Reducing New York’s Budget Deficit and Reforming Local Government: The Need for Consolidation

Shane J. Egan, Staff Writer

New York State is facing growing budget deficits that are a threat to the long-term viability of the state.[1]  New York State leaders will have to make some very difficult choices in the months and years ahead about how to close these record budget deficits.  The financial panic of last fall combined with the historic economic downturn that followed will mean that the state will have to spend less.  According to State Comptroller Thomas DiNapoli, New York depends on Wall Street for up to twenty percent of its revenue.[2]  While it is likely that we have made it through the worst of this recession, the New York State government will have to adapt to this new economic reality. 

New York has very few good options to close the budget gap.  The state could, of course, raise taxes, but in this author’s opinion, this is not the right course of action because raising taxes on an already overtaxed state[3] will only stifle economic growth and innovation.  Borrowing money is another option that is simply not feasible.  The Governor has stated that he, “fears rating agencies would downgrade the state’s credit standing if New York used loans to address the financial crisis.”[4]  Finally, the aid New York State receives from the American Investment and Recovery Act is only a short-term solution to the state’s budget deficit, which does nothing to solve the underlying problem — too much spending.

One area where spending can be cut is in the form of state aid to local government entities.[5]  Reducing the number of local government entities will allow the state to reduce its expenditure on aid to local government entities and at the same time help avoid painful cuts in important areas like education and healthcare.  New York State Attorney General Andrew Cuomo has put forward a plan that overhauls the current process of municipal consolidation.[6]  The plan streamlines the process of consolidation by allowing municipalities to consolidate in a more efficient manner. 

First, the plan calls for simplifying the applicable laws.  There are currently a wide variety of laws governing municipal consolidation depending on the type of municipal entity.[7]  Cuomo’s plan would change all this by creating one law that would cover the consolidation of all municipalities and special use districts, such as fire, school and water.[8]  Second, the plan calls for “empowering” municipal governments to initiate the processes of consolidation.[9]  This is a change from current law, which requires local taxpayers to initiate certain consolidation measures.[10]  Empowering municipal governments will allow a town or village board to place consolidation measures directly on the ballot, thus bypassing the petition processes.  

At the same time, Cuomo will continue to allow citizens to initiate the consolidation process.  A citizen taxpayer would need to obtain the signatures of ten percent of the municipal entities eligible voters or five thousand signatures, whichever is less, to place the consolidation measure on the ballot.[11]  This is logical, because while it may be easier for a town or village board to pass a resolution authorizing a consolidation measure to be placed on next years ballot, it also gives the average citizen the power to bypass an unresponsive legislative body. 

Cuomo’s plan is encouraging for several additional reasons — although it does not provide a mechanism for consolidating or eliminating county government, it does allow a county government to transfer and abolish local government entities subject to the referendum requirement.[12]  This will allow county government, which governs a much wider region than a town or a village, to be the driving force behind widespread consolidation.  

This reform is needed in order to help alleviate the crushing property tax burden New Yorkers face.[13]  The proliferation of local government entities has contributed greatly to this problem.  This is another important matter that the Attorney General points out: the many duplicative levels of local government contribute to the crushing property tax burden in New York.  For example, Westchester County has 301 town special use districts, Erie County has 939, Oneida County has 268, and Suffolk County has 200.[14] 

These numbers are staggering.  There is no doubt that some of these districts, which include school, fire, water, and sewer, could be consolidated resulting in lower taxes and more efficient services.  There will be public opposition to consolidating school and fire districts because of the attachment that a local resident feels towards these entities.[15]  The “pride element” will not be as prevalent when it comes to water and sewer districts, so this is a better starting point for consolidation. 

Overall, the Cuomo plan is a step in the right direction; it will encourage more service sharing and municipal consolidation by simplifying the law.  The plan also identifies a number of areas that are ripe for consolidation by pointing out the large number of special use districts.  The plan, however, lacks a mechanism for counties to be eliminated or combined and instead focuses solely on municipalities.  The plan should be expanded to include county governments.  

The Governor signed a version of the Attorney General’s plan into law early this year.[16]  While this is certainly a step in the right direction, the Attorney General should continue to advocate for consolidation to ensure that these reforms are actually utilized.  Without this advocacy, these reforms will have little impact on New York’s fiscal status.   

In these difficult economic times a new approach is needed in how we as a state deal with budgetary issues.  By cutting spending at the local level, we will reduce the amount of state aid that is needed to finance local governments.  This will help prevent the state from having to raise taxes and fees on an already over taxed state.  It is also a long-term solution to New York’s underlying budgetary problem of too much spending. 

New York needs to implement a plan that reduces spending across the board.  One part of this plan should be the consolidation of municipalities and special use districts as well as the sharing of services between municipalities.  These measures will help solve two of New York’s most pressing economic challenges: (1) lowering the crippling tax burden faced by all New Yorkers and (2) reducing the state’s unsustainable budget deficits over the long-term.

