Teresi Reflects On State Budget

With the final version of the state budget being passed recently, Mayor Sam Teresi reflected on both the negatives and positives that he saw.

One of the most obvious flaws in the budget for Teresi was the lack of an increase in aid and incentives to municipalities, or AIM funding. That funding source has sat stagnant, or actually been reduced for many years, according to Teresi.

“We saw a bit of an uptick about five or six years ago, but if you look at it with inflation and adjustment, we’re still receiving less in the way of general purpose AIM payments than we were in the early 1980s,” said Teresi. “That’s ridiculous in an era when the state is asking cities to do more and more, and the state is transferring it’s burden down the line to local governments.”

As much as there was in the way of disappointments, there were some silver linings to the budget, most notably the budget being passed on time, an increase in CHIPS aid and Gov. Cuomo standing his ground in regard to binding arbitration.

“I have to give credit where credit is due,” said Teresi. “We had the third on-time budget in a row. That has a significant, positive psychological impact on both states and local governments. Every time a local government like Jamestown goes out to get re-rated for its bonds, they take a look at what’s happening in the state that we’re located. If New York is getting its act back together and sending a message to the world that our government can function, that’s a positive thing. Also, I think it sends out a message loud and clear to the world that New York is back in the business game, as well.”

With the cost of maintaining roads and infrastructure continuing to go up, an increase in CHIPS aid will be extremely helpful to municipalities like Jamestown, which often have aging roads and buildings in need of repair.

“We’re dealing with 50-, 75- and 100-year-old or older infrastructure that is literally crumbling,” said Teresi. “You can’t build the economy of the future with crumbling infrastructure. It’s costly to fix it, and the prices are going up, but I think the adjustment in this year’s budget was warranted and we’ll certainly put it to good use.”

According to Teresi, Jamestown is expected to get an additional $130,000 in CHIPS payments from the state, which will keep the city at a level point compared to past years.

Prior to the final budget being passed, both the Assembly and the Senate approved a four-year extension for binding arbitration. Typically, binding arbitration has been renewed at a two-year interval. The governor, however, decided that the issue should be separated from the budget and resolved during the next legislative session, after it has had a chance to be researched more thoroughly.

“The governor had the sense and also the political courage to fight for the fact that something as detrimental as local government needed to be separated out of the budget process and be debated on its own,” said Teresi. “He also indicated that he would have to look very closely before signing or vetoing any extension of binding arbitration that didn’t have some of the reforms that he was proposing, particularly capping arbitration awards at a 2 percent level for distressed municipalities.”

Fifty-six out of the 60 cities outside of New York City and roughly 150 of the 300 villages in the state that have paid police and fire departments qualify as distressed municipalities.

One of the hot-button issues in the budget, a pension proposal, also saw changes before it was passed in the final iteration of the budget. According to Teresi, the governor was effectively proposing an initiative that would allow communities to reduce and freeze their pension payments for both the police and fire departments, as well as the general employee retirement program, at 16 percent and 12 percent, respectively. Those rates would then be locked in for a five-year period.

The pension payment from the city to the state as an employer contribution was roughly $129,000 in 1999 when Teresi first ran for mayor, including payments for BPU employees. In the following years, however, the payments took a sharp rise, in part due to several stock market crashes and other factors. This year, the city’s payment to the state is estimated to be roughly $5.9 million, an increase of more than 3,500 percent. According to Teresi, the city’s payment to the pension system accounts for nearly 15 percent of the yearly budget at this point.

“This does have some benefit to localities, allowing them to finance some of their payments,” said Teresi. “It’s a middle ground between what is already available to communities and the more generous approach that the governor was proposing in his budget. It’s certainly something that we’ll be looking at here in Jamestown as we start putting together the 2014 budget, to see if it has any value and then we’ll be going forward accordingly.”