...as the City Council considers Mayor Bloomberg’s budget submitted earlier this month, with more than $11 billion in proposed capital commitments for the next year, payments on debt service are rising well above inflation at a rate of almost 10 percent a year, according to the city’s Independent Budget Office. Taken with a slowing economy and perhaps falling tax revenues, the increased debt costs could leave future office holders with a shrinking pie of uncommitted money in the budget to move around as they please in the post-Bloomberg era.
Bloomberg's Hidden Debt
The bulk of the money for capital projects, which include expansions and repairs on city infrastructure and buildings, comes from loans, as the city pays for the projects over the long term in the form of debt payments.
The high level of city borrowing at the end of Mr. Bloomberg’s tenure—this year and the proposed budget for next year call for over $20 billion in city spending commitments on capital projects—spreads the cost for the capital projects to future administrations. Yearly debt payments are expected to reach about $6 billion by 2012, up from the $4 billion-plus spent in much of the mayor’s first term.
...fiscal monitoring groups have raised concerns over the rising debt. They generally support the increased attention to aging infrastructure, and are careful to say that the problem hasn’t reached crisis proportions yet. But they also warn that the rising cost of debt payments will take up an increased, untouchable portion of the annual budget, especially if tax revenues decline.