The stalemate in the New York Senate has left some local governments crossing their fingers that important finance bills will eventually get passed. For municipalities with financial control boards overseeing their finances, the calculus is slightly different.
Municipal governments with control boards include Nassau County, Erie County, New York City, Buffalo, Yonkers, Troy, and Newburgh.
Control boards can be merely advisory - which entails writing reports on budgets - but in some case they can implement control periods that give the board powers to intervene in budgets, borrowing, and contracts.
For example, if Erie County doesn't get an extension of a 0.75% sales tax that expires on November 30, it could open up a hole in its budget.
"If that were to happen in Erie County, we would be looking for the county to generate revenue from other venues or to reduce spending, or a combination of the two," said Erie County Fiscal Stability Authority executive director Kenneth Vetter. Failure to take action in such a situation could lead the board to vote to reimpose a control period, he said.
Erie's extender bill passed both houses, but it has not been certified by the Senate and transmitted to Gov. David Paterson for his signature, and with control of the Senate still up the in air, it is not clear when or if it will be.
"I don't think anyone knows what will happen next if the bills cannot be or are not certified by the Senate," said Timothy Callan, associate deputy comptroller for Erie County. The 0.75% sales tax generates between $10 million to $15 million a month, on average, but if it expired just before the busy holiday shopping season, it could have a greater impact, he said. However, "nobody in Erie County government is panicking at this point," Callan said.
Nassau also has a sale tax extender bill that has passed both houses of the Legislature but has not been signed by the governor yet.
Past fiscal problems left Yonkers with a requirement that the state comptroller certify its budget. But the city is counting on two extender bills - one that allows a 10% surcharge on state personal income tax and another that reauthorizes a mortgage recording tax - to balance its fiscal 2010 budget.
"The comptroller who reviews our budget is stating that unless those extenders are in place that those revenues that are generated after the [Nov. 30] expiration date are technically not there, and he has a problem certifying our budget," said Yonkers finance commissioner James LaPerche. "Without certifying our budget, we can't send out our tax bills so that has us in a cash problem."
Yonkers has enough resources to continuing paying debt service through November, so the immediate problem is funding operations, LaPerche said. Without certification, it is unable to borrow, though there were no immediate plans to sell debt, he said.
Buffalo also has a control board, but officials from both the city and its control board said there was no immediate impact. The Senate passed an authorization for Buffalo to sell debt on June 3, just days before the Senate Republicans' June 8 leadership coup. However, the coup did stall a bill passed by the Assembly that would weaken the control board's powers.
New York City is counting on the Senate to pass a tax package that would generate a projected $60 million monthly to balance its current fiscal year budget. It's control board has no power to impose a control period but it can make a request of the Legislature to implement a control period.
"We're not even close" to making such a request, said the control board's acting executive director, Jeffrey Sommer. "The city would have to do nothing to replace the sales tax."
So far the impasse hasn't triggered any rating actions, according to Standard & Poor's managing director Colleen Woodell. "It's awkward but it's not having a negative impact on any credits," she said.
