ALBANY – The city of Jamestown isn’t the only community in New York State dealing with financial challenges due to slow or stagnant revenue growth while continuing to see expenses go up.
State Comptroller Tom DiNapoli released a report on Friday that said many of New York’s local governments are coping with slow or no revenue growth, making it difficult for them to maintain services while keeping pace with rising fixed costs such as health care.
“New York’s municipal governments are seeing sales tax revenue growth slow and state aid remain essentially flat while they and school districts are coping with tax cap and tax freeze initiatives that limit growth in property taxes,” DiNapoli said. “As local governments adapt to changing circumstances, my office will continue to support them with training, analysis and guidance.”
Thomas DiNapoli
According to the report, Local government spending growth has increased between 0.9 and 2 percent annually since 2010. Spending by school districts remained below 1 percent for three years starting in 2011, but ticked up at a higher rate in the last couple of years, when compared to counties, cities, towns, villages and fire districts, due to increases in state aid to schools.
DiNapoli’s report found that local sales tax revenue growth fell from 3.6 percent to 1.8 percent in the first nine months of 2016 from the same period a year earlier.
School districts, towns and villages rely on the property tax for approximately half of their revenues. The property tax levy limit that took effect in 2012 effectively restricts reliance on property tax revenues to fund increases in local spending. In recent years, the tax cap’s allowable levy growth factor has been less than 2 percent.
Unrestricted State Aid for Municipalities (AIM) has been frozen at $715 million for five years. However, large financial settlements with banks have bolstered state revenues and some of the windfall has been targeted to programs that help local governments.
Despite the noted financial pressures, fewer local governments have been designated in fiscal stress under DiNapoli’s fiscal stress monitoring system.
Counties and cities showed more signs of stress, but improved in 2015, while the number of school districts in stress was stable at 12 percent.
In 2016, DiNapoli’s office completed over 500 audits of localities and schools and trained more than 10,000 local government officials and staff. The audits identified nearly $49 million in cost savings and revenue enhancements.
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