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DiNapoli: Unrestricted State Aid for Local Governments Failed to Keep Up With Inflation

February 14, 2022

Unrestricted state aid for cities, towns and villages has remained flat or declined over the last decade, according to a report issued today by New York State Comptroller Thomas P. DiNapoli. When adjusted for inflation, unrestricted aid to local governments has actually declined by 24% since 2011, when the state’s real property tax cap was enacted.

Because this aid can be used by municipalities for any governmental purpose, it is an important revenue source, particularly for many cities. Also called revenue sharing, this funding comes to local governments from the Aid and Incentives for Municipalities (AIM) program.

“The state has long supported local communities through revenue sharing programs. Many municipalities depend on this aid to balance their budgets, but inflation has eroded its value,” DiNapoli said. “Right now, the state is on solid fiscal footing and should take this opportunity to assess what changes are needed to improve this critical funding source.”

Since State Fiscal Year (SFY) 2012, AIM funding was held flat for most municipalities. In SFY 2020, funding was eliminated for most towns and villages and replaced with “AIM-related” payments, which was funded using county sales tax revenue.

Unrestricted Aid Chart

Other findings in the report:

  • Cities: New York’s cities are the biggest beneficiary of AIM funding. Cities outside of New York City received nearly 91% of total AIM funding from SFY 2012 to SFY 2019 and 99% of it in SFY 2021. Many cities are disadvantaged relative to their surrounding towns and villages, and often face lower per capita full property values, higher poverty rates, and population declines. On average, cities receive nearly 13% of their revenues from revenue sharing.
  • Big Four Cities: Buffalo (31.4%), Syracuse (23.5%), Yonkers (17.7%) and Rochester (14.1%) receive a large share of their total revenues from AIM. Among the state’s other cities, AIM accounts for nearly 7% of total revenues on average.
  • New York City: Before AIM, New York City received a large share of total unrestricted aid to local governments, including more than 41% of the total in SFY 2005. In SFY 2006, the city received $328 million, but AIM funding for the city was eliminated in SFY 2011. The state has not restored it since.

Report
Aid and Incentives for Municipalities: New York State’s Local Revenue Sharing Program


Track state and local government spending at Open Book New York. Under State Comptroller DiNapoli’s open data initiative, search millions of state and local government financial records, track state contracts, and find commonly requested data.