Adjusted     Executive
                          Appropriation       Request                Percent
                                2001-02       2002-03        Change   Change



DEBT SERVICE
  Fiduciary                  40,000,000     40,000,000            0     0.00%
  Debt Service Fund       4,739,950,000  3,916,175,000 (823,775,000)  -17.38%
  Internal Service Fund     210,000,000    110,000,000 (100,000,000)  -47.62%
  Capital Projects Fund - 
              Other         525,000,000    625,000,000  100,000,000    19.05%
  Total for DEBT SERVICE: 5,514,950,000  4,691,175,000 (823,775,000)  -14.94%
  Total Contingency:        240,000,000  1,331,000,000 1,091,000,000  454.58%
  Total for Bill:         5,754,950,000  6,022,175,000  267,225,000     4.64%


Fiduciary                                                                       
  School Capital Facilities Financing Reserve Fund                                
    Principal and Interest on       
      Serial Bonds           40,000,000     40,000,000            0     0.00%

Debt Service Fund                                                               
  Debt Reduction Reserve Fund                                                     
    Debt Reduction          500,000,000              0 (500,000,000) -100.00%
  Mental Health Services Fund                                                     
    Financing Agreements    355,000,000    370,000,000   15,000,000     4.23%
  General Debt Service Fund                                                       
    Principal and Interest on       
      Serial Bonds          715,000,000    580,000,000 (135,000,000)  -18.88%
    Financing Agreements  2,457,600,000  2,444,650,000  (12,950,000)   -0.53%
    Lease Purchase Payments  62,100,000     61,525,000     (575,000)   -0.93%
  Housing Debt Fund                                                               
    Principal and Interest on       
      Serial Bonds           29,000,000     28,000,000   (1,000,000)   -3.45%
  Health Income Fund                                                              
    Financing Agreements     37,250,000     35,000,000   (2,250,000)   -6.04%
    Financing Agreements      2,000,000      2,000,000            0     0.00%
  Emergency Highway Reconditioning 
    and Preservation Fund                          
    Financing Agreements     32,000,000              0  (32,000,000) -100.00%
  State University Dormitory Income Fund                                          
    Financing Agreements     55,000,000     70,000,000   15,000,000    27.27%
  Emergency Highway Construction 
    and Reconstruction Fund                          
    Financing Agreements     32,000,000              0  (32,000,000) -100.00%
  Local Government Assistance Tax Fund                                            
    Financing Agreements    463,000,000    325,000,000 (138,000,000)  -29.81%

Internal Service Fund                                                           
  Centralized Services Fund                                                       
    Financing Agreements    210,000,000    110,000,000 (100,000,000)  -47.62%

Capital Projects Fund - Other                                                   
  Dedicated Highway and Bridge Trust Fund                                         
    Financing Agreements    525,000,000    625,000,000  100,000,000    19.05%

                                                                                 
                                                               

BUDGET HIGHLIGHTS
(Executive Budget: pp. 425-429)

The Executive recommends total Debt Service Budget appropriations of $6,022,175,000
for State Fiscal Year (SFY) 2002-03, a net increase of $267,225,000 over SFY 2001-
02. This increase is primarily attributed to an increase in the All Funds
Contingency with a new appropriation of $1,086,000,000 which the Executive plans to
use to satisfy the maximum debt service requirement on all short term and
outstanding variable rate debt.

The Executive submits a separate appropriation bill for debt service. The
appropriations reflect the maximum required debt service payments for the State
Fiscal Year, which could be significantly higher than the actual cash amount
necessary in specific instances. This is most common for the variable rate debt and
other short term debt instruments issued by the Local Government Assistance
Corporation (LGAC), the Housing Finance Agency, the Urban Development Corporation,
the Dormitory Authority and the State's General Obligation bonds, which reflect a
maximum annual rate of 18 percent. 

