Gov. Andrew Cuomo released a proposal today to create a Financial Restructuring Board to help distressed local governments manage their finances. The board would include the state budget director, secretary of state, attorney general, comptroller and a private-sector restructuring professional. Local governments that met the standards as fiscally distressed would be able to ask the board for help and work with members to create a restructuring plan.
The 2013-14 state budget includes up to $80 million to help local governments with their reorganization plans. Any municipality that accepted funding would have to follow the board’s recommendations. The board could require a multi-year financial plan, functional consolidation, mergers, shared services, fewer elected officials and other measures, according to Cuomo.
The board also would provide an alternative to the binding arbitration process for police, fire or deputy sheriff unions if municipalities and unions agreed. The board would issue a ruling within nine months.
“Growing retirement costs, declining populations, decreasing property values, and the recent fiscal crisis have all contributed to the difficult financial issues facing localities today,” Cuomo said in a statement. “The Financial Restructuring Board will bring together state and local officials to help localities make tough decisions and solve this crisis now instead of kicking the can down the road.”
Cuomo said more money is not the way to help local governments solve their financial problems. The state has an Aid and Incentives for Municipalities (AIM) program, which doesn’t reflect local governments’ needs or performance. These are the current amounts the state’s largest cities outside New York City receive:
Earlier this year, state Comptroller Thomas DiNapoli finalized a statewide fiscal monitoring system that will identify local governments that are experiencing financial strain. The “early warning” system will calculate whether roughly 2,300 municipalities and school districts are in “significant fiscal stress,” “moderate fiscal stress,” “susceptible to fiscal stress” or “not in fiscal stress.” The system will include nine financial indicators, including cash on hand and patterns of operating deficits.
DiNapoli said his office will offer services to local governments and districts, such as budget review, training and guidance on multi-year financial planning.