and paid for by a private developer. They are commonly used to finance housing projects and hospitals. Advanced refunding bonds, meanwhile, let governments refinance debt earlier than most terms allow to start saving sooner with lower interest rates.

The Takeaway: The House and Senate are currently reconciling their tax reform bills. In the latest version, private activity bonds are preserved while advanced refundings are eliminated. As a result, observers expect issuance to continue to pick up as the year -- and potential savings opportunities --comes to an end.
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Old 12-18-2017, 10:53 AM
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TAX REFORM

https://www.barrons.com/articles/sha...ial-tw#new_tab

Quote:
Shaking Up the Market for Municipal Bonds

Spoiler:
All politics are local, according to the famous dictum of Reagan-era House Speaker Tip O’Neill. But the municipal bond market has rarely been as roiled by national politics as it has been by the drama in Washington over tax reform.

–– ADVERTISEMENT ––




On the face of it, the muni market should be a shelter from the storm over taxes. The chief attribute of bonds issued by states and localities is that their interest is typically exempt from federal taxation, and in the case of bonds issued in the investor’s home state, usually free of state and local income taxes, too. For those who feel they’re drowning in taxes, munis are their oasis.

But as with almost anything to do with taxes or with Washington—or both—it’s rarely that simple. The tax changes proposed by congressional Republicans were supposed to make everybody’s taxes lower and less complicated. Somebody’s simplification had to become somebody else’s loss of a tax break.

That’s where the muni market comes in. The tax writers have targeted several categories of bonds; they would lose their tax exemptions so that Uncle Sam could reap revenue.

Even with the changes emerging from Capitol Hill—the final legislation text was just released as we went to press—the relatively high after-tax yields of munis still make them attractive for investors.

But tax reform does present fiscal challenges to state and local governments. And that’s on top of the better-known problems of public pension shortfalls in states such as Illinois and New Jersey. For one, so-called advance-refunding bonds would lose their tax-free status under Congress’ plan. These bonds are sold before they’re able to be redeemed in order to refinance older, higher-cost debt. In the meantime, the proceeds of the advance-refunding bonds are invested in other securities, usually Treasuries, until the old bonds can be called.


The removal of the exemption will reduce financial flexibility, which, along with other aspects of tax reform, is a “hidden tax” for state and local governments.

A more worrisome long-term threat looms over states and municipalities: the restriction on deductibility of state and local taxes, which now goes by the acronym SALT, from individuals’ federal income taxes.

Shaking Up the Market



for Municipal Bonds
The original House bill killed the state and local deduction entirely. In response to a loud outcry over the SALT elimination, the Senate version would have limited the deduction to $10,000 in property taxes.

The conference committee loosened the restriction a bit further, allowing the deduction of $10,000 of state and local taxes, whether property, income, or sales taxes. But that doesn’t come anywhere near the state and local tax tab borne by high earners in high-tax states.

Combined with the restriction on deductions on mortgage interest, Standard & Poor’s worries that the SALT restrictions will “likely have an impact on property values over time, and given the dependence of local governments on property taxes, there could be a credit impact from both tax-base reductions and the resultant lower tax revenues.”

The argument against the SALT deduction is that it effectively subsidizes high-tax states’ profligate ways, shifting part of the burden to lower-tax states. But the money flows actually go the other way.

Natalie Cohen, senior analyst for Wells Fargo Securities, cites estimates from the Rockefeller Institute of Government that finds a SALT restriction would worsen the balance of payments from states that pay more to the federal government. The top “donor” states are currently Connecticut, New Jersey, New York, Massachusetts, Illinois, and California—all high-tax states that would be hurt by the elimination of the deduction.

Paying more to the federal government than it receives induces higher taxes just to stay even, Cohen writes. “Connecticut, which is having significant fiscal difficulties, would likely do better if it could retain more of the income its residents generate,” she concludes.

Indeed, according to Piper Jaffray analysts Justin Hoogendoorn, Brett Adlard, and Al Cappelli, SALT restrictions “could eventually result in the redistribution of wealth as individuals leave high-taxed states.”

SALT could also have an impact on where businesses decide to locate, notes Terri Spath, chief investment officer of Sierra Investment Management in Santa Monica, Calif.

EVEN SO, THE TAX-EXEMPT FEATURE of munis remains valuable. Indeed, investors in high-tax states may face a shortage of in-state bonds exempt from federal, state, and local levies. Even without being able to take advantage of such tax exemptions, foreign investors have increasingly been buying munis because their yields are significantly higher than what’s available in other countries, Spath adds.

