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NEWS from the Office of the New York State Comptroller
Contact: Press Office 518-474-4015

DiNapoli: Comprehensive Planning Needed for Billions in State Infrastructure Spending

August 29, 2019

New York state expects to spend an average of $13.4 billion in each of the next five years on capital projects, but would benefit from a more comprehensive assessment of its capital assets and needs, according to a report released today by State Comptroller Thomas P. DiNapoli.

“Investment in roads, bridges, water and sewer systems, schools and other infrastructure is essential to New York’s economy and its quality of life,” DiNapoli said. “Effective planning will help ensure that public resources are put to good use and that critical assets are well-maintained. New York needs to develop a better strategy and a clear roadmap for its infrastructure investments.”

The State Fiscal Year 2019-20 Capital Plan projects $66.8 billion in spending through SFY 2023-24, an increase of $14.2 billion, or 27 percent, from the previous five years. Major expenditures by category include $25.7 billion for transportation, $9.9 billion for health, mental hygiene and social welfare, and $9 billion for economic development.

Although transportation comprises the largest share of total projected capital spending over the next five years, its 38.4 percent share represents a decline from 47.5 percent over the past ten years. The economic development category is expected to rise significantly, from 8.8 percent of spending to a projected 13.5 percent in the current plan.

The report shows that the planning and financing of capital needs, including those of the state’s public authorities, is not fully integrated or coordinated, and there is no comprehensive public reporting of the state’s assets, their conditions, or the estimated costs necessary to maximize their useful lives.

Each state agency is required to annually prepare a five-year assessment of its capital asset and maintenance needs, which is incorporated into the Capital Plan. However, five years does not provide an adequate planning window for assets that have significantly longer useful lives, such as bridges, roads and buildings.

The Comptroller recommends the creation of a Capital Asset and Infrastructure Council charged with developing and implementing a comprehensive process to identify and assess the condition of existing state assets, including preparing a 20-year long-term strategic plan to be updated every two years. This process could also include local assets which receive a significant amount of state funding.

Among other tasks, the council would be charged with making recommendations including:

  • Better prioritizing of the planning and funding of capital asset investments;
  • Ways to ensure that state agencies and public authorities, and certain local government entities, replace assets on regular schedules, according to reliable estimates of their useful lives; and
  • Promoting the most cost-effective use, and maximum return on, investments in capital assets.

The report shows that bonds issued by public authorities are projected to finance 54.2 percent of spending in the current capital plan, up from 48.5 percent over the last five years. Including General Obligation debt approved by voters, 57.4 percent of capital spending over the next five years is projected to be funded through borrowing. The remainder will be paid for using current state resources (cash), otherwise referred to as pay-as-you-go (state PAYGO), and federally funded current resources (federal PAYGO).

From April 2014 to date, the state has received more than $12.7 billion in monetary settlements from various financial and other institutions. Between SFY 2015-16 and SFY 2018-19, a total of $4.1 billion has been spent in settlement dollars for capital purposes. The Division of the Budget expects to spend an additional $4 billion from such resources through the end of the plan.

As noted in the report, billions of dollars of debt have been issued to finance capital spending that will not produce an asset for the state. Some spending relates to economic development projects, where a private business, nonprofit organization or other entity owns the asset for which the state has incurred such debt. In other instances, such borrowing may support local government assets. This practice produces debt liabilities for the state without associated assets, making it more difficult to assess the benefits of such investments.

Read the report, or go to: https://osc.state.ny.us/reports/debt/capital-report-2019.pdf

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