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As local goverments struggle, NY State finances show signs of good health

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Local governments in New York continue to flounder, but there are signs that the state's finances are improving as Governor Cuomo and his budget director Robert Megna announced last week that the state finally got an upgrade in an assessment from a major rating agency.

Standard & Poor's changed the state's outlook from "stable" to "positive". Megna says he hopes that lays the groundwork for an improvement in the state's credit rating, which has been ranked as weak for decades: "This outlook revision is professional evidence from an outside observer that New York is once again on the right track."

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Reported by

Karen DeWitt
NYS Capitol Correspondent

Standard & Poor’s cited two years of on- time budgets that held the line on spending, taxes and borrowing led them to their decision.
Cuomo says the austere state budgets, beginning with a $10 billion cut last year, and continued penny pinching this year, paid off: “We tackled the tough ones.” Cuomo also says he tamped down the growth of spending on education and health care. Cuomo and lawmakers have also agreed to curb pension growth in the future with a new benefit tier for public workers.
While the state’s financial management has improved, most local governments around the state are suffering. A report by Comptroller Tom DiNapoli found many municipalities in a precarious state, with more than 300 running a deficit and over 100 having cash flow problems. Local governments are squeezed by soaring health care and pension costs, combined with a recently enacted property tax cap. Counties across the state are struggling to keep their public nursing homes running. Comptroller DiNapoli says some local governments might eventually have to be taken over by a financial control board.
Betsy Lynam, with the watchdog group Citizens budget Commission, calls the Standard & Poor’s upgrade the “good housekeeping stamp of approval” on the state’s fiscal practices since 2010. But she shares concerns over local governments, which she says are facing numerous “fiscal pressures”.
“They’re going to also find ways to do more with less,” says Lynam ,who says localities also have to get state government to “take account of whatever its share of the problem happens to be.”
Governor Cuomo says the municipalities need to take more responsibility and do more to control costs. He says the state would still be struggling too, if he and the legislature had not made what he calls “tough choices”.
“We’re both swimming in the same pond here, and the same choices that face the state face the local governments ” said Cuomo . “If they don’t make the right decisions, they could have a financial problem.”
Lynam agrees the local government leaders also have to get their own house in order.
“They don’t get to just write it all off on the state, they have to do the heavy lifting,” Lynam said. “And try to reign in their expenditures as much as they can.”
Governor Cuomo has appointed a commission to study mandate relief and other methods to save local governments money, like consolidation. It’s known as the SAGE commission. A report was due in June, but it’s been delayed.

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