City Awaits Fiscal Stress Results

Fiscal stress is an issue that can be seen in cities, towns and villages across New York, including some in Chautauqua County.

State Comptroller Thomas DiNapoli released the first results of fiscal stress scores for municipalities across the state Tuesday. Jamestown was listed as having not filed with the state during the initial report.

“I guess they’re still going over information at this juncture of reporting,” said Mayor Sam Teresi. “They have all the information on the city of Jamestown that they need. My guess is that just about every city in the state is going to end up in one of those stress categories. I don’t want to dismiss the work that they’ve put in, though, because I think it has value for them to go through and create a system to quantify what fiscal distress means.”

The initial fiscal stress list was based on financial information provided to DiNapoli’s office by local communities as of May 31 and includes only municipalities with fiscal years ending on Dec. 31, 2012. In New York, all counties and towns, 44 cities and 10 villages have a Dec. 31 fiscal year end – a total of 1,043 communities.

Scores were assigned to each municipality between 1 and 100 percent, taking into account year-end fund balances, operating deficits, cash position, use of short-term debt and fixed cost. Each calculation was then linked to a scoring system with a potential of 29 points. The higher the percentage of the total score a municipality receives, the more apparent fiscal stress is in that entity. If an entity received 45 percent or more of the total possible points, they were classified as susceptible to fiscal stress; 55 percent or more, moderate fiscal stress; and 65 percent or more, significant fiscal stress.

Two municipalities in Chautauqua County were categorized in this first round of evaluations. The town of Chautauqua received a score of 45.8 percent and the town of Ellicott received a score of 64.2 percent, the seventh worst score in the state thus far.

The municipalities found to be in stress often shared a number of common characteristics, including a low fund balance, a continued pattern of operating deficits and inadequate cash on hand to pay their bills.

DiNapoli also released a report examining fiscal stress drivers and how municipalities can address fiscal stress. The report details the primary factors that could jeopardize local government finances, such as operating deficits, increasing fixed costs, poor economic conditions and long-term demographic shifts.

According to Teresi, however, the effort at the state level needs to be focused not on quantifying the reasons for these issues, but on actively changing the reasons that we have fiscal distress in New York.

“There’s no question that there have been bad decisions made over the years at the local level,” said Teresi. “As I often say, it’s a bit of a mixture of homicide and suicide – suicide being the poor choices made by local government, but disproportionately it’s a matter of homicide, with all of the mandates and labor laws that have been the real cost drivers for the fiscal distress that the comptrollers exercise is helping to quantify.”

Despite the criticisms, Teresi does believe that the exercise has some value, saying that it will help make it clear to the rest of the state that there is an emerging financial crisis.

“This exercise has put numbers to the problems, and hopefully it will drive the message at the policy level in Albany,” said Teresi. “If you want healthier local governments, then the rules to the game need to change. “It doesn’t matter what deck you’re on, we’re all on the Titanic together, and this state is headed toward an iceberg.”

According to a press release from DiNapoli’s office, later this year more information will be provided for those municipalities that are still under review or have yet to file. He will also release a separate scoring list for school districts and those cities and villages whose fiscal years and at various periods throughout the year.

For more information about the fiscal stress scores for municipalities in New York, visit www.osc.state.ny.us. Documents are also available on the state comptroller website to learn how to read the scoring sheets.