Assemblyman James N. Tedisco (R,I,C-Schenectady/Saratoga) today announced that he will introduce legislation to reveal the true costs associated with state borrowing. The bill, the Truth in Borrowing Act, will require public disclosure of estimated costs to appear on the ballot for a vote prior to the state taking on new debt. Tedisco said the measure was necessary in light of today’s vote in the Assembly Chamber to support $9.29 billion in debt service and Lieutenant Governor Ravitch’s plan to borrow $6 billion more.
“This legislation seeks to more closely align government borrowing with private banking practices,” said Tedisco. “When a working family or a small business goes to a bank to request a loan, it is not as simple as the bank saying ‘sure, here is your money.’ The terms are clearly laid out. Not only do you know exactly how much you’re borrowing, but also you know precisely the amount that you will have to pay back. You know the principal amount, cost of interest, and the term to maturity. Unfortunately, this information is not shared with New York State taxpayers before they go into the voting booth to decide on new borrowing proposals.”
Tedisco’s plan would require any ballot proposition creating state debt to contain an estimate of the interest, payback period, and total cost at a time when the state faces a budget deficit of over $9 billion. Tedisco said the Truth in Borrowing Actwould help to avoid the mistakes of the past. He pointed to the state’s 1990 sale of Attica prison to a state authority. The state then leased Attica in what was billed as $200 million in borrowing. To date, the state has paid $344 million and still owes $222 million in principal and interest.
“We’re still paying for Attica and for New York City’s bailout in the 1970s,” Tedisco said. “Fiscal experts, regardless of party affiliation, will attest to the dangers associated with incurring more debt. According to Comptroller DiNapoli, New York’s $3,089 in debt per person is more than three times the national average. With those figures in mind, I cannot fathom how borrowing any more money can be seen as anything but disastrous. If the legislative leaders cannot curb their appetite for spending, the least that they can do is allow taxpayers to see how their money is being spent.”