By DANNY HAKIM
Published: March 10, 2012
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CloseDiggRedditTumblrPermalink ALBANY — It was not a good week for New
York's cities and counties.
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Ángel Franco/The New York Times
Richard Ravitch, who is helping Yonkers with its financial woes.
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Steve Bellone, the Suffolk County executive.
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On Monday, Rockland County sent a delegation to Albany to ask for the
authority to close its widening budget deficit by issuing bonds backed
by a sales tax increase.
On Tuesday, Suffolk County, one of the largest counties outside New
York City, projected a $530 million deficit over a three-year period
and declared a financial emergency. Its Long Island neighbor, Nassau
County, is already so troubled that a state oversight board seized
control of its finances last year.
And the city of Yonkers said its finances were in such dire straits
that it had drafted Richard Ravitch, the former lieutenant governor,
to help chart a way out.
Even as there are glimmers of a national economic recovery, cities and
counties increasingly find themselves in the middle of a financial
crisis. The problems are spreading as municipalities face a toxic mix
of stresses that has been brewing for years, including soaring
pension, Medicaid and retiree health care costs. And many have
exhausted creative accounting maneuvers and one-time spending cuts or
revenue-raisers to bail themselves out.
"We really are up against it," Mayor Michael R. Bloomberg said during
a recent trip to Albany, urging the state to reduce pension benefits
for future public employees. New York City's annual pension
contributions have increased to $8 billion from $1.5 billion over the
past decade.
In a radio interview on Friday, Mr. Bloomberg noted the spreading
financial woes of local governments, saying, "Towns and counties
across the state are starting to have to make the real choices — fewer
cops, fewer firefighters, slower ambulance response, less teachers in
front of the classroom."
And Thomas S. Richards, the mayor of Rochester, recently described a
grim situation facing New York's cities in testimony to the State
Legislature, saying, "I fear that Rochester and other upstate cities
are approaching the point of financial failure and an inevitable
financial control board — as is the case in Buffalo — unless something
is done now."
The problem has national echoes: Stockton, Calif., a city of almost
300,000, is teetering on the verge of bankruptcy. Jefferson County,
Ala., made the biggest Chapter 9 bankruptcy filing in history in
November and stopped paying its bondholders. In Rhode Island, the city
of Central Falls declared bankruptcy last year, and the mayor of
Providence, the state capital, has said his own city is at risk as its
money runs out.
The concerns of municipal officials are validated by the ratings
agency Moody's, which downgraded the debt of Rockland County and Utica
last month, and Yonkers and Long Beach last year. New York is hardly
alone, and certainly not the worst; for four straight years, Moody's
has had a negative outlook for the country's local governments . And
the problems are likely to persist.
"We expect that the pressure from fixed expenditures, and pensions in
particular, will continue to be a strain," said Geordie Thompson, a
Moody's analyst. "This is where the budgetary tradeoffs will continue
to be difficult. There will have to be tradeoffs that will have to be
made to make those payments."
Pension costs are a particular problem. The stock market collapse of
2008 decimated public pension fund investments, and municipalities are
now being asked for greater contributions to make up for the losses.
The impact has been drastic: Three percent of New York property tax
collections were used to pay pension costs in 2001; by 2015, pension
costs are expected to eat up 35 percent of property tax collections.
Falling property values have also affected cities and towns because
lower assessments hurt property tax collections.
The state is taking some steps to ease municipal burdens, but they
come with risks. A relatively new plan allows municipalities to borrow
from the state pension fund, with interest, a portion of their
required contributions to the pension system.
"It's the worst thing that you can do financially," said Steve
Bellone, the Suffolk County executive. "But when you are up against
the wall and you have a county that has used every one-shot revenue
that it can possibly use already, and you're facing a deficit of huge
proportions, suddenly that becomes not such a bad option."
Suffolk and Nassau are borrowing a combined $85 million this year to
pay their required contribution into the state pension system.
"That's where we're at today," Mr. Bellone said. "We are in a
financial crisis."
More Here:
http://www.nytimes.com/2012/03/11/nyregion/deficits-push-municipalities-to-desperation.html
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Together, we can change the world, one mind at a time.
Have a great day,
Tommy
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Together, we can change the world, one mind at a time.
Have a great day,
Tommy
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