New York state finances receives failing grade in controversial report

Fiscal watchdog group Truth In Accounting gave New York state’s financial health a failing grade, ranking the state 42 out of 50.

The report, published in September, claims New York is more than $132 billion in debt and “would need more than $20,000 from each of its taxpayers to pay all of its bills.”

TIA was founded as a federal debt watchdog before shifting its focus to individual state debt, said Bill Bergman, TIA’s research director. The group’s objective is to incentivize federal and state governments to produce easily digestible financial reports, according to its website.

The group collects financial data from all 50 states for its State Data Lab, an online tool that tracks the fiscal health of states since 2009. Alaska, North Dakota and Wyoming are among the top performing states — while New Jersey, Illinois and Connecticut are at the bottom.

Rankings are based on a singular metric called the “taxpayer burden.” The taxpayer burden subtracts a state’s bills from its assets before dividing that figure by the number of taxpayers in the state.

“Our taxpayer burden is valuable,” Bergman said. “It provides a metric for thinking about the cost of accumulated obligation over time. It’s a good metric for comparing the states.”

New York in the last two or three years has had a somewhat balanced budget, Bergman said, but its remaining deficit leaves the state ranked where it is.

The state had a $3.5 billion budget deficit in 2017, according to Fortune.

New York’s “F” grade raised questions about the legitimacy of the report. Other financial performance rankings place New York above the bottom eight states in TIA’s report.

Major credit reports have given the state somewhat favorable grades — including Fitch Ratings, which gave New York a AA+ on a scale from BBB to AAA, the same rating that S&P Global gave the state. The Mercatus Center at George Mason University ranked New York’s fiscal health No. 39.

Morris Peters, a spokesman for the New York State Department of the Budget, contested the report, calling TIA a “dubious source” in an email.

“Until asked about this report, I had never even heard of this group,” Peters said in an email. “Look at their page on methodology (or, really, it’s just half a page) and compare that to the methodology section of any report from any legitimate think tank.”

Bergman defended TIA’s findings. He said he compared TIA’s rankings to other credit ratings, and felt that TIA’s conclusions stacked up.

He said TIA focuses on liquid assets and does not include capital assets or assets that are restricted by law or contract. The accounting group also adds pension and retiree benefit programs and adds those to the state’s expenditures list.

Bergman noted TIA uses data from a variety of sources — including Comprehensive Annual Financial Reports, pension plans and Actuarial Valuation Reports. TIA only uses public information and does not seek information via the Freedom of Information Law or Freedom of Information Act, Bergman said.

Bergman said he has more than 30 years of experience in financial policy analysis.

“I’d be very surprised if you arrive at the conclusion that this one is legit,” Peters said.