New York governments fear Detroit-like fiscal cliff
July 27, 2013
New York governments fear Detroit-like fiscal cliff
The Associated Press Associated Press Sat Jul 27, 2013, 03:27 PM EDT
Niagara Gazette — ALBANY — Half the school-crossing guards in Auburn lost their jobs, Fire Station No. 7 that served Syracuse since 1954 will close and Yonkers can't afford full-day kindergarten as the fiscal crisis that sent Detroit into bankruptcy this month hits New York's local governments and their taxpayers.
New York's local governments face unaffordable public worker payrolls and growing pension costs while employers and residents who pay for it flee the Rust Belt. Union protections and Albany's unfunded mandates of programs also handcuff local governments.
Experts in municipal finance make the case that Detroit and today's New York state lack what brought New York City back from the brink of bankruptcy in the 1970s: powerful political will.
Detroit "was a political system unwilling to address the problem in a constructive fashion. The world has changed," said Richard Ravitch, who helped save New York City from financial disaster in the 1970s. He and former Federal Reserve Chairman Paul Volcker have spent recent years studying and warning about the emerging local government crisis nationwide.
Ravitch said New York won't likely face bankruptcies like Detroit because of laws and procedures unique to the state, where the pain for residents would come in the form of state-ordered financial control boards.
New York state, cities including Binghamton, Buffalo and Yonkers and counties including Rockland, Monroe and Nassau must take bold, unified action the way state and local leaders did to rescue New York City in the 1970s, Ravitch said.
Albany's lack of will for such a unified front to make difficult decisions against powerful special interests was clear when the state faced its crisis beginning in 2009. Labor unions ran heart-wrenching TV ads against Gov. David Paterson, one of his own commissioners rebelled against his layoffs and Democratic leaders trashed the fiscal recovery plan Ravitch compiled because it included short-term borrowing, a political pitfall.
"My best friends turned against me," Paterson said.
Today, Syracuse Mayor Stephanie Miner continues to seek a local government summit meeting with officials from across the state and Gov. Andrew Cuomo to share and propose solutions. So far, Cuomo hasn't agreed.
Cuomo urges local governments to slash and streamline the way he did to tame the state fiscal crisis that once pushed deficits to more than $10 billion. He has also offered a tool to limit crushing public pension costs now, though at a cost in later years. Some local officials already dismissed that as risky borrowing. Albany raised $2 billion a year with a millionaire's tax to help address its crisis. But New Yorkers already pay some of the nation's highest property taxes and a state-mandated 2 percent cap on property tax growth makes raising taxes even harder.
Cuomo has also created a panel of government finance experts to help local governments deemed to be "distressed" restructure and cut spending. He declined to comment for this story.
Meanwhile, Miner is meeting with some colleagues at the local level, and Ulster County Executive Mike Hein is meeting others as he compiles an online list of innovative options.
State Comptroller Thomas DiNapoli created an early warning system for cities, towns and counties facing fiscal distress and lauds the individual efforts, but he thinks there should be closer cooperation.
But Miner says, "We have to first admit the way we fund city government is outdated and no longer works. That model of large manufacturing paying huge property taxes for services doesn't exist anymore and it's not coming back."
She noted, for example, that Rhode Island Gov. Lincoln Chafee recently allowed a town to charge a tax-exempt private university an annual fee for police, fire and emergency services. That precedent could benefit upstate cities like Syracuse, where half its property is tax exempt for hospitals, research institutions, schools, universities, and state and county government buildings.
"Government has an obligation to reinvent itself so the people in need don't suffer and because property taxpayers are clearly at their limit," Hein said.
Lacking a state database, he created a website, www.paygony.com, to collect and share ideas from local governments. He sees hope in making a bold move that can eventually be seen as a political win, such as his new model to fund the county nursing home, which drew 200 protesters and no political allies.
"Now you can't find an elected official who didn't support it and many who thought it was their idea," Hein said.
Yonkers Mayor Mike Spano said the state and federal government have "walked away" from cities.
"There needs to be a summit on cities," he said. "I'm not ready to say we've failed yet."
http://niagara-gazette.com/local/x2040134859/New-York-governments-fear-Detroit-like-fiscal-cliff
