News Coverage on Unfunded Mandates
Yonkers, upstate cities face perilous financial timesJoseph Spector
ALBANY — The state’s fiscal woes may have been largely remedied, but the problems have been pushed down to local governments. And perhaps nowhere is it more pronounced than in upstate cities.
Most large cities in New York are preparing their budgets for a fiscal year that starts July 1. Mayors are warning of more layoffs and service cuts to deal with a declining tax base and growing costs.
They said they are running out of fiscal maneuvers, and years of borrowing have caught up with them.
“If we don’t start to address the needs of the cities, you’re going to see a systematic failure in the cities all across America,” said first-year Yonkers Mayor Mike Spano. “They are just going to start, one by one, going belly up.”
Yonkers faces a whopping $462 million budget gap over the next three years that is forcing 114 layoffs, program cuts and a proposed 3.7 percent tax increase this year. Rochester has warned that it and other cities could end with state control boards, which Buffalo already has.
While other local governments, such as counties and towns, have railed against the cost of state-mandated programs, cities say they are particularly hurt in a bad economy. They have higher concentrations of poverty and require more services, such as large police and fire departments, mayors said.
Thirty-seven upstate counties lost population between 2010 and 2011, meaning cities have a smaller tax base and are coping with job losses in the manufacturing sector that has stemmed decades.
Cities don’t reap as much benefit from sales-tax revenue as counties do, so they rely more heavily on property taxes to fund their budgets. But the property tax doesn’t get them as far as it used to.
“Cities were supposed to be traditionally funded by real-estate property tax. And that’s just not going to work in the future,” said Rochester Mayor Thomas Richards, the former president of Rochester Gas & Electric.
“It was based on having an industrial base. Industry generated the revenue, and residents generated the expense,” Richards continued. “We’re not in a situation where we can continue to do that.”
It’s a reason why Syracuse Mayor Stephanie Miner hasn’t raised property taxes over the past two years. There simply isn’t much money in it.
Raising property taxes by 1 percent would bring in about $335,000 in new revenue for Syracuse. The city’s pension costs alone are going up $9 million next year.
Syracuse has some of the poorest census tracts in the country, while 50 percent of its properties are off the tax roles. The price of homes average about $70,000 to $80,000, Miner said.
“There’s real hardship in our community,” Miner said.
So while the state has implemented a property-tax cap this year, cities aren’t generally looking to bust it -- in part because there isn’t much revenue to be gained.
Richards, like other mayors, has pleaded for more state aid. He said Rochester gets less per capita than Syracuse and Buffalo, a $42 million-a-year disparity.
“The loss of the real estate property tax base and the increase in expense is permanent,” Richards said. “We need to shift the way we finance these cities permanently.”
Cities, towns and villages receive direct aid from the state, but counties do not. Counties have their own troubles: Nassau is under a control board, and Suffolk warns it might be joining them. Rockland and other upstate counties say their financial picture is untenable.
For cities, towns and villages, the total of $715 million in state aid has either stayed flat or has been cut in recent years. Gov. Andrew Cuomo and the state legislature kept it flat in the 2012-13 fiscal year, which started April 1.
At a news conference Thursday, Cuomo was asked about the state of cities. Cuomo said what’s happening in local governments is a “recalibration to the economic realities of today.”
He said the state also has had to cut staff and programs and adopt union contracts that had zero raises for three years. He said taxpayers can no longer afford higher taxes.
“In many ways, I think government is adjusting to an economic reality that the taxpayers have adjusted to years ago,” Cuomo said.