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Report: Tight state aid drives up local tax bills

Wednesday, January 16, 2013
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— Slow growth in state aid is to blame for much of the increase in local property taxes in recent years, state Comptroller Thomas P. DiNapoli said a report released Wednesday.

Local government leaders, who have felt taxpayer wrath in recent years when they raised property taxes and often put the blame on costs imposed on them by the state, heartily agreed.

“The comptroller is really pointing out the obvious,” said Alan R. Grattidge, R-Charlton, chairman of the Saratoga County Board of Supervisors.

The report was the latest in a series DiNapoli is issuing to highlight the causes of fiscal stress in New York’s local governments.

Some $6.9 billion in combined federal and state aid was distributed in New York in 2011, with three-quarters of that total going to counties.

“Federal and state aid have slowed at a time of rising local costs,” said DiNapoli. “What’s more troublesome, however, is that New York’s municipalities and school districts have been forced to rely largely on sales taxes and property taxes to make ends meet.”

Sales tax revenue, in particular, can fluctuate with the economy, dropping when times are tough. That’s among the reasons Saratoga County has raised property taxes the last two years.

“That’s been a really big factor when we put together the last two or three budgets,” Grattidge said.

The New York State Association of Counties agreed with the report, and said the picture may be worse than DiNapoli painted it.

“During this 10-year time period, when rising costs have outpaced state assistance, the state actually reduced reimbursement to counties and shifted more of the costs of state-mandated programs on to county property taxpayers,” NYSAC Executive Director Stephen J. Acquario said.

State aid, as a percentage of counties’ revenue, dropped from 15.7 percent in 2001 to 11.6 percent in 2011.

“In nearly every major category of spending, counties are receiving less reimbursement than they did five years ago, while costs and case loads have risen,” Acquario said.

DiNapoli said that from 2001 through 2011, total federal and state aid has grown at an average of 2.2 percent annually.

The report found that from 2001 through 2011, federal aid to New York’s local governments grew by $932 million. But much of the recent growth, DiNapoli said, was attributable to funds from the federal American Reinvestment and Recovery Act, the one-time “stimulus” for the U.S. economy during the recession.

During the decade, the state’s funding to local communities grew by only 1.2 percent annually on an average.

DiNapoli also noted that a large amount of the aid to local governments comes with strings attached.

State aid largely represents reimbursements for a variety of social service and public health-related programs. DiNapoli estimated that 65 percent of state aid is earmarked for these programs.

“Counties do not receive aid. We get partially reimbursed for some of the services we provide,” said Schenectady County spokesman Joe McQueen. “It’s no secret that we’ve been forced to raise property taxes and cut services because of the cost of state mandates.”

State mandates account for 84 percent of Schenectady County’s $295 million budget, he said.

Grattidge noted that mandated municipal pension contributions have been rising by double digits each year for the last several years — and that the state pension funds are managed by DiNapoli’s office.

 
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