Fiscal Stress for New York’s Cities Continues
Many cities in New York State are already facing very difficult fiscal
situations, and if current trends continue, more of these cities are
likely to fall into severe fiscal stress in the coming years, according
to a report issued today by State Comptroller Alan Hevesi which provides
details on the financial condition of the 61 cities outside of New
The Comptroller’s report, which analyzed numerous measures
of fiscal stress, finds that spending growth outpaced revenue growth
in nearly half of the cities in New York from 2000 to 2004, the latest
year for which data is available. Almost half of the cities faced
a deficit in 2004.
Based on measurements of fiscal stress reflecting changes in revenues,
debt, fixed costs and operating position, the study found:
- Fiscal conditions in the Big Four Cities outside of New York
City – Buffalo,
Syracuse, Rochester and Yonkers – continue to worsen. Buffalo
ranks among the most severe on measures of fiscal stress, while
Rochester and Syracuse face fiscal stress on virtually every indicator
examined. Recent multiyear financial plans show persistent and increasing
out-year gaps amounting to roughly 20 percent of general fund budgets
- Beyond the Big Four Cities, ten other cities exhibited significantly
higher than average fiscal stress in at least one measurement: Niagara
Falls, Auburn, Binghamton, Albany, Gloversville, Lackawanna, Geneva,
Watertown, Oswego, and Mount Vernon.
"The financial condition of many once-flourishing cities in
New York State is truly troubling,” Hevesi said. "For
decades, these cities have seen demands for municipal services increase
while their tax bases continued to erode. Most troubling, cities all
across New York State continue to lose population, which has made
achieving fiscal stability even more challenging.”
Other findings include:
- Impact of Population Declines. Generally cities that have lost population
were found to have the highest levels of fiscal stress across a
range of indicators.
- Operating Deficits. 27 out of 61 cities had a general fund operating
deficit in 2004.
- Per Capita Spending. Average general fund spending per capita was
$995 for cities in 2004. White Plains was highest at $1,700 per
capita, while the lowest spenders (those spending less than $700
per capita) were Amsterdam, Salamanca, Mechanicville and Sherrill.
Many factors influence these variations, including the level and
scope of services provided.
- Property Taxes. As the largest revenue source for cities, property
taxes are increasingly under pressure, and many cities with declining
populations have stagnant or declining property values. As a result,
more cities are operating dangerously close to their constitutional
property tax limits.
- Reliance on Sales Tax. Six cities rely on the sales tax for more
than 25 percent of their revenues. This tax is particularly sensitive
to economic swings and can decline when a region is struggling economically.
- Debt. Six cities have debt levels that are far above average, including:
Auburn, Oswego, Niagara Falls, Watertown, Buffalo and Geneva.
The study examined factors including spending, revenues, debt, fixed
costs, operating positions, as well as population, property value,
poverty, tax and debt limits, personal income and employment.
The report noted that last year’s State budget increased (for
the first time in several years) unrestricted aid to cities (revenue
sharing) under the Aid and Incentives to Municipalities (AIM) program.
Last year, under AIM, cities received across-the-board increases of
12.75 percent, with the aid being contingent on developing multiyear
financial plans and meeting other requirements. This year’s
Executive Budget also proposes an increase in AIM; most cities (42)
would receive an 11 percent increase. The 19 cities with a higher
per capita value of property tax base would receive smaller increases.
Click here for a copy of the report