In announcing his 2013 city budget back on Oct. 18, Mayor Shayne Gallo offered up a frozen tax levy, a significant drawdown from the city’s rainy-day fund and harsh words for Albany politicians who he says are driving communities towards municipal bankruptcy with a seemingly endless parade of unfunded mandates.
“When you look at Albany you see an arrogant indifference to the plight of local government,” said Gallo in an interview shortly after his budget address. “There’s this sense that local government will bear the burden of political decisions the legislature has made to satisfy its base.”
The outcry from local government leaders like Gallo over state-imposed mandates is a familiar one, but it’s grown louder since 2011, when state lawmakers and Gov. Andrew Cuomo pushed through legislation capping property tax levy hikes for municipal and school district budgets at a baseline of 2 percent. (Various factors which are plugged into a formula result in actual caps ranging from as low as zero percent to as high as, in some cases, 5 percent.)
At the time, Cuomo and tax-cap backers in the legislature promised that the landmark legislation would be accompanied by mandate relief. But two years later, big-ticket mandates like payments into the state retirement system, Medicaid and the Safety Net welfare program remain a major drag on local budgets. In Kingston, for example, Safety Net costs alone would have wiped out the city’s roughly $400,000 tax cap cushion in the 2013 budget. To remain under the state-imposed taxing limit while paying the state-mandated welfare costs, Gallo said he was forced to take nearly $700,000 from the city’s reserve fund. It was, Gallo said, a stopgap solution — one that likely cannot be repeated without damaging the city’s bond rating and driving debt service costs to unsustainable levels.
A gaping gulf
But what to do and how to do it remain contentious, maybe intractable, issues. Two documents sum up the gulf between the desire of local governments to ease the mandate burden and the willingness, or ability, of state elected officials to do that. In 2010, with the tax cap looming, the New York Conference of Mayors and Municipal Officials (NYCOM) task force on mandate and property tax relief produced a report: “You Can’t Cap What You Can’t Control,” a dire warning about the fiscal consequences of unfunded state mandates and a call for major reforms. The same year, Gov. Cuomo convened a “mandate relief and redesign” team of local, state and school district officials to study ways to cut the impact of state mandates on local budgets.
The NYCOM report includes a chart which claims that while property tax increases for local governments across the state will be capped at $19.7 million in 2012, expenses for pension payments, employee and retiree health insurance will rise by a projected $116.1 million. The report, according to NYCOM officials, was an attempt to reconcile the tax cap with the rapid increase in mandated “cost drivers” like pension and health care costs.
“The positive thing that came out of the tax cap was that there was more attention focused on mandate relief,” said Barbara Van Epps, deputy director of NYCOM. “Because mandate relief is the only way to deal with the reality of the tax cap.”