The  New York State Division of Budget, in conjunction with DASNY (the Dormitory  Authority of the State of New York), announced today the details of its  upcoming bond sale of approximately $850 million of New York State Personal  Income Tax Revenue Bonds. This issuance will be used to refund higher-interest bonds  and replace them with lower-cost debt, generating significant savings to the  State of New York.

DASNY, on behalf of the State, plans to price $800  million of tax exempt fixed-rate refunding bonds on Wednesday, March 12th.  There will be a one-day retail order period on Tuesday, March 11th.  The bond issue may include up to $50 million  of taxable fixed rate bonds. The sale will be led by senior manager Citi, which  was chosen through a competitive selection process.

“Investors  recognize that New York’s finances are as strong now as they have been in a  very long time,” said State Budget Director Robert Megna. “The Governor’s  budgets have embraced the principle that State spending must grow more slowly  than the overall economy, both to assure that the State prudently uses the  resources granted to it and to leave more money in the hands of the people. We  are encouraged that this principled approach and our long-term fiscal planning  are being recognized by the rating agencies, all three of which have placed New  York State on positive credit watch.”

“DASNY has had a  long history of successful Personal Income Tax (PIT) Bond Sales. The lower-cost  debt afforded by this refunding will provide substantial savings to the State,”  said DASNY President, Paul T. Williams, Jr.

In the last three  years, State debt practices have been substantively improved. New York has and  will continue to remain within the debt cap, and measures of debt affordability  are steadily moving in a positive direction:

• In every year of the Capital Plan, the debt to personal income ratio is expected to improve and represent the lowest level the State has recorded in decades. 
• State-related debt outstanding as a percentage of personal income declined from 5.9 percent in FY 2011 to 5.2 percent in FY 2014, and is expected to decrease further to 4.4 percent by FY 2019.
• Debt outstanding actually declined by $680 million from FY 2012 to FY 2013 and is expected to decline again in FY 2014. This would be the first time in over fifty years that debt outstanding has declined in two consecutive years.
• Over the five-year Capital Plan, debt outstanding is projected to grow by 1.3 percent from FY 2014 to FY 2019. The growth rate is projected at 0.8 percent from FY 2011, when Governor Cuomo took office, to FY 2019. This remains well below the  historical growth rate in debt and below inflation.

Investors look  favorably at New York’s three consecutive on-time budgets, the setting aside of  over $450 million in reserves to reduce debt and meet unforeseen “rainy day”  needs, and the implementation of spending controls. The State replaced  unsustainable inflators for major programs with rational formulas linked to  fiscal capacity, eliminating over $70 billion in budget gaps.

The ratings for New  York State’s Personal Income Tax Bonds being offered by DASNY are expected to  be AAA by Standard & Poor’s and AA from Fitch Ratings.