Regional News

N.Y. Comptroller Seeks Solutions to Local Fiscal Stress

AUG 7, 2012 4:30pm ET
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After reporting that many local governments in New York are struggling to keep their financial houses in order, Comptroller Thomas DiNapoli is examining possible solutions, including creation of a “super control board.”

The comptroller at this point is not working with Gov. Andrew Cuomo on legislation that could establish such a control board, said Jennifer Freeman, communications director for DiNapoli.

A recent news report suggested such legislation is under review. A super control board, the report said, would be able to impose a control period over multiple fiscally stressed localities at once.

“We’re looking at who’s fiscally stressed — there are a number of different classes of governments — what’s causing that fiscal stress, and we’re looking at a number of different solutions,” Freeman said.

Some solutions may be legislative, while others could include performing audits and providing classes on long-term fiscal planning, she added.

New York State mayors — including Gerald Jennings of Albany, Thomas Richards of Rochester, Stephanie Miner of Syracuse and Mike Spano of Yonkers — have responded warily to the possibility of a super control board, saying any decisions about cities should be made in concert with local officials.

They added that they’re committed to working with Cuomo and DiNapoli to find a solution to the “looming fiscal crisis.”

There are currently three New York local governments under active control boards: Erie County, Nassau County and the city of Troy.

The Erie County Fiscal Stability Authority was established in 2005 after reports from the state comptroller and bond rating agencies highlighted significant fiscal stress in the county, located in western New York and home to the city of Buffalo.

Buffalo was also previously under a control board. The city’s board transitioned to an advisory period in July, after nine years in a control period.

On the other side of the state in Long Island, the Nassau County Interim Finance Authority imposed a control period in Jan. 2011 when it found that the Nassau County’s budget gap for fiscal 2011 was greater than 1%.

In Troy, located in eastern New York near Albany, its Municipal Assistance Corp. has been providing financial assistance and fiscal oversight since 1995.

Freeman said the comptroller’s office has always played a major role in control boards set up around the state, including in Nassau County and Buffalo.

“So this whole concept of a super control board is something that we’re looking at but we are certainly not wedded to any single proposal at this point,” according to Freeman.

Spurring this search for a solution is an analysis released last week by DiNapoli, which found that nearly 300 local governments had deficits in 2010 or 2011, and more than 100 had inadequate cash on hand to pay their current bills.

His analysis, based on data from 4,000 local governments and recent audits, warns that some municipalities and school districts have become increasingly vulnerable to unanticipated expenses, including emergencies, mandates, and spikes in the costs of goods and services.

“Our communities are facing a challenging economic reality,” DiNapoli said in a statement. “There are no quick fixes and any future economic shocks could have a devastating impact on some communities.”

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