Jessica Gould covers politics and public finance for WNYC.
To Bond or Not To Bond? Cuomo's Budget Asks the Question
Monday, January 20, 2014
New York Governor Andrew Cuomo releases his budget Tuesday. It’s expected to cap spending at two percent, cut taxes by $2 billion and increase investments in education, healthcare and economic development.
At the same time, the governor has said he wants to issue $2 billion in bonds to overhaul New York’s classrooms with new laptops, desktops, tablets, and broadband.
Budget analysts like Elizabeth Lynam, vice president of the Citizens Budget Commission, question the proposal because bonds — basically a loan — are usually used for long-term projects such as bridges, highways, or a new building.
"It's OK to borrow money to purchase a house and you pay that back over 30 years because the house is going to last you 30 years,” she said. "It's not OK to borrow typically in your personal life for a vacation because that's a short term benefit and you're going to be paying it back for many years to come."
A house tends to grow in value. An old computer? Not so much.
The state also has a cap on how much debt is allowed. Issuing this bond, she said, would mean less money possibly available for other projects.
The governor's office defends the plan, pointing out that it's common to use bonds to pay for equipment. Furthermore, his office argues the upgrades are desperately needed to improve education in the state.
James Parrott with the Fiscal Policy Institute has another idea: Use part of the proposed $2 billion tax cut to pay for technology upgrades for schools.