February 20, 2013
DiNapoli: Yonkers Challenged by School Finances, Declining Property Values
City Officials Have Begun Making Tough Choices to Close Budget Gaps
The city of Yonkers has persistently faced significant budget gaps which have caused the city to draw down its fund balance. Recent declines in state aid, property values and growing school demands have added to the city’s financial challenges, according to a report released today by New York State Comptroller Thomas P. DiNapoli. Yonkers officials have started making tough choices needed to bring the city’s budget into structural balance. The report is the latest in a series of fiscal profiles on cities across the state released by the Comptroller’s office.
“Yonkers is better off than many other cities in the state,” DiNapoli said. “However, its dependent school district, for which the city must raise taxes and issue debt, has put stress on the city’s budget, as has a drop in property values driven by the downturn in the housing market. Mayor Spano and city officials have taken several positive steps to balance the budget and boost the tax base, but the city is not out of the woods yet.”
The city’s population enjoys a higher median household income than most cities in New York State – $55,715 compared to $37,607 for the median city. Fewer city families live in poverty – 11.1 percent, compared to 13.7 percent for the median city and the city’s median home value of $428,900 is more than four times that of the median city ($96,000).
DiNapoli’s report found that the city has faced large budget gaps over the last several years, and relied on non-recurring revenues, such as fund reserves to help close them. As a result, the city’s general fund balance declined from $47.1 million in 2006 to $11.6 million in 2010. While the general fund balance increased to $14.5 million in 2011, the city still lacks stable reserves going forward.
After a new city administration took office in 2012, the mayor ordered a hiring freeze and officials began to merge city departments to cut costs. However, large budget gaps for both the city and school district combined are projected over the next few years, up to $86 million in 2014 and $187 million in 2016.
DiNapoli’s report additionally notes that the city has been promoting economic development initiatives which could boost city and school district finances. These include the addition of slot machines at the Yonkers Raceway (now called the Empire City Casino), Ridge Hill – a mixed-use residential and retail development, and the redevelopment of the city’s waterfront.
“Thank you to the State Comptroller’s office for shedding light on the fiscal challenges Yonkers faces,” said Yonkers Mayor Mike Spano. “We are working diligently to get the city back on the road of fiscal stability. The positive changes we’ve made in just the last year along with the open dialogue with the state will aid us in achieving our goals.”
The largest source of revenue for Yonkers in 2011 was state aid, which accounted for 34 percent of all city revenues, compared to 31 percent for the Big Four cities and 20 percent for all cities. Yonkers’ high level of state aid compared to all cities in the state is driven partly by its school district. State aid grew at an average annual rate of 6.9 percent from 2001 to 2010 but then declined by 5.1 percent from 2010 to 2011. The biggest component of state aid to cities is attributable to the state’s revenue sharing program, Aid and Incentives to Municipalities (AIM). Yonkers currently receives $552 per capita in AIM funding, in contrast to $147 per capita for the median city.
Other findings in DiNapoli’s report include:
DiNapoli’s office has an on-going involvement in monitoring the fiscal policies of Yonkers as the city’s fiscal agent. Under the state’s Fiscal Agent Act, the Comptroller must verify that proposed revenues and expenditures are in compliance with the act and may compel changes in the city’s budget prior to its adoption. OSC has also conducted several in-depth audits of the city’s financial operations.
In the coming months, DiNapoli will issue fiscal profiles on select cities across the state to further inform officials and citizens on some of the unique environmental and systemic pressures facing New York’s cities. As part of this effort, DiNapoli will also release in-depth reports on some of the issues that contribute to the financial pressures on local governments.
DiNapoli’s office recently finalized details of a new fiscal monitoring system that will calculate and publicize an overall score of fiscal stress for municipalities and school districts across the state. The ‘early warning’ system will identify those headed toward fiscal crisis and give local officials and the public greater opportunity to consider options for turning things around.
For a copy of the report visit: http://www.osc.state.ny.us/localgov/pubs/fiscalprofiles/yonkers.pdf