Cuomo Proposes $1.8 Billion Refunding of NYC Sales-Tax Bonds

(Bloomberg) -- New York Governor Andrew Cuomo has proposed a $1.8 billion refinancing of debt issued by a New York City entity that would save the state $215 million over the next two fiscal years.

The bonds were issued in 2014 by New York City’s Sales Tax Asset Receivable Corp., created in 2003 as the city faced a financial squeeze following the Sept. 11 terror attacks and the national recession.

New York State pledged to pay the annual $170 million debt service on the STARC bonds for 20 years through an entity called the Local Government Assistance Corporation. The proposal in Cuomo’s budget would eliminate the “moribund” entity after the STARC bonds are paid off.

“We are working with the City of New York on this proposal, which does not require the city’s approval, and it would save the state $170 million in FY 2022 and $45 million in FY 2023,” said Freeman Klopott, a spokesman for the state’s Division of Budget.

Laura Feyer, a New York City spokeswoman, said city officials are reviewing the state’s proposal.

New York would issue personal income tax and sales tax bonds to retire the STARC debt.

New York State plans to issue $11.6 billion of bonds in the fiscal year beginning April 1, an increase of 20% from the previous year, with the growth mainly attributed to the STARC refinancing, according to budget documents.

State-related debt outstanding is projected to increase $8 billion, or 13%, to $67.8 billion.

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