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Wise to warn

Rochester Business Journal
October 5, 2012

State Comptroller Thomas DiNapoli thinks his office should create an early warning system to identify municipalities and school districts under budgetary strain before a financial crisis occurs. And he's right.

Peter Baynes, executive director of the New York Conference of Mayors, believes the state needs to do more to identify solutions and take "the steps necessary to alleviate the financial pressures confronting cities and villages." He's right too.

But Mr. Baynes goes too far in suggesting New York does not need a system to "measure a fiscal problem of which local officials are already well aware." Mr. DiNapoli's plan is not a cure-all, but it is a prudent step on behalf of taxpayers.

Unveiled last week, the monitoring system would analyze data already submitted by more than 4,000 local governments to calculate and publicize fiscal stress scores for municipalities and school districts statewide.

Mr. DiNapoli will use nine financial indicators-metrics such as cash on hand, patterns of operating deficits and short-term debt-along with information like population trends, poverty rates and tax assessment growth.

The comptroller plans to show the proposed system to officials throughout the state for their review and to implement it starting with localities whose fiscal year ends Dec. 31, 2012.

In Mr. Baynes' view, the DiNapoli proposal "fails to acknowledge that many of the key factors causing fiscal stress for local governments-such as state mandates, rising pension costs and declining state aid-are beyond the control of local officials."

In fact, a new economic and fiscal analysis prepared by the comptroller's office does note the pressure caused by rising pension expenses. But it also notes that while federal aid to New York's cities from 1980 to 2010 declined from 17.5 percent of total revenues to 6.8 percent, state aid increased from 16 percent to 21 percent.

Still, there's no denying that Mr. Baynes is correct to say "the state has been a partner in creating the fiscal stress crashing down on municipalities (and must) be a part of the solution."

A problem created over decades will not be fixed overnight. So in the near term, Mr. DiNapoli's early warning system looks like a wise move.

10/5/12 (c) 2012 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email service@rbj.net.


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