Statewide, recession still claws local budgets

New York State Comptroller Thomas DiNapoli said local New York State Comptroller Thomas DiNapoli said local governments face difficult choices that require better long-range planning and honest conversations about revenues and expenses. (March 14, 2012) Photo Credit: Newsday/Audrey C. Tiernan

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The weak economic recovery continues to strain local budgets, with many municipalities running deficits while others struggle with lower tax collections and cuts in state and federal aid, according to a report by state Comptroller Thomas DiNapoli.

Across the state, local government revenues fell as sales taxes slumped, property values sank and fewer houses were sold. Against this backdrop the state cut local aid and more recently the tax cap kicked in, which makes it more difficult to raise property taxes to close budget gaps.

"Our communities are facing a challenging economic reality," DiNapoli said in a news release Wednesday. "There are no quick fixes and any future economic shocks could have a devastating impact on some communities."

Local governments have responded to falling revenues by cutting spending on public safety, health and recreational programs and transportation. Even so, the report said that more than 100 local governments have current liabilities that exceed the amount of cash they have on hand. Nearly 300 local governments ran deficits in 2010 or 2011.

During the recession, which began at the end of 2007 and ended in mid-2009, local government revenue statewide fell by $400 million, according to the comptroller's office. Federal stimulus funding helped local budgets, but it was temporary.

Since 2009, the state has reduced a key local aid program by $50 million, a 7 percent drop. In 2009, county sales tax collections fell by 5.9 percent compared with the previous year and only recovered to 2008 levels last year. Property values in nine downstate counties, including Nassau and Suffolk, shot up at a rate of 12.2 percent annually from 2000 to 2008. But since the housing bubble burst they've fallen at an average annual rate of 5.3 percent, the report said.

DiNapoli said local governments face difficult choices that require better long-range planning and honest conversations about revenues and expenses so they can prepare realistic budgets.

Mark LaVigne, deputy director of the New York State Association of Counties, said, "Counties are exploring all ways to reduce costs at the local level. We're seeing service cuts, layoffs, elimination of long-standing social programs like nursing homes."

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