Great Recession And Albany’s Unfunded Mandates Have Delivered A Devastating 1-2 Punch To Local Governments And Taxpayers – It’s Time For Relief!
Legislative column from Assembly Minority Leader Brian M. Kolb (R,C,I-Canandaigua)
August 17, 2012
According to boxing historians, former heavyweight champion of the world Rocky “the Rock” Marciano was widely credited with having some of the sport’s most devastating knockout power. Well, move over Rock, because there is an even more fearsome puncher on the scene, one that threatens to “KO” the Empire State’s local governments and taxpayers! GREAT RECESSION + ALBANY UNFUNDED MANDATES HURT LOCAL FINANCES The “puncher” I refer to comes in the form of the the Great Recession, coupled with Albany’s costly unfunded mandates, which combine into a devastating “1-2” punch to the finances of local governments. It’s no exaggeration to say that counties, towns, cities, villages and school districts all across New York are facing some of the toughest budgetary pressures in their history. These pressures are not an abstraction or some far-off challenge affecting only a select few; every local taxpayer in the Empire State is impacted by the the hefty price tag of Albany’s unfunded mandates and the economic downturn that New York is still recovering from. There is a direct, inescapable connection between Albany’s unfunded mandates – whenever State government tells local government to do something but does not provide any funding to pay for it – and County property tax levies. In addition, when the national and state economies take a hit, as they did during the recent recession, localities suffer a disproportionate impact. In short, when the State’s economy sneezes, local governments and local taxpayers from Buffalo to Brooklyn catch a very bad – and very expensive – cold. REAL CHALLENGES THAT COULD “KO” LOCALITIES AND TAXPAYERS If you think such a description is overblown or sensationalizes the issue, take a quick read of information from the New York State Association of Counties (NYSAC) and a recent report from State Comptroller Thomas DiNapoli which spell out the challenges localities face: MEDICAID: In 2012, County and New York City taxpayers funded more than $7.4 billion of the State’s $54 billion Medicaid program – and the growth of Medicaid has caused increases in County property taxes (Source: NYSAC Legislative Priority, Medicaid Reform); PENSIONS: County pension contributions will rise by more than 2,400 percent between 2001 and 2014. These increases stem from the benefit expansions in 2000 and stock market fluctuations – and these escalating costs increase property taxes and cut local programs (Source: NYSAC Legislative Priority, Pension Reform); and LOCAL FINANCES: Over 100 local governments do not have enough cash on hand to pay even 75 percent of current liabilities. Furthermore, almost 300 local governments ended either fiscal years 2010, 2011, or both, in a deficit situation and 27 localities may have spent more than what they had in their “Rainy Day Funds” (Source: Office of State Comptroller Report “New Fiscal Realities Challenge Local Governments”). LOCALITIES NEED A LIFELINE FROM ALBANY, NOT MORE UNFUNDED MANDATES Having had the privilege and opportunity to serve in local government – as a Town Supervisor, a member of the County Board of Supervisors and on a local school board – I can say with complete confidence that the men and women serving in local government have done, and continue to do, everything possible to reduce costs and find innovative ways to deliver services. However, regardless of how cost effective or creative local officials are, they cannot escape the reality that nearly 90 cents of every County property tax dollar goes to fund State mandates, including Medicaid, which is the 800-pound gorilla of unfunded mandates. How can we expect localities to meet local needs with a measly thin dime left over from every County property tax dollar they generate? Folks, even Warren Buffet couldn’t make those economics work! SMART SOLUTIONS TO HELP LOCAL GOVERNMENTS AND PROTECT LOCAL TAXPAYERS Even though addressing the formidable 1-2 punch of Albany’s unfunded mandates and the lingering effects of the economic recession may seem complicated, I believe that the solutions to these problems are relatively straightforward and should include the following:
- Ban ALL new unfunded mandates, suspend current unfunded mandates and get outdated, unproductive State rules off the books;
- Freeze the entire local share of Medicaid costs;
- Give local governments increased flexibility to manage their rising pension costs and implement defined contribution plans for new employees;
- Place a renewed emphasis on eliminating waste, fraud and abuse throughout State government and use that savings to strengthen funding to cash-strapped localities through the Aid and Incentives to Municipalities (AIM) program; and
- Provide technical assistance to localities to help them implement best practices for long-term budgeting to ensure they can weather any future economic downturns.