2019 NYSAC Fall Seminar
September 16 - 18
Aid and Incentives for Municipaplities (AIM) is an unrestricted state aid program for local governments. Aid had been held flat since 2008, at $715 million, until the $59.2 million reduction this year. This is down from a peak of about $1.1 billion in unrestricted aid provided in 1988-89, when AIM revenue sharing for counties was eliminated. In that year, the county share (excluding NYC) was $47 million. Revenue sharing of nearly $330 million annually ended for New York City in 2010.
This year's NYS budget cut AIM funding by $59.2 million, from $715 million to $655.8 million. The adopted budget ended AIM payments to all towns and villages where the 2018 AIM payment represented less than 2 percent of their total expenditures as reported to the State Comptroller. Nearly 1,300 towns and villages will no longer receive AIM payments.
With the new formula change, about 99 percent of all AIM payments will go to cities, up from 90 percent. For cities, AIM assistance can be a significant portion of their total budget and could approach 30 percent of total revenue for some municipalities. For the handful of towns and villages that continue to receive AIM payments, AIM will typically represent somewhere between 2 percent to 5 percent of their total expenditures.
While the budget eliminates traditional AIM payments for these towns and villages, the budget replaces those payments with a new state payment that is equal to what each municipality received in 2018 under the AIM program. These new payments will be received by towns in December 2019, and each December thereafter. Villages will receive their new payments beginning in May 2020, and each May thereafter.
The major difference in these payments is the source of the revenue. The source of funding to make these new state payments will no longer be the state general fund, instead they will be derived from county sales tax. Beginning this year, the state will withhold a small portion of county sales tax from each county to generate enough revenue for the state to make these payments in 2019 and beyond.
The adopted budget modified state laws and regulations related to the collection of sales taxes on internet purchases and a portion of this new county sales tax revenue is being used to fund the payments for towns and villages going forward.
NYSAC is talking with the State Comptroller about how this will happen.
AIM payments are paid out through varying installments depending on the municipal type:
Read more of NYSAC's reports on the NYS Budget at https://www.nysac.org/nysbudget.