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State aid not always keeping up with rate of inflation

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CNY/NNY/S. Tier: State aid not always keeping up with rate of inflation
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With just days to go before the governor presents his budget proposal to the state, the comptroller's office released a report that shows state aid to municipalities doesn't keep up with the rate of inflation. Capital Tonight's Nick Reisman reports.

NEW YORK STATE -- As local governments in New York continue to budget within a property tax cap and growing costs, Comptroller Tom DiNapoli's office released a report this week that found state aid to municipalities isn't keeping up with inflation.

“For the past six or seven years, this state has been struggling with its economy. When you combine that with a property tax cap and reduced state reimbursement to the counties for state services, this is pretty severe,” said Steve Acquario, Executive Director of the New York State Association of Counties.

DiNapoli's report found that from 2001 through 2011, federal and state aid grew at 2.2 percent each year, less than the 2.4 percent rate of inflation. When it comes to state aid alone, that's only grown by 1.2 percent on an average basis. With the state aid growth at anemic levels, they're focused more on collecting property and sales tax revenue.

“The tax cap has been shown to be working in the first year or two, but I think most objective viewers would say that's not sustainable using fund balance, eliminating programs, you can't do that forever,” said Peter Baynes, Executive Director of the New York Conference of Mayors.

Local government officials are hopeful the governor will push this year for increased state aid and, as usual, a reduction in mandated state spending in order to cover costs.

Baynes said, “The ultimate sign that the state is in good fiscal shape is if they start sharing their revenues with local governments because when they do that, we've shown that in years, local governments get an increase in state aid they use it for property tax relief.”

In his State of the State Address last week, Cuomo said that solving the problems of local governments on the brink of bankruptcy can't be addressed with a one size fits all solution. He proposed a board of public and private officials to help municipalities through restructuring.

“Let's bring them in, individually. If they're in financial distress, we'll see with them, come up with a restructuring plan that makes sense and then we'll work with them on their restructuring plan,” Governor Andrew Cuomo said.

The governor presents his budget proposal on Tuesday.

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