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Backdoor Borrowing Drives New York into Debt Overload

By Will Barclay


Each quarter, New York State’s Division of Budget releases updates to the state’s financial plan. The latest report, which was published in November, included, once again, details on state debt. As one might guess, with our state’s reputation for spending, the state debt load is among the highest in the nation. Our outstanding debt is nearly $54 billion — second only to California.

Also, it may not come as a surprise that the state budget only scratches at the surface of paying down that debt. Of the nearly 

$54 billion in outstanding debt, the 2018-19 state budget only authorized paying back 

$5.6 billion of what is owed. In essence, if the state were a household with credit-card debt, it would only be paying its minimum balance along with some interest charges. On top of this massive borrowing, the Division of Budget estimates outstanding debt will grow. Projections indicate that by the fiscal year 2020, the outstanding debt will reach $57 billion and as much as $64 billion by 2023.

The state constitution limits using debt without voter approval to help ensure that New York does not over-borrow. Unfortunately, for several decades, the state, for a variety of reasons, has circumvented the state constitution by having public authorities and agencies borrow on behalf of the state. This borrowing is referred to as “backdoor borrowing” and it accounts for almost all of our state debt — $51.4 billion of the nearly $54 billion of state debt. Regardless of who issues this debt, the state — meaning you and me as taxpayers —are still on the hook to pay it back.

Using debt as financing isn’t on its face improper, or even bad public policy, provided it is used sparingly and for capital projects. Problems arise when debt is overused, used for operational expenses, and is made difficult to track. Unfortunately, this accurately describes much of our state’s backdoor borrowing. 

To curb our state’s addiction to debt, in this upcoming session I plan to introduce legislation that will limit our state’s overreliance on debt and backdoor borrowing. Just like any household, the state must learn to live within its means. My legislation will require all backdoor borrowing to be lined out and be primarily issued for capital projects that help finance our roads, sewers, or other public-works projects. In addition, we need to increase transparency among all authorities and require by law that each authority submit an annual report to members of the legislature and to the governor. I co-sponsor legislation that would increase these debt-reporting requirements that would help during budget negotiations. In addition, the state should begin using a portion of any future settlement dollars it receives to pay down its debts to save taxpayers in the long run. This just makes good financial sense and would help protect future generations of New Yorkers.       

William (Will) A. Barclay is the Republican representative of the 120th New York Assembly District, which encompasses most of Oswego County, including the cities of Oswego and Fulton, as well as the town of Lysander in Onondaga County and town of Ellisburg in Jefferson County. Contact him at or (315) 598-5185.

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