Comptroller’s
Report Shows Unrestricted Aid for Local Governments Failed To Keep
Up With Inflation or Budget Growth
Unrestricted aid for local governments failed to keep pace with inflation
and State budget growth, according to a report issued today by State
Comptroller Alan G. Hevesi.
Unrestricted aid, also known as revenue sharing, is distributed primarily
to local governments to be used for any governmental purpose. From
the time of its highest allocation in 1988-89, revenue sharing has
declined by 26.5 percent, while inflation has increased by 65.5 percent
and State revenues have increased by 93 percent. If revenue sharing
had increased at the rate of State spending growth over the last 17
years, unrestricted state aid would be more than double its current
level.
“Revenue sharing has declined significantly over the last two
decades,” Hevesi said. “Local governments face tremendous
challenges, and State leaders need to determine the best methods to
meet local governments’ needs for State aid.”
The research brief analyzes the history of the revenue sharing program,
tracks trends in specific unrestricted aid categories, and provides
a breakdown of unrestricted aid to municipalities within each county
from 1988-89 to 2004-05.
Findings include the following:
- Overall Trends. Unrestricted aid peaked at nearly $1.1 billion in
1988-89, and by 1992-93 it was reduced by approximately 50 percent
to a low of $532 million. Since then, aid has grown slowly through
some modest across-the-board increases and the creation of some
new aid categories. Revenue sharing currently totals $792 million,
still 27 percent lower than at its peak.
- Aid to Cities. More than 90 percent of the total $792 million of
revenue sharing funds go to cities. In 2003-04, unrestricted aid
made up more than 18 percent of total revenues in cities. Total
unrestricted aid to cities outside of New York City currently totals
$411 million, an increase of $117 million (+40%) compared to aid
received by such cities in 1988-89. New York City now receives
$327.9 million in aid, a decrease of 39 percent from 1988-89.
- Aid to Counties. No unrestricted State aid is provided to counties.
An aid program (approximately $15-22 million) was established for
counties in 2000-01 to offset the cost of Family Health Plus; however,
this aid expired in 2003-04.
- Aid to Towns. Towns currently receive $37 million in unrestricted
aid, a decrease of $108 million (-74%) from 1988-89, which currently
accounts for one percent of town revenues.
- Aid to Villages. $16 million in unrestricted aid is provided to
villages, a decrease of $33 million (-68%) compared to 1988-89.
Unrestricted aid accounts for one percent of village revenues.
- Largest Aid Increases. Counties with municipalities that have received
the most aid between 1988-89 and 2004-05 include: Westchester (+38%),
Onondaga (+33%), Erie (+16%) and Monroe (+5%). These are the counties
where the Big Four cities are located.
- Largest Decreases in Aid. Those counties with the largest declines
in aid between 1988-89 and 2004-05 include: Essex (-82%), Greene,
Putnam and Sullivan (-79%), Suffolk and Hamilton (-78%), and Lewis
and Wayne (-76%).
The report notes that cuts in revenue sharing in the 1990’s
were linked to future savings in local government pension contributions,
but that the savings never materialized because the proposed funding
method was declared unconstitutional. However, the robust market performance,
which lowered overall pension contribution rates, masked the aid cuts.
While pension costs have returned to more normal historical levels
in recent years, revenue sharing funding has not been restored.
Click here for a copy of the research brief or county-by-county
data.
Albany Phone: (518) 474-4015 Fax:(518)
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Internet: http://www.osc.state.ny.us
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