Related News:
New York Lawmakers Put Off Budget Action Again With Borrowing Cost Rising
New York’s Legislature adjourned without taking action for a second consecutive day after Governor David Paterson summoned them into session to break a 17-week budget impasse.
Lawmakers said they’ll return Aug. 3 to resume negotiations that are deadlocked over allowing state universities to set their own tuition, enter into partnerships and lease facilities to private companies.
New York’s borrowing cost has risen relative to AAA rated municipal debt since April 1, the start of the state’s fiscal year, according to data compiled by Bloomberg. The spread, or risk premium, between its general-obligation bonds maturing in 10 years and comparable top-rated debt has widened by 0.14 percentage point. New York’s 10-year bonds yield 3.36 percent, or 0.58 percentage point more than AAA securities.
“We’ve been avoiding the state’s general obligation and state appropriation debt because of all this uncertainty,” said Howard Cure, director of municipal research at Evercore Wealth Management LLC, with more than $1.1 billion in fixed income investments, including $254 million in New York state debt. “The politics are a bit scary to us.”
New York, the nation’s third-most populous state, has operated under emergency spending measures since April 1, after lawmakers and the governor failed to agree on how to close the deficit.
Although the Senate passed a $136 billion spending plan, it adjourned before the July 4 holiday without signing off on a way to pay for it. Without a revenue bill, “the state will run out of money in about a month-and-a-half,” Paterson warned July 8.
Tuition Bill
The college tuition bill has support from some senators who represent areas in which universities are situated. It’s drawn opposition from other senators and in the Assembly, where Speaker Sheldon Silver, a Manhattan Democrat, has said the bill could make the schools too expensive for poor and minority students to attend.
“We have a stand-off,” said Senator Ruth Hassell- Thompson, a Democrat from the Bronx and Westchester who opposes the measure, as she emerged from a meeting between Paterson and several legislative leaders. “How we’re going to resolve that is yet to be determined.”
The failure to produce a budget may have political consequences in a year when all 212 seats of the Legislature are up for election Nov. 2. A Quinnipiac University poll released yesterday found 53 percent of voters say their state senator should go, versus 35 percent who support their lawmaker. Fourty- nine percent to 33 percent want their state assembly member ousted. In the Senate, where Democrats hold a 32-29 majority, two seats would alter the balance of power.
Third-Highest
Debt for both the city and state is rated Aa2 by Moody’s Investors Service and AA by Standard & Poor’s, each the third- highest. New York and New York City were the second-and third- largest issuers of municipal bonds in 2009, respectively, after California.
While expressing concerns about the state’s ability to solve its fiscal problems, Cure said he didn’t see reduced demand for the state’s debt generally in the market.
‘There has been very little new issuance of New York paper recently, which increases demand,’’ he said. “Once the budget is completed, issuance by the state should increase.”
The sessions today in the Senate and the Assembly each took less than 15 minutes. The sessions cost the state about $35,000 in $171-a-day expenses for the more than 200 lawmakers who attended, plus travel costs for those arriving from more than 35 miles away, said Robert Whalen, a spokesman for state Comptroller Thomas DiNapoli.
----With assistance from Alan Wechsler in Albany and Martin Z. Braun in New York. Editors: Pete Young, Jerry Hart
To contact the reporter on this story: Henry Goldman in Albany, New York, at hgoldman@bloomberg.net.
Rate These Stories
Rate this Page