FOR RELEASE:

Fiscal Stress for New York’s Cities Continues to Grow

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 York City.

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 by 2009.
• 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

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