New York’s Legislature refused urgent pleas for help during its 2012 session from local governments now faced with another year of dwindling options for shoring up shaky finances that include raising taxes, again.
The Legislature refused “home rule” requests — which it typically grants automatically — from local governments including Rockland County, the City of Long Beach, Suffolk and Nassau counties, Buffalo and Newburgh. Those requests sought permission for a variety of breaks, including permission to spread debt payments and increase local sales taxes.
Nationwide, Stockton, Calif., recently joined 13 cities, counties and other local governments that have filed for bankruptcy protection in the last two years, the highest level in nearly two decades.
“It’s the step before bankruptcy,” said Richard Brodsky, a former New York Democratic assemblyman and now a senior fellow at the Wagner School at New York University. “This is everybody turning their back on this problem … that’s going to be impossible.”
In New York, local governments are operating on flat state aid at $714.7 million for the last two years following annual cuts from almost $750 million in 2009-10. Meanwhile, they are struggling to pay rising pensions, wages and other costs on a shrinking and overburdened local property tax base already limited by Albany to 2 percent growth.
In Albany, the Senate’s Republican majority said it’s time for government fiscal crises to be solved by cutting spending, not raising taxes.
“We understand the plight of many local governments across the state,” said Scott Reif, spokesman for the Senate’s Republican majority. “Whether it’s raising property taxes, sales taxes or borrowing, Senate Republicans agree with New Yorkers who have had enough. The answer to the fiscal challenges facing governments at every level is reducing spending, not fiscal gimmicks or more tax hikes.”
“Our position is we need to put our fiscal house in order by reducing spending, and not tax increases.”
In Rockland County, however, the government has already cut 400 jobs and another 120 jobs mid-year, while underspending its budgets. Savings from its nursing home are still being worked out, however.
In June, Moody’s Investors Service gave Rockland County a negative outlook as the county faces an $18 million budget gap, a deficit driven by rising expenses of its nursing home. The county had hoped the state Legislature would provide relief of $21 million from its current budget, and the county has budgeted $18 million from union concessions, which it hasn’t secured in negotiations.
The deficit is projected to grow to $95 million by end of the fiscal year on a $710 million budget.
“We’ve done exactly what folks tell you to do,” said Rockland County Executive C. Scott Vanderhoef, who voluntarily cut his $7,700, or 5 percent of his $155,087 salary. “We have done it and we’ve done it here on a bipartisan basis … we can see the light at the end of the tunnel, and we were just looking to close this balance so we can start fresh.”
Rockland needed the Legislature’s approval to borrow $80 million by issuing deficit-reduction bonds. That would spread the cost of replenishing a reserve fund and pay off some debt over 10 years.
Instead of a fixed cost and what Vanderhoef calls “a clean slate” to rebuild with a safe reserve fund, the county will have to juggle spending each year on essential services while replenishing the reserve fund.
The Legislature’s rejections of “home rule” requests specific to a county or municipal government surprised local officials, who saw the beginning of the end of more than three years of recession and plummeting tax revenue as they faced the first year of a state-imposed 2-percent cap on property tax growth. The cap was supposed to be paired with a promise to remove costly state mandated services and construction rules, but Gov. Andrew Cuomo and the Legislature haven’t fulfilled most of that promise yet.
“The counties are under tremendous fiscal pressure,” said Mark LaVigne of the New York State Association of Counties. “We are hopeful that the Legislature comes back to Albany this year and enacts a package of mandate relief proposals.”
A return to Albany during the legislative election campaigns, however, is rare and not expected this year until after the November elections.
“It’s getting more serious every day,” said Peter Baynes of the New York Conference of Mayors and Municipal Officials. “The taxpayer is the last resort for resolving these fiscal problems,” Baynes said. “Going into the fall, there will be no place to go other than to raise taxes, and that just perpetuates the cycle.”
Copyright 2012 The Associated Press.