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Many New York towns still struggling to pay expenses-report
December 28, 2012 / 8:05 PM / 5 years ago

Many New York towns still struggling to pay expenses-report

Dec 28 (Reuters) - New York’s cities, counties and towns, many of which have already cut their budgets to the bone, are increasingly spending more money than they collect, a report from the state’s comptroller showed on Friday.

Total expenditures by local governments in New York grew by about 17 percent from 2006 through 2011, an average growth rate of 3.3 percent per year, New York State Comptroller Thomas DiNapoli said in his yearly report on local governments.

Revenue collections increased by only 15 percent during the same period, an average of 2.8 percent annually.

“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,” DiNapoli said in a statement.

During the recession, municipalities around the United States lost property tax revenue and saw federal and state aid stall, while pension, healthcare and other costs skyrocketed.

In the past year, many U.S. cities and towns have begun showing signs of improvement, but the recovery has been uneven and some areas are still experiencing financial distress.

New York state has at least 3,984 local governments, including villages, school districts, fire districts, water conservation districts and industrial development authorities.

DiNapoli’s report found that altogether, towns collected $249 million less in mortgage recording tax revenue in 2011 than they did in 2005.

Towns’ expenditures grew nearly twice as much as revenue, 13 percent compared to 7 percent, respectively, according to the report.

County expenditures rose about 17 percent from 2006 through 2011, while revenue rose about 13 percent. Between 2008 and 2011, counties collectively cut $265 million from health, recreational and cultural programs.

The report said that spending on sanitation and public safety was cut by $76 million in cities over the same period.

Long Island’s Nassau and Suffolk Counties and Rockland County, northwest of New York City, have had budget problems.

To raise more revenue, Rockland will hike its already high property taxes 18.4 percent in fiscal 2013, which begins Jan. 1.

Hurricane Sandy, which slammed the U.S. East Coast on Oct. 29, has contributed to the financial stress on communities. New York’s Governor Andrew Cuomo has said the state and its municipalities need $42 billion to recover from the storm and to make improvements to help minimize damage from future storms.

Insurance and federal aid is expected to cover much of that, but reimbursement can trickle in slowly, and the storm added another element of uncertainty for local governments, according to the comptroller’s report.

“This single event will undoubtedly leave a long-lasting and significant impression on state and local government finances alike,” the report said.

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