Economy and Public Policies Impact County Revenues, Expenditures
By Dave Lucas, NYSAC Director of Finance and Intergovernmental Relations
Counties provide hundreds of services to the public, including many that are directed by the state or federal government in addition to those demanded locally by taxpayers. The vast majority of county spending is for State and federal programs, and these are generally targeted toward ensuring there is a social safety net for those most in need and promoting the public health. Other “quality of life” initiatives that ensure local roads and communities are safe and secure, promote accessible culture and recreation, enhance public safety, and promote local economic development are provided at the discretion of counties with available resources.
This article is a summary of where counties get their revenue, what they spend their resources on, and their use of debt. The report provides general points of comparison for counties, including an average county's revenues and expenditures. There are also highlights of expenditure and revenue trends between 2000 and 2015.
Counties use debt to fund an array of public infrastructure assets, including roads and bridges, jails and 9-1-1 centers, and water and sewer systems. The lack of surplus funds has forced counties to increase their use of debt, from about $7.5 billion in 2000 to about $13.3 billion by the end of 2014. Despite this growth, counties are still well below their constitutional debt capacity.
Counties rely on a variety of revenue sources to fund their annual operations, with most of these revenues coming from four sources: property taxes, sale taxes, state reimbursement, and federal funding make up 65 % of total county revenues across the state. In the past 15 years, these revenues were impacted by the Great Recession and subsequent decisions by the state. At the same time, revenues from the federal government reimbursement rose, but have stabilized more recently.
In New York, county expenditures are heavily driven by state law under which county governments are required to administer and fund an array of state and federal programs. The major cost categories for counties include social services, general government projects, employee salaries and benefits, and public safety, which account for nearly 65% of county expenses. County spending was highly correlated to increases in state-imposed mandates and also economic conditions that both increased demands for social services and curtailed revenue.
There is also a brief discussion on aggregate county per capita expenditures and how they have changed over time. The data indicates that pre-Great Recession, spending (and revenues) per capita grew at a consistent rate, often to meet state and federal mandate requirements. However, since the first year of the recession, per capita spending has remained relatively flat with more than 40% of counties spending less per capita in 2015 than they did in 2008.
State Mandated Spending
Counties are required under state law to administer and fund a large array of state and federal programs. For most of these programs counties are required to follow strict state rules about what services must be provided, including the amount and duration of benefits. It is also important to note that counties in most other states do not have to administer such a large number of state programs using locally raised tax revenues.
Counties have highlighted how the costs of just 9 state mandates (of more than 40 NYSAC has identified) can add up when measured against the primary revenue source available to most counties—the property tax. The chart below provides an estimate of the impact state mandates can have on counties.