For instance, a triple-A 10-year muni yielded 1.99% Thursday, compared with 2.27% for the comparable Treasury note. For an investor in the new, top 37% tax bracket, the muni is equivalent to a 3.16% taxable yield. Even at the 25% bracket, the 10-year muni is equivalent to 2.65% on a taxable security.

At the long end of the market, a 30-year top-grade muni’s yield of 2.57% is equivalent to a 4.08% taxable yield in the 37% tax bracket and 3.43% in the 25% bracket; that compares with 2.72% for a long Treasury bond.

That doesn’t reflect the 3.8% Medicare tax on investment income that’s levied on couples earning more than $250,000 and individuals making over $200,000, which doesn’t affect munis, notes John Miller, the head of municipals at Nuveen. With the SALT deduction capped at $10,000 and the top tax rate barely budging (from the current 39.6%), muni income is that much more valuable, he contends.

Washington could have had an even bigger impact on the municipal market. The biggest class of muni bonds in tax writers’ crosshairs—so-called private-activity bonds—was spared when the House and Senate hashed out the differences in their respective bills.

Keeping the exemption is a plus for entities that use this financing—not-for-profit hospitals, low-income housing, universities, charter schools, and infrastructure projects like airports, roads, and bridges. Curtailing private-activity bonds would go against the Trump administration’s professed interest in infrastructure investment.

All in all, the municipal market will face greater challenges in the future. But it is—and will remain—one of the few tax-favored sources of income for investors.
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Old 12-18-2017, 03:28 PM
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NEW YORK

http://www.osc.state.ny.us/press/rel...scal+oversight

Quote:
DiNapoli: Report Warns of Growing State Debt
New York Ranks Second in Nation in Total State Debt
Spoiler:
New York's state-funded debt is projected to reach $63.7 billion at the end of the current fiscal year and to increase over the following four years to $71.8 billion, according to a report issued today by New York State Comptroller Thomas P. DiNapoli. The comptroller once again called for reforms to New York's use of debt, including voter approval of borrowing and better capital planning for infrastructure projects.

"New York faces tremendous infrastructure challenges and the wise use of debt can be an essential part of the financing picture," DiNapoli said. "Still, backdoor borrowing imposes significant costs on taxpayers, lacks transparency and may limit flexibility in providing important services and programs. My debt reform proposal would help ensure effective capital planning and manageable debt levels."

The Debt Reform Act of 2000 imposed statutory limits on the levels of debt outstanding and debt service. Current projections indicate the state's available borrowing capacity under the limit on debt outstanding will shrink to only $58 million in SFY 2020-21. The act added restrictions to provisions in the state constitution that prohibit the state from issuing debt without voter approval. However, the state has used various mechanisms, including public authorities, to circumvent both the constitutional and statutory restrictions on borrowing.

New York's per capita debt is $3,116 or three times the median for all states. The annual debt service payments are projected to exceed $8.2 billion by the end of State Fiscal Year 2021-22.

New York's debt includes (as of March 31, 2017):

$61.4 billion in state-funded debt outstanding, an increase of $8.9 billion, or 17 percent, from SFY 2007-08.
$2.46 billion in voter-approved, General Obligation debt, representing 4 percent of state-funded debt outstanding at the end of SFY 2016-17. That's down from 6.1 percent 10 years earlier.
$47.2 billion of state-supported debt issued by public authorities, which increased $6 billion, or 14.5 percent, over the same period.
$11.7 billion of debt which is not counted as state-supported debt but is part of total state-funded debt outstanding. For example, this debt includes the Dormitory of the State of New York's Secured Hospital program bonds for which the state is paying debt service on behalf of certain hospitals based on a contingent contractual obligation, but is not defined under the law as state-supported.
State-funded debt is a measure developed by the Office of the State Comptroller to provide a more comprehensive description of the state's debt burden than the statutory measure of state-supported debt. The $61.4 billion in state-funded debt outstanding at the end of SFY 2016-17 included $49.6 billion of state-supported debt. Examples of such additional debt include bonds issued by the Tobacco Settlement Financing Corp. and certain bonds issued in recent years to pay for State University of New York dormitories.

Total state-funded debt is projected to increase by $10.4 billion, or 17 percent, over the state's current five-year capital plan period.

