McKinstry: Local gov'ts just scratching by

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Yonkers Mayor Mike Spano speaks at a news

Yonkers Mayor Mike Spano speaks at a news conference. (Aug. 28, 2012) Photo Credit: Angela Gaul

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Gerald McKinstry Portrait of Newsday editorial board member Gerald McKinstry

Gerald McKinstry is a member of the Newsday editorial board.

Speaking to a subdued crowd of municipal and school leaders, Mayor Mike Spano acknowledged that the City of Yonkers could one day go bankrupt.

It's not a prospect that the mayor takes lightly; he's been working hard to avoid that fate. And New York's fourth-largest city isn't alone: Buffalo, Rochester and Syracuse face that grim reality, too.

For these cities, and so many others across the country, the daunting fiscal situation can best be summed up this way: They are spending more money than they can realistically raise from taxpayers who are already feeling the strain. The future trend line doesn't look good, either.

"We've kicked the can down the road," Spano told the group of roughly 30 at a forum Wednesday night in White Plains sponsored by the Empire Center for New York State Policy, a conservative-leaning think tank. "The problem is we've run out of road."

This year Yonkers officials approved a $958 million budget that cut programs and staff while raising taxes 3.4 percent and is still expected to come up short by tens of millions of dollars -- and by more than $400 million over four years. Before Yonkers' coffers run dry, Spano, a Democrat who took office last year, predicted a sort of cultural erosion. The first services to be jeopardized will be libraries, parks and school programs like music, art and athletics over more essential ones like police, fire and trash pick-up.

Some programs have already been cut in city schools. Elsewhere, Spano is in the midst of a bitter battle with the city's firefighters over a contract that is currently in arbitration.

To varying degrees, localities are handcuffed by growing state mandates, rising pension and health care costs, a declining tax base and the lousy economy. In New York, the challenges have been compounded for decision-makers by a 2 percent cap on the growth of property taxes -- lauded by many taxpayers as a way to curb out-of-control annual increases..

While leaders often rail against the cap, mandates and other circumstances out of their control, they're also to blame: Too few of them have made the needed tough calls or radically changed spending behavior in the years leading up to this latest crisis. Certainly not when times were good.

Whether it's politics or an uneasiness of upsetting constituents, they haven't always been straight with the numbers, often providing rosier revenue projections or blaming the federal or state governments for a shortfall. And generally speaking, they haven't taken a longer view by projecting expenses and revenues by more than a year or two.

To borrow Spano's sentiment, leaders on all levels -- local, state and federal -- have too often punted. They've relied on bailouts, one-shots and gimmicks like borrowing for day-to-day expenses. Now, that Band-Aid approach just won't work, as few municipalities or taxpayers have bags of money lying around. And the state doesn't look like it's coming to the rescue.

At Wednesday's gathering, officials offered differing problems facing their localities and school districts, but a common thread is little or no control over their biggest expenses: labor and mandates like retiree costs.

Take pensions. In Westchester County, retirement obligations cost taxpayers $3.3 million in 2001 and are expected to exceed $91 million in 2013. In Yonkers schools, they've grown 83 percent in two years to $47 million. And in Syracuse, the city would have to raise taxes 100 percent just to cover its tab.

Only 74 percent of cities and 78 percent of states in this country can cover what they've promised retirees, so many cities have underfunded their pension tills by 20 percent or more, a Pew Center on the States study published this week found.

New York City is only 70 percent funded, while Providence, R.I., and cities in Nebraska and Oregon had only about 50 percent in the bank. One city in West Virginia was at an abysmal 24 percent. The New York State pension fund is nearly fully funded.

States, meanwhile, are short by $757 billion for pensions- and that's only one aspect of the problem. There are plenty more fiscal mountains to climb.

"There's no question there's a lot of fiscal stress," E.J. McMahon, a senior fellow at the Empire Center, told the forum. "The question is, what lies ahead?"

Tough choices. Bold action. And an honest assessment of the true long-term cost of services. We can only hope.

Gerald McKinstry is a member of the Newsday editorial board.

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