New York’s insolvent municipalities!

In Columns by Hal PetersonLeave a Comment

Last October, New York Post columnist Fred Dicker reported that several of New York biggest cities including Syracuse, Rochester, Buffalo and Yonkers, are “close to bankruptcy” and looking for a bailout from Governor Cuomo’s administration. Why? They face runaway labor, pension and education costs and a shrinking tax base. The governor’s reaction (at that time) was somewhat curt.  Troubled communities cannot “come to us for a handout” without adequate proof of absolute need.

This retort vaporized the following May when he announced agreement on legislation to  establish a 10-member Financial Restructuring Board (FRB) that will “help eligible municipalities manage their finances and provide public services in a more cost-effective manner.” Really! This legislation can only be described as a pathetic reaction to need, and the chances of anything of value being accomplished is nil to none.

Why? Edmund J. McMahon, president of the Empire Center for Public Policy was recently asked to testify before the New York State Senate Committee on Local Government on what the governor and legislature hope to accomplish. His responses are hardly encouraging. One, “the recession did not cause the problems now evident. Rather, it exposed a fundamental problem in our state and local budgets in New York – budgets that had been geared to run on average annual revenue increases that were simply unsustainable in the long run.” Two, “the local government restructuring board established by Chapter 67 of the Laws of 2013, was designed to keep problem’s at bay…..and does not force anyone to confront what is actually occurring now.” Three, “this legislation embraces a vague, irresolute and inconsistent approach that won’t solve fundamental problems, and is more likely to perpetuate them.”

Nicole Gelinas’, from the City Edition, was even more critical. The governor’ solution “won’t solve the fiscal woes of cash-strapped cities, towns, and counties because Cuomo designed it to be impotent: lacking the power to take on the main forces that drive up costs for localities: public-sector unions and the politicians who covet their support.”

Four assessments! I’ll add a 5th  :resolving contentious issues is not one of the skill sets many of our elected officials are blessed with. In Washington, the Bowles-Simpson Commission identified many opportunities to achieve fiscal sustainability that did not gain the 14-vote threshold required to be taken seriously. Our elected officials have also paid little attention the numerous evaluations completed that specifically outline effective intervention planning. Why? It’s probably not in their best interest to get involved in policy decisions especially while running for office next year.




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