New York’s debt limit is inching closer to its legally mandated capacity, according to the quarterly fiscal plan update released by Gov. Andrew Cuomo’s Division of Budget.

The state is operating under “relatively limited debt capacity” that is declining to under $1 billion by 2014.

A 2000 law requires the state operate under a debt limit for capital purposes, restricting how much issuance of state-supported debt to capital purposes only and limits it to a maximum 30 years.

“Current projections estimate that debt outstanding and debt service will continue to remain below the limits imposed by the Act,” according to the report. “However, the State is continuing through a period of relatively limited debt capacity. Based on the most recent personal income and debt outstanding forecasts, the available room under the debt outstanding cap is expected to decline from $3.6 billion in FY 2012 to $752 million in FY 2014. The State is continuing to implement measures to address capital spending priorities and debt financing practices.”

The expected state budget deficit for the 2013-14 fiscal year, which begins April 1, is increasing from $950 million to $982 million following several labor contracts being finalized, state litigation and slightly lower-than-expected sales tax revenue.

Fy 2013 July Update