Nearly 300 local governments in New York had deficits in 2010 or 2011, and more than 100 didn’t have enough cash on hand to pay current bills, according to a new report from state Comptroller Thomas DiNapoli’s office.
Some municipalities and school districts have become increasingly vulnerable to emergencies, mandates, unexpected spikes in the cost of goods and services and other unanticipated expenses, the report found. Local governments had an actual decline in revenues of more than $400 million during the Great Recession, which has led to cuts in spending on public safety, health and recreational programs, garbage collection and transportation, it said.
“Our communities are facing a challenging economic reality. There are no quick fixes and any future economic shocks could have a devastating impact on some communities.,” DiNapoli said in a statement. “Difficult choices are ahead but they start with better long-range planning and an honest conversation about the numbers. By preparing more accurate and realistic budgets, local officials will be better able to deal with these issues without overburdening taxpayers.”
The report is based on an analysis of data from 4,000 local governments, including public authorities, school districts and other special taxing districts, and recent audits. Seventeen audits identified governments with such poor financial systems that they didn’t know their current financial condition or didn’t realize how their actual expenditures compared to what they had budgeted, the report said. Rockland County has the highest general-fund deficit that grew in part because of problematic budgeting practices, it said.
Local governments must implement effective multi-year financial planning to identify structural imbalances in revenue and spending, and use excess fund balances for immediate needs, such as paying off debt, DiNapoli said.
Cities are most at risk due to population loss, declining or stagnant property assessments, high poverty rates and older and decaying infrastructure, the analysis said. However, all local governments have been impacted by shortfalls in anticipated revenues since the Great Recession began, DiNapoli said. Examples include:
—Property values in nine downstate counties—Putnam, Rockland and Westchester among them—have dropped since 2008. Almost half of upstate counties had similar drops in property value between 2010 and 2011.
—County sales tax collections dropped by 5.9 percent during the Great Recession. Counties and cities have been most significantly affected. It has taken three years for this source of revenue to recover to levels prior to 2008.
—Mortgage recording-tax revenues have declined since peaking in 2005. Towns collected $240 million less in 2010 than they did in 2005.
—Since 2008-09, state Incentives for Municipalities payments have been reduced by $50 million. They were eliminated for New York City.