KBRA assigns a long-term rating of AAA with a Stable Outlook to the Dormitory Authority of the State of New York (DASNY) State Personal Income Tax Revenue Bonds (General Purpose) Series 2026A (Tax-Exempt) and Series 2026B (Federally Taxable). Concurrently, KBRA affirms the AAA rating and Stable Outlook on outstanding State Personal Income Tax Bonds (General Purpose) issued by DASNY and by the New York State Thruway Authority.

Key Credit Considerations

The rating actions reflect the following key credit considerations:

Credit Positives

• Provisions of the PIT Enabling Act and the importance of residual PIT revenues to fund State operations mitigate the risk of legislative non-appropriation or a failure to pay financing agreement payments when due after amounts have been appropriated and set aside in the RBTF.
• RBTF Receipts provide ample historical and projected coverage of maximum annual debt service.
• The 2.0x additional bonds test and essentiality of surplus PIT revenues mitigate against overleveraging.

Credit Challenges

• PIT receipts, particularly the non-withholding component, are inherently volatile and closely correlated to the income of wealthy residents and financial sector performance. The share of PIT receipts related to net capital gains is significant.
• PIT receipts are disproportionately generated by the State’s highest-earning taxpayers. The potential exists for continued outmigration of this component of the PIT revenue base.
• Financing agreement payments are subject to annual appropriation and executory only to the extent of amounts available in the RBTF. The potential for a diversion in the flow of RBTF Receipts in the event of a budgetary delay or severe fiscal distress, while not non-existent, is extremely remote, in KBRA’s view.

Rating Sensitivities

For Upgrade

• N/A

For Downgrade

• A trend of declining debt service coverage that approaches the 2.0x ABT level.
• Failure by the State Legislature to annually appropriate financing agreement payments.
• State actions to amend, repeal or alter statutes relating to the Personal Income Tax (Articles 22, 24 and 24-A of the Tax Law), or the State Personal Income Tax Revenue Bond Financing Program that negatively impact revenues available for financing agreement payments.

To access ratings and relevant documents, click here.

Methodologies

• Public Finance: U.S. Special Tax Revenue Bond Rating Methodology
• Public Finance: U.S. State Annual Appropriation Obligation Rating Methodology
• ESG Global Rating Methodology

Disclosures

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Only those ratings on securities issued by this Issuer that also are denoted on the Security Ratings tab for this Issuer on KBRA.com as “endorsed” by Kroll Bond Rating Agency Europe Limited into the European Union and/or by Kroll Bond Rating Agency UK Limited into the UK are covered by the disclosures set forth in this press release and the corresponding Information Disclosure Form. No other ratings on issuances by this Issuer have been endorsed into the European Union or the UK, and the disclosures set forth herein and in the corresponding Information Disclosure Form are inapplicable to those ratings and may not be used for regulatory purposes by European Union or UK investors in these securities.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA), one of the major credit rating agencies (CRA), is a full-service CRA registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a Designated Rating Organization (DRO) by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized as a Qualified Rating Agency by Taiwan’s Financial Supervisory Commission and is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider (CRP) in the U.S.

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