DiNapoli: Strapped Local Governments Need More Help

New York Comptroller Thomas Napoli said the state should consider bolstering the pot of money available to local governments, noting that the state's Aid and Incentives for Municipalities budget has decreased over the past five years while the government has increased spending elsewhere.

Speaking at a City & State discussion on property taxes Tuesday, DiNapoli said AIM accounts for about $1 billion of the state’s $138 billion budget and offers cities, towns and villages assistance balancing their books as they strive to comply with the state’s 2 percent property tax cap.

“If we are in a time where we’re able to increase funding for other programs, I think it’s appropriate for us to put on the table ... a discussion on an increase in AIM funding that will certainly help our local governments deal with their budget challenges and keep their property taxes low,” Napoli said. “Keep in mind AIM funding is less than a billion dollars, so in the context of other programs that billions of dollars get spent on, even a modest increase there will not have a significant impact on the overall state budget.”

The comptroller said it may be prudent to tie AIM increases with additional long-term financial planning conditions that municipalities would need to meet to access the money, but did not detail any specific requirement suggestions.

Gov. Andrew Cuomo is slated to unveil his budget proposal on Wednesday and has already laid out a number of proposals, while legislators have wasted little time suggesting their own ideas on how to spend the $5 billion the state recouped from financial institutions fined for past misconduct.

Municipalities, particularly upstate cities, counties and school districts, have struggled to shore up their budgets while working within the property tax cap. The law requires that at least 60 percent of voters approve a government’s or school district’s budget if it relies on raising the property tax levy by more than 2 percent or the rate of inflation. 

Relatively few local governments have exceeded the cap, but local officials say they are left with little to run the local services constituents expect after they fund employees’ pensions and pay for programs mandated by the state, such as Medicaid.

The federal government pays for about half of Medicaid in New York, and the state pays 35 percent and passes along roughly 15 percent of the costs to the county governments. By comparison, other states assume much larger shares of the program.

The comptroller said if the state bankrolled more of Medicaid, it would need to trim back in other areas.

Still, DiNapoli said the state could not overlook the property tax pinch facing municipalities and school districts.

“If we’re doing better at the state level, but our local governments are in trouble and taxes are impacted, well, we’re not moving ahead as a state,” he said. “So we do need to have a more robust discussion.”

Correction: An earlier version of this story said that New York covers about half of the state's Medicaid costs. In fact, it covers about 35 percent of the costs.