By Joseph Spector
Albany Bureau Chief
ALBANY, NY-- Local governments would be eligible for a portion of $80 million in state aid if they agree to consolidation recommendations made by a new financial restructuring board, Gov. Andrew Cuomo proposed Tuesday.
Cuomo offered more details on his proposal to help provide guidance and resources to municipalities struggling with higher costs and limited revenue.
Among the recommendations, which will be sent in bill form later this week to the Legislature, would allow the new board to serve as an intermediary in contract disputes between municipalities and unions.
"The fundamentals are not going to change if the municipality is fundamentally out of balance," Cuomo told reporters at a news conference at the Capitol. "And many of them are and many of them have been for a long period of time. The question is what do you do about, and the answer is hard."
Local governments have pleaded with Albany for more relief from unfunded state mandates and more aid to cover growing expenses. Cuomo has said that they shouldn't expect more money, except through competitive programs, but the new panel would assist municipalities in ways to save money and consolidate services.
Still, some local leaders were cautious about the proposal, which Cuomo said he hoped the Legislature would approve before the legislative session ends June 20.
Syracuse Mayor Stephanie Miner said state leaders need to change policies that are crippling municipalities' budgets. She said the problems are structural: 70 percent of the city's health care and pension costs go to police and fire services.
"It's not about recommendations as much as it is changing the policies that are driving these outcomes," said Miner, the co-chairwoman of the state Democratic Committee who has been critical of Cuomo's solutions for local governments. "And will this restructuring panel have the ability to change policies? I don't know."
Still, she said, "the fact that they are having discussions about this and people are talking about it is a good step."
Yonkers Mayor Mike Spano said he was hopeful that the panel would have the ability to make policy changes, saying he's concerned that the panel won't include people who have run state government.
It would include the state budget director, secretary of state, attorney general, comptroller, and one private sector restructuring professional.
"It's a positive step in the sense that finally we are talking about it, but if it's just an advisory, we have enough people for that," said Spano, a former state assemblyman. "What we need is a committee that has stakeholders in it."
Some local government leaders said they are optimistic that the panel will help them improve their finances. Cuomo said the power of state government and its resources could help municipalities improve their fiscal conditions.
Cuomo said that the population of cities outside New York City declined 1.4 percent between 2000 and 2010, yet spending grew 47 percent.
"The present system of governance at the county level is unsustainable. Things have to change," said Stephen Acquario, the executive director of the state Association of Counties.
Cuomo said the panel would be a step before a municipality was essentially bankrupt and put under a financial control board, which would have the power to unilaterally control a government's finances. Nassau County and Buffalo have been under financial control boards, for example, and Yonkers also had one.
"Finance control boards are invasive and they are effective because they have extraordinary powers," Cuomo said. "This is a voluntary mechanism, one step before a financial control board."
The $80 million will be available to local governments who implement the recommendations of the panel, such as requiring a multi-year financial plan or consolidation of services. Cuomo said layoffs could be one of the recommendations.
The panel would also have a binding arbitration function, instead of unions and local governments going before an arbiter. The panel would be a alternative to the binding arbitration process for police and fire unions and municipalities, Cuomo said, and would render a decision within nine months.
Cuomo said more state aid is not the answer. He said 33 percent of Buffalo's budget comes from state aid, and nearly 25 percent of Yonkers spending is through state aid.
Rochester has long complained that it gets less per capita in state aid than other upstate cities; 18 percent of its budget comes from the state, Cuomo said.
Rochester Mayor Thomas Richards has warned that cities can no longer depend on property-tax revenue to fund most of their services because of the decline in their manufacturing base. He has recommended that the state consider a broader tax, such as income taxes, to fund upstate cities or more state aid.
"It is our contention that cities like Rochester, much like school districts receive, need a broader base of support than just property taxes," Richards said in a statement Tuesday. "We will anxiously look into the proposed board to see if there are new ideas, strategies and perhaps funding to help Rochester."
Cuomo said he hoped to have the financial restructuring board operating within a few months.