DiNapoli's report notes:

New York's current debt total is second only to California's $87 billion.
New York's debt as a percentage of personal income, at 5.1 percent, was second only to New Jersey within its peer group and more than two times the national median of 2.5 percent;
New York's debt per capita of $3,116 was again second to New Jersey within its peer group and three times the national median of $1,025;
New York's debt as a percentage of state GDP (4.1 percent) is nearly twice the median of its peers and the national median of 2.2 percent; and
New York follows Illinois with the second highest debt service as a percentage of All Funds receipts in the peer group.
DiNapoli's proposal for debt reform includes statutory and constitutional provisions that would:

Amend the state constitution to limit all state-funded debt to 5 percent of personal income, starting in SFY 2027-28 to allow appropriate time for planning purposes, and to prohibit the use of state-funded debt for non-capital purposes.
Amend the constitution to ban the issuance of state-funded debt by public authorities and other entities, to allow multiple General Obligation Bond acts to be considered by voters in the same year, and to require all state-funded debt to be issued by the Comptroller, following voter approval. A limited amount of debt could be issued without voter approval annually, along with emergency debt to be issued only under extraordinary circumstances and within strict guidelines.
Create a New York State Capital Asset and Infrastructure Council to provide an inventory and monitor the status of all capital assets of the state and its public authorities, as well as, in its discretion, local authority and municipal corporation capital assets which receive a significant state investment; and
Establish a Statewide Capital Needs Assessment and require a comprehensive 20-year long-term strategic plan to guide the five-year Capital Plan.
Read the report, or go to: http://osc.state.ny.us/reports/debt/...study-2017.pdf

For access to state and local government spending, public authority financial data and information on 140,000 state contracts, visit Open Book New York. The easy-to-use website was created to promote transparency in government and provide taxpayers with better access to financial data.
Report:
http://www.osc.state.ny.us/reports/d...study-2017.pdf

http://www.pressrepublican.com/news/...ecb17670b.html

Quote:
DiNapoli sounds alarm over rising debt cost to New Yorkers
Spoiler:
ALBANY — State taxpayers will be on the hook for billions of dollars in increased finance charges over the next four years as a result of growing government debt, the state comptroller says.

Thomas DiNapoli called for a constitutional amendment to cap state debt at 5 percent of personal income, starting with the state budget for the 2027-28 fiscal year, along with an end to the practice known as "back-door borrowing" — a fiscal gimmick used by some state authorities.

"Backdoor borrowing imposes significant costs on taxpayers, lacks transparency and may limit flexibility in providing important services and programs," he said.

A report issued by DiNapoli's office projected that total state debt will hit $71.8 billion over the next four years, with annual debt service obligations expected to top $8.2 billion by 2022.

Total debt now stands at $63.7 billion, the comptroller said.

DiNapoli contended that voters should be empowered to have a say on general obligation bond act proposals in the year they are set to be issued.



CHILLY RESPONSE

The comptroller's analysis of the state's debt woes comes at a time when Gov. Andrew Cuomo's administration is beginning to piece together its proposed budget for the state fiscal year that begins April 1, one that will have to close a deficit projected to exceed $4 billion.

DiNapoli's analysis drew a chilly response from the Cuomo administration, which contended the comptroller inflated total state debt by more than $10 billion, noting the report lumped in borrowing that was approved by local governments and school districts, which required no state approval.

“This report does not adhere to generally accepted accounting principles and includes debt that is not recognized as the responsibility of the state on the Office of the State Comptroller's own financial statements," said Morris Peters, Office of the State Division of the Budget.

"The fact is, New York’s debt has declined for five consecutive years for the first time in history, and our debt to personal income ratio is at the lowest level since the 1960s.”



'VERY SENSIBLE'

But E.J. McMahon, research director for the Empire Center for Public Policy, called DiNapoli's proposals "very sensible reforms," noting that state debt is about to start rising again after it initially declined on Cuomo's watch.

He attributed some of the latest debt to economic-development and housing projects initiated by Cuomo five years ago.

"The economic-development handouts, mainly debt-funded, are the most dubious category for which the state has expanded its borrowing in the past six years," McMahon said.

"The priority should be core infrastructure, not subsidies for developers and private corporations."

With the state facing major fiscal woes, Sen. Rob Ortt (R-North Tonawanda) called for "increasing public oversight of borrowing and setting in place a long-term plan can help decrease the financial strain on future generations.”

"For years, the state has been unwise with borrowing practices and the spending of taxpayer dollars," Ortt said. "This carelessness has contributed to our current budget deficit and will force us to make some difficult decisions."

State Sen. Betty Little (R-Queensbury) said state debt service has drawn only scant attention in Albany in recent years.



Email Joe Mahoney:

jmahoney@cnhi.com
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