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Counties Brace for Gathering Financial Storm
September 16, 2008
Counties Brace for Gathering Financial Storm in New York State
Wall Street crisis, growing unemployment, fewer people and high tax burden
In the midst of the ongoing fiscal crisis on Wall Street, higher unemployment numbers, increased demand for services, growing personnel costs and shrinking corporate tax, counties are bracing for another round of reductions from the State of New York.
“How can we not be alarmed by the circumstances taking place on Wall Street? Having already faced two rounds of across the board cuts in state reimbursement this year, counties are now bracing for a third,” said Stephen J. Acquario, executive director of the New York State Association of Counties, which represents New York’s 57 counties and the City of New York. “The State needs to immediately control spending and not shift costs to other units of government.”
This week’s collapse of Lehman Brothers and the subsequent uncertainty plaguing Wall Street has New York State Governor David Paterson bringing additional focus to the State’s growing multi year structural deficit. Wall Street banks, firms and salaries provide as much as 20 percent of the State’s revenues. The shakeup of the financial market, the recession and the resulting financial crisis facing Wall Street will necessitate deeper cuts to the state budget.
Historically, when the state faces a financial crisis, more of the costs for state programs and services have been shifted down to the local property taxpayers. “The state has two choices when they lower state aid to help close its budget gap. They can either reduce state programs that are delivered by counties or they can shift the cost of delivering those programs to counties,” said NYSAC President Lucille M. McKnight, an Albany County legislator. “When they shift costs instead of cutting programs, county property taxpayers end up paying the difference.”
As counties prepare their 2009 spending plans, they are factoring in the two rounds of state budget cuts, the projected economic volatility and the reality of rising costs and increased demands for services. “We are already seeing hiring freezes and reductions in non-mandated programs. Counties are looking for every avenue to reduce costs and increase efficiency,” said Acquario.
Fittingly, the theme for NYSAC’s 2008 Fall Seminar, to be held next week in Niagara Falls is Navigating the Waters of Tough Financial Times. It will include programs on the state’s fiscal crisis, increasing oil and gas prices, and promoting energy-efficiency and other governmental cost saving ideas.
The New York State Association of Counties is a bipartisan municipal association serving all 62 counties of New York State including the City of New York. Organized in 1925, NYSAC's mission is to represent, educate and advocate for member counties and the thousands of elected and appointed county officials who serve the public.
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