An Imminent Financial Crisis!

In Breaking News by Hal PetersonLeave a Comment

During the fiscal year 2011-12, the state comptroller’s office collected and analyzed more than 4,000 annual financial reports filed by local governments, school districts, public authorities and special taxing districts to determine liquidity, reliance on one-time revenues, levels of short-term debt and occurrences of non-discretionary spending etc.

The results of this examination were just released in a report titled “New Fiscal Realities Challenge Local Governments” and described by State Comptroller Thomas P. DiNapoli as a “perfect storm” of financial pressures – including diminished state aid, falling property values and sluggish collections of sales taxes.

Their findings are properly making headlines predicting, absent new sources of revenues, dire “crises like” consequences. Even more disturbing, some 60 audit reports produced in the course of the examination portray numerous examples of inaccurately depicted expenditures, poor record keeping that (in some situations) allowed activities to occur without the public’s knowledge or approval.

How consequential? “300 local governments ended the 2010 or 2011 fiscal year, or both, with a deficit, and more than 100 do not currently have enough cash on hand to pay even three-quarters of their liabilities.”

As he has in the past, DiNapoli now urges “local governments to embrace multiyear planning and resist fiscal trickery as they seek to balance their short term budgets.” Really! Dollars will not reign down from heaven nor can we anticipate an epiphany in behavior or reporting. To quote former Assemblyman Richard Brodsky (who recently prepared his own analysis of local concern’s) “New York will see what California has already seen,” with localities simply unable to make the math work when it comes to budgets.

You can use this web site to access more specific information on the most troubled entities. Storm clouds are gathering, and damage is predicable. Seek shelter.

Hal Peterson

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