As a result of the Debt Restructuring legislation adopted during SFY 2001-02 which
established a Revenue Bond Financing Program, the Executive's $3.1 billion proposed
new bonding in the SFY 2002-03 Executive Budget will be supported by a pledge of 25
percent of the State Personal Income Tax Receipts or at least $6 billion.

This Debt Restructuring will reduce the cost of borrowing by improving the
marketability and the creditworthiness of State supported obligations and by
permitting the consolidation of multiple bonding programs.

Contingency

The Executive recommends a total contingency appropriation of $1,331,000,000 for
debt service, an increase of $1,091,000,000 over SFY 2001-02. This total includes
a $20,000,000 contingency appropriation for the State's potential liability to
rebate arbitrage earnings on its General Obligation bonds to the Federal government,
an increase of $5,000,000 primarily due to an increase in debt service requirements
for the general obligation notes. It also includes a contingency appropriation of
$225,000,000 for redemption of General Obligation serial bonds should this become
necessary to maintain the federal tax status of the bonds. The Executive proposed
a new approprition of $1,186,000,000 to satisfy the maximum debt service requirement
on all short term and outstanding variable rate debt. The Executive does not
anticipate that disbursements will be necessary against these contingent
appropriations. 

Internal Service Funds

The Executive recommends a total appropriation of $110,000,000 for the Centralized
Services Funds, a decrease of $100,000,000 compared to SFY 2001-02 for payments of
the State's Certificates of Participation (COPs). This appropriation also includes
debt service payments on planned COPs for equipment to implement the new Welfare
Reform Computer Systems.

General Debt Service Fund

The Executive recommends total appropriations of $3,916,175,000 for the General Debt
Service Fund, a net decrease of $823,775,000 over SFY 2001-02. Primarily, this
decrease is a result of the following:

--    A $135,000,000 reduction in General Debt Service Fund;

--    A $138,000,000 reduction in the Local Government Assistance Tax Fund. These
      savings are derived from a decrease in the maximum appropriation for the Local
      Government Assistance Corporation short term debt instruments. 

--    A $32,000,000 reduction in the Thruway Authority Local Highway Improvement
      Program for local highway Construction and Reconstruction.

Included in the General Debt Service Fund is a $580,000,000 appropriation for debt
service for the State's general obligation bonds. This represents a decrease of
$135,000,000 from SFY 2001-02.  

Capital Projects Fund

The Executive recommends an appropriation of $625,000,000 in the Capital Projects
Fund. The entire amount of this appropriation will be set aside in the Dedicated
Highway and Bridge Trust Fund, reflecting an increase of $100,000,000 over SFY 2001-
2002. This increase reflects the Executive's proposed capital program for
transportation. Disbursements from the fund are used to make payments to the Thruway
Authority for debt service on its Dedicated Highway and Bridge Trust Fund bonds.

Fiduciary Fund

The Executive recommends an appropriation of $40,000,000 in the School Capital
Facilities Financing Reserve Fund, which is funded at the same level as in SFY 2001-
02. These funds are used to pay debt service on bonds issued by the Dormitory
Authority on behalf of certain Special Act School Districts, pursuant to legislation
enacted in 1988.

Debt Reform

The Executive Budget proposes a Constitutional Debt Reform package following the
enactment of the Debt Reform Act of 2000.  This Debt Reform Plan would do the
following:

--    Constitutionally mandate the State supported debt outstanding and debt service
      cap now imposed by the Debt Reform Act of 2000;
--    Eliminate all State supported public authority debt;
--    Authorize a limited amount of revenue backed debt;
--    Require that at least one-half of the debt be approved by the voters;
--    Authorize a multiple general obligation (G.O.) bonds act proposal;

The Executive further proposes two new statutory initiatives which would:

--    Authorize all Public Authority issues of State supported debt to issue
      variable rate debt in aggregate principal amount of up to 15 percent of their
      outstanding State debt, and allow them to enter into interest rate exchange
      agreements (SWAPS);

--    Exempt refunding of State supported debt from PACB (Public Authorities Control
      Board) approval.