Niagara Gazette

December 31, 2012

DiNapoli warns of other cliffs

STAFF REPORTS
Niagara Gazette

Niagara Gazette — Many local governments have nearly exhausted their resources in an effort to avoid severe fiscal stress, according to an annual report released Friday by State Comptroller Thomas P. DiNapoli.

DiNapoli’s report noted that the growing disparity between revenues and expenditures continues to increase. From 2006 through 2011, total local government spending grew by 17.4 percent (an average growth of 3.3 percent per year). Meanwhile, revenues only grew by 15 percent (an annual average of 2.8 percent per year).  

County spending jumped 17.2 percent, while revenues climbed 13.4 percent. Total spending by cities, excluding New York City, increased 8.4 percent during this time frame, but revenues only increased 6.4 percent.

Towns fared a little better, with town expenditures growing 12.9 percent, but revenues increased only 7.1 percent.

“For the past five years, the financial trends in our municipalities and school districts have become of heightened concern,” said DiNapoli. “Years of decreasing, stagnant or slow economic growth have led local governments to cut vital services and tap their rainy day funds to balance budgets, a practice that is not sustainable in the long term.”

Additional findings in the report include:

• Local government fund balances have been reduced 28 percent since peaking in 2006;

• Sales tax collections did not recover and grow beyond pre-recession levels until 2011. Collections declined by 5.9 percent from 2008 to 2009, but in 2010 and 2011, local sales grew by 4.7 percent and 4.1 percent, respectively;

• Towns have been hit hard by the decline in mortgage recording tax revenues, collecting $249 million less in 2011 than they did in 2005; and

• Between 2008 and 2011, counties cut $265 million in health, cultural and recreation programs. Public safety and sanitation spending were reduced by $76 million in cities during the same time frame.

DiNapoli said he plans to launch an "early warning fiscal stress monitoring system" in January that will identify signs of budgetary strain in local communities sooner so that corrective actions can be taken before a full financial crisis develops.

Details of the system were announced in September. DiNapoli said the system will calculate and publicize an overall score of fiscal stress for municipalities and school districts across the state.

The monitoring system was announced in conjunction with a report examining the demographic and financial trends of New York's 61 cities (excluding New York City) over the past three decades. The report found that many cities are struggling to balance budgets and revitalize deteriorating local economies.

DiNapoli has also begun to issue fiscal profiles on select cities across the state. Earlier this month, the Comptroller profiled the cities of Niagara Falls and Salamanca. The reports will help further inform officials and citizens on some of the unique environmental and systemic pressures facing New York’s cities.

For a copy of the annual report visit: http://www.osc.state.ny.us/localgov/datanstat/annreport/12annreport.pdf