2021 Financial Condition Report

For Fiscal Year Ended March 31, 2021


2021 Financial Condition Report
For Fiscal Year Ended March 31, 2021

The debt burden of a governmental entity creates fixed costs that directly affect its ability to provide current services, as well as its long-term fiscal health. High borrowing levels may:

  • Indicate an inability to support current programs with current revenues.
  • Force future program reductions, increased taxation or additional future borrowing.
  • Limit the capacity to finance capital assets and grants.

New York State Ranks Second Highest in Outstanding Debt Nationwide

  • At the end of SFY 2020-21, the State reported the following debt levels:
    • $2.2 billion of constitutionally authorized, voter-approved general obligation debt, a decrease of 11.9 percent since SFY 2016-17.
    • $58.7 billion of State-Supported debt, as defined in section 67-a of the State Finance Law, an increase of 18.3 percent since SFY 2016-17.
    • $66.5 billion of debt reported in accordance with Generally Accepted Accounting Principles (GAAP), an increase of 18.3 percent since SFY 2016-17.
    • $70.7 billion of State-Funded debt, an increase of 15.1 percent since SFY 2016-17. This is the State Comptroller’s more comprehensive measure of the State’s debt burden, which includes certain obligations that are not recognized within the measure of State-Supported debt. It recognizes debt where the State makes payments with State resources, directly or indirectly, to a public authority, bank trustee or other municipal issuer. Nearly 97 percent of State-Funded debt has been issued by public authorities without voter approval.
  • In 2020, New York State had the second highest debt burden, behind only California. It was fifth highest among all states in debt per capita.
  • At the end of SFY 2020-21, State-Funded debt outstanding per capita was $3,500. State-Funded debt was equivalent to 4.8 percent of State personal income.


New York State Projects Increasing Debt Levels in Coming Years

  • The SFY 2021-22 Enacted Budget Five-Year Capital Program and Financing Plan projects that the 
    State will issue 221 percent more debt than it will retire over the next five years, with:
    • $45.4 billion of new issuances of State-Supported debt; and
    • $20.6 billion of State-Supported debt retirements.
  • The SFY 2021-22 Enacted Budget authorized the issuance of up to $5 billion in borrowings for State cash flow relief, consisting of a $2 billion line of credit and $3 billion in short-term notes. In SFY 2020-21, the Dormitory Authority of the State of New York (DASNY) issued $4.4 billion of short-term Personal Income Tax notes, which were fully retired by the end of the fiscal year.
  • The State projects reduced statutory debt capacity over the next five years, declining to $4 billion in SFY 2025-26. For the second year in a row, the SFY 2021-22 Enacted Budget excluded new debt issuances (in both SFYs 2020-21 and 2021-22) from the caps on debt outstanding and debt service, as well as removing requirements that proceeds be used for capital purposes. It also authorized issuing debt for MTA purposes in excess of the 30-year maximum term limit, up to 50 years. Combined, over $20 billion in new debt issuances are expected to be excluded from the caps in SFYs 2020-21 and 2021-22.
  • The State’s accumulated deficit financing ($388.7 million in SFY 2020-21) is scheduled to be fully repaid by SFY 2024-25. This includes remaining bonds issued by the New York Local Government Assistance Corporation (LGAC), bonds issued by the Urban Development Corporation to refund certain LGAC bonds and the Municipal Bond Bank Agency. An additional $1.5 billion in debt outstanding is associated with issuances by the Sales Tax Asset Receivable Corporation, which was refunded by the DASNY in June 2021, making it State-Supported debt.
  • New York issues State-Supported debt to fund certain capital purpose grants to other entities, which also creates State liabilities without corresponding State assets.
  • $3.1 billion in State-Supported debt service otherwise due during SFY 2020-21 through SFY 2024-25 was prepaid or defeased in SFY 2020-21. Prepayments typically do not reduce the State’s interest costs, and artificially reduce reported year-over-year growth in both debt service and overall spending levels.

New York State Bond Ratings

At the end of SFY 2020-21, the State’s general obligation bond ratings were assigned as follows:

  • AA+ by Fitch Ratings;
  • Aa2 by Moody’s Investors Service; and
  • AA+ by Standard & Poor’s (S&P) Rating Services.

These ratings are one to two steps below the highest investment grade ratings. In August 2021, Moody’s assigned a positive outlook to the State’s credit, reflecting recovery from the impacts of the COVID-19 crisis on the State’s finances. Ratings can influence interest rates and bond pricing. Higher ratings provide greater confidence to the investment community that the issuer is willing and able to meet the financial commitments of its obligations. The rating agencies have previously cited issuing additional debt for operating purposes as a potential risk factor that may lead to a downgrade of the State’s credit rating.