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March 27, 2007

Comptroller Report: Suburban Growth in Towns Leads to
Proliferation of Special Districts; More than 6,900 Statewide

Special Districts Account for $1.3 Billion 24 Percent of All Town Revenues

More than One-Third of All Special Districts are in Erie, Onondaga and
Monroe Counties; Nassau County Special Districts Account for
31 Percent of All Special District Revenue Collected Statewide

Special improvement districts in towns in New York State have proliferated over the last 50 years in large part to address increased residential needs resulting from suburban growth. The revenue raised from the 6,927 town special districts statewide accounted for $1.3 billion, or nearly a quarter, of all town revenues in 2004 (see data links below for a full breakdown), according to a research brief on town special districts released today by New York State Comptroller Thomas P. DiNapoli. The report noted that special districts can add hundreds of dollars to property owners’ tax bills.

“As towns respond to increasing demands and property tax pressures, they need to evaluate the methods they use to deliver services. At the same time, state leaders should examine ways to help towns deliver services more efficiently,” DiNapoli said. “While special districts have given towns the flexibility they needed to provide critical services to residents, they don’t always operate as efficiently and equitably for all taxpayers.

“This report provides important information for state and local policy makers as they engage in public discussions on “right-sizing” our local government structure. I commend the Governor and local leaders who have made it a priority to examine these issues and expect that our efforts will be helpful to them.”

Several state and local initiatives are underway to analyze ways to consolidate New York’s multiple layers of local government, including Governor Spitzer’s recently announced Commission on Local Government Efficiency. In addition, Nassau County Executive Thomas Suozzi is developing a blueprint for the consolidation of separate taxing authorities operating in Nassau County and Suffolk County Executive Steve Levy is rethinking how resources should be shared among school districts.

Major findings of the research brief include:

  • Geographic Concentration of Special Districts. Thirty-four percent of all special districts are located in three counties — Erie (939), Onondaga (867) and Monroe (551). Seven of the nine counties in the New York City metropolitan area reported having more than 100 special districts each.
  • How Special Districts are Funded. Most special district revenues are collected through property taxes and assessments, and in some cases, from user fees paid by taxpayers within the district. In 2004, $862 million or 67 percent of special district revenue came from property taxes and assessments, while user fees for water, sewer and garbage collection accounted for $259 million (20 percent). Another $173 million (13 percent) was collected through other user fees and taxes.
  • Who Collects the Most Revenues. Nassau County (31 percent) and Suffolk County (19 percent) on Long Island are responsible for half of the state’s special district revenues. Combined with Erie (11 percent) and Westchester (5 percent), these four counties are responsible for two-thirds of all special district revenues collected in the state
  • Percentage of Town Revenues. In three counties, special district revenue accounted for a third to more than half of all town revenues, including Nassau (52 percent), Niagara (41 percent) and Erie (32 percent). In 2004, special districts accounted for the majority of all real property taxes and assessments collected by towns in Niagara County (77 percent), Nassau County (65 percent) and Warren County (52 percent).
  • Who Pays the Most. On average, taxpayers pay $257 per household for special districts in New York State. Taxpayers in Nassau ($946), Hamilton ($772), Niagara ($687), Warren ($609) and Erie ($585) counties pay the most, while those in Tioga ($49), Cortland ($49), Herkimer ($69), Lewis ($78) and Cattaraugus ($83) counties pay the least for special district services.

Special districts were created to allow towns to provide residents within a specific geographic area services such as lighting, water, sewer, fire protection, snow removal and ambulance services. The concept of special district has proven to be so flexible that it has been used to meet some unusual needs, including public docks, beach erosion control and harbor improvement for seaside properties. State law provides the framework for how special districts can be established, financed and operated.

The report analyzes the growth in special districts, details how special districts are structured, and compares the geographic concentration of these districts. The report also contains a county-by-county breakdown of the total number of special districts, the total amount of revenue raised and the impact on taxpayers.

Among the report’s other findings:

  • Garbage, Water and Sewer Generate Most Revenue. The 160 refuse and garbage districts, which represented only 2.3 percent of all districts statewide, accounted for almost 29 percent of the revenues collected. Nassau County’s 24 garbage districts are responsible for 14 percent ($181.1 million) of all special district revenues collected statewide.
  • Lighting Districts are Most Common but Generate Least Revenue. The 1,783 lighting districts in the state amount to more than a quarter of the 6,927 districts — the largest number of districts reported — yet accounted for only 4 percent of revenues. Combined, Nassau and Suffolk Counties have 24 lighting districts, or 1.3 percent of the statewide total, yet are responsible for 55 percent of the statewide revenues for lighting purposes. In comparison, Erie, Monroe and Onondaga Counties have 776 lighting districts — 44 percent of the statewide total — yet are responsible for only 27 percent of all revenues collected for lighting districts.
  • Other Less Common Districts Have Been Created for Ambulance Services, Incinerators, Sidewalks and Snow Removal. These districts account for 7 percent of all special districts.

The report recommends several policy considerations for state and local leaders including:

  • Unit Cost Analysis. Unit cost studies could be conducted to shed light on possible inequities and inefficiencies in the current delivery of services.
  • Thresholds. State legislation could compel towns to undertake a consolidation study if certain prescribed thresholds or triggers are met. Thresholds should be based on the percentage of population living in an area served by multiple special districts with the same purpose.
  • Expansion of the Shared Municipal Services Incentive (SMSI) Program. The state currently offers grants to local governments looking at consolidation opportunities, which could be expanded to include special districts, as the Governor has proposed.

Special District Real Property Tax and Assessment revenue by town: 2004

Special District total revenues by town: 2004

Click here for a copy of the report



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