Edited by Danielle Erickson and Stephen Dushko 


[1] See Kenneth Lovett, Governor Paterson Floats Yanking State Cars From Agency Heads to Close $2.1B Budget Gap (discussing one possible measure for closing the budget gap) Daily News, Sept. 18, 2008, available at http://www.nydailynews.com/news/2009/09/18/2009-09-18_agency_heads_to_lose_state_cars_to_budget_ax_not_so_fast.html.

 [2] New York State Comptroller, DiNapoli Report: Wall Street’s Transformation Will Lead to Lower Tax Revenues; Continued Job Losses, Nov. 24, 2008, available at http://www.osc.state.ny.us/press/releases/nov08/112408.htm. 

[3] See Matt Woolsey, In-Depth: Most Taxed States, Forbes, Mar. 30, 2009, available at http://www.forbes.com/2009/03/30/highest-state-taxes-lifestyle-real-estate-state-taxes_slide_6.html?thisspeed=25000 (ranking New York as the 6th highest tax state in the country).

[4] Valerie Bauman, NY Gov Opposes Borrowing to Bolster Budget, Newsday, Nov. 4, 2008, available at http://www.balconynewyork.com/2008/11/04/ny-gov-opposes-borrowing-to-bolster-budget/.

[5] See New York State 2009-2010 Budget (chart and discussion of AIM funding for municipalities outside of New York City), available at http://www.budget.state.ny.us/budgetFP/0910enactedInitiatives/0910enacted_localGovernments.html. 

[6] Office of The Attorney General: Media Center, Attorney General Cuomo Outlines Legal Proposal to Reduce Government Waste and Save Taxpayer Money: New Law Proposes to Eliminate Legal Barriers that Make it Virtually Impossible for Citizens to Reform Local Government, http://www.oag.state.ny.us/media_center/2008/dec/dec11b_08.html (last visited Sept. 26, 2009).

[7] See N.Y. Village Law §§ 19-1900 to 19-1924 (governing consolidation and dissolution as pertains to villages); see also N.Y, Town Law § 79 (towns); N.Y. Gen. Mun. Law §§ 119-m to 119-oo (covering municipal cooperation); N.Y. Const. Art. 9, § 1(d) (counties).

[8] See New York State Office of the Attorney General, The New N.Y. Government Reorganization And Citizen Empowerment Act, (Bullet 1) http://www.oag.state.ny.us/bureaus/legislative/government_consolidation/proposal.html (last visited Sept. 26, 2009).

[9] See id. (Bullet 3).

[10]See id. (compare Bullet 2 with Bullet 3). 

[11] See id. (Bullet 5).

[12] See id. (Bullet 7).

[13] See New York State Comptroller, Property Taxes in New York State, available at http://www.osc.state.ny.us/localgov/pubs/research/propertytaxes.pdf.

[14] Office of the Attorney General, Map of New York State’s Local Governments by County, http://www.oag.state.ny.us/bureaus/legislative/government_consolidation/county_flash_map.html (last visited Sept. 26, 2009) (showing the number of special use districts by county).

[15] Fred Lebrun, Cuomo’s Plan Faces Pride Angle, Times Union, Dec. 14, 2008, available at http://www.timesunion.com/AspStories/story.asp?storyID=750290&category=OPINION.

[16] New York State Office of the Attorney General A New N.Y.: A Blueprint to Reform Government, available at http://www.oag.state.ny.us/bureaus/legislative/government_consolidation/about.html.

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2 Comments

Filed under Civil Procedure, Constitutional Law, Municipal Law, Uncategorized

2 responses to “Reducing New York’s Budget Deficit and Reforming Local Government: The Need for Consolidation

  1. The largest part of property taxes and their yearly increase is in education.

    The US Constitution does not mention education. Therefore, it is left to the States and the People. However, in the past 30 years or so, the Federal Government has chosen to interfere with how States deliver education, passing two massively expensive, intrusive laws: the Individuals with Disabilities Education Act (IDEA) and more recently No Child Left Behind. IDEA dictates special education policy, right down to the who, what, when, where, and how, creating powerful committees on special education, punishment constraints on special ed students, the number of students permitted per teacher, the types of service, etc. Principals and teachers cannot challenge the decisions of the committee for fear of lawsuit. On top of that, NYS has deemed that every student must graduate with a college preparatory diploma, which causes huge numbers of students to drop out. The only exception is the classified special education student, which comprises around 10% of the students in NYS schools.

    To entice States to accept what the Government knew was unconstitutional to demand, States willingly signed on because the Government promised to fund special education and other programs. The truth is, the funding falls far short of the immense cost of implementing these laws and the real payers in our state are property tax payers and renters who are made to pay the increased costs to their landlords. If Congress would repeal these intrusive laws, the States would undoubtedly find better, less expensive, less litigious ways to accomplish education, hence property taxes could finally have a chance to come down.

  2. Pingback: » How sticker journalism polarizes | Djelloul Marbrook

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