New York State’s cities, towns and school districts are facing unusual challenges, according to a Wells Fargo Securities report.
“Many localities are stressed as they face growing costs and limited flexibility to raise revenue,” wrote Wells Fargo Securities associate Roy Eappen in “New York Local Government Outlook.”
The biggest New York cities have faced smaller reductions in state aid in the last few years than have smaller cities, towns and villages. From fiscal 2010 to 2013, the New York cities ranked second through fifth in population lost 3.5% in state aid. In the same period, New York’s other cities lost 5.9% in aid and its towns and villages lost 7.9% in state aid.
In the Mohawk Valley, Southern Tier and Western New York areas there have been declining populations. That is a problem for those areas’ school districts, which are given state school aid on a per capita formula.
School districts are especially feeling squeezed, Eappen wrote. From 2009 to 2011 the state’s districts’ unrestricted reserves declined 55%, according to the New York State Department of Education.
Long Island’s two counties, Nassau and Suffolk, get more of their tax revenue from sales taxes than from property taxes, unlike most of New York’s other counties. Both have fiscal years that line up with the calendar year and both get most of their sales tax revenue from the latter part of the year.
They have had a history of overestimating their sales tax revenues, Eappen wrote, resulting in fiscal challenges.
Whereas New York’s median age was 35.9 in 2000, it was 38 in 2010. The portion of its population over 65 went from 12.9% in 2000 to 13.5% in 2010.
The state controls local governments’ pension contributions. A decade of low pension returns on investment as well as growing numbers of retirees have led to “exponential growth” in pension contribution requirements.