ALBANY – Since he was attorney general and now as governor, Andrew M. Cuomo has criticized what he defines as 10,500 local governments – 1,044 in Erie County alone – scattered across New York and driving up property taxes.
To the governor, Grand Island would be a poster child of such excess.
Besides the town itself, Grand Island has 62 “special districts,” 58 of them created just to provide streetlights in various neighborhoods.
How, the governor’s mantra goes, can towns like Grand Island possibly justify such numbers? It should be merging and sharing as many services with neighboring communities as possible, he says, to help beleaguered property taxpayers.
But here’s where the rhetoric doesn’t necessarily tell the complete story.
Consider Grand Island’s 58 lighting districts. Not one has a single employee drawing a salary or getting health benefits from the town or waiting for a big pension upon retirement. These lighting districts are simply lines on a balance sheet, ensuring that a neighborhood’s residents pay for the electricity they use.
Moreover, getting rid of such lighting districts would not cut property taxes, town officials say. The 12 hours of clerk time to administer the billing for the 58 lighting districts in Grand Island: $250.
Now consider what the town paid last year for one small state mandate.
To write, print and mail a highly technical annual water-quality report to all residents – the state insists the letters be sent in writing via mail – cost Grand Island $2,700, and that’s among the least costly state-imposed mandates.
Cuomo seen as exaggerating
Local supervisors and one fiscal watchdog say Cuomo is chasing the wrong property tax cost drivers. They blame state mandates such as the Taylor Law, which gives public employee unions additional leverage when negotiating expired contracts, for driving up local taxes. At the same time, they complain, he is taking aim at special districts that, even if eliminated, would still cost taxpayers because they provide specific services for a locality’s residents.
“The governor has grossly exaggerated the true numbers of local governments,” said E.J. McMahon, president of the Empire Center for Public Policy, a tax watchdog group in Albany. “He’s diverting attention from the state-mandated expenditures on Medicaid, welfare, education and personnel that are the true drivers of our high local taxes.”
Cuomo is using the arguments of bloated local government to push passage of his plan to provide modest property tax rebate checks that, in a couple of years, would only go to residents of localities and school districts that cut a certain level of spending through mergers or shared-services deals. “Everything else is baloney if you don’t do something about the 10,500 governments,” Cuomo said last week in a radio interview.
The “proliferation” of local governments is driving up property taxes, the governor said. Friday, in another radio interview, Cuomo said localities don’t want to consolidate services.
“I frankly want to pressure them to cooperate with their neighboring local governments,” he said.
Cuomo’s budget plan proposes tax breaks to residents in local taxing jurisdictions that stay within the 2 percent tax cap in the first year of his program. In the second year, the breaks only go to taxpayers who live in jurisdictions that agree to shared-services deals with neighboring localities that save 1 percent of combined tax levy, a requirement that rises to 3 percent in the program’s third year.
His argument is that localities often create special districts to artificially keep their town general fund spending from appearing to grow. That’s why localities create districts for police, fire, sidewalk repairs, garbage services and the like, the Cuomo administration contends; it helps hide a locality’s total spending.
If localities won’t merge, Cuomo administration officials say, they should at least end situations where every community has its own personnel office, or information technology staff, legal functions, payroll systems and other back office and contracted services.
Why, one administration official said, does every fire district need its own ladder truck, or every school district have a superintendent or building principal in rural districts with sharply declining enrollments?
But would merging those 58 lighting districts into one on Grand Island save money?
Grand Island Supervisor Mary S. Cooke explained what would happen.
A special district for one neighborhood has a total lighting tax bill of $15,000 annually. Another neighborhood’s lighting district, with fewer, less fancy streetlamps that uses less power, costs $2,000 a year.
Imagine, she says, how people in the areas with lower lighting costs would react to getting lumped in – and therefore subsidizing – the more costly neighborhoods?
“There would be a mutiny,” Cooke said of the town’s 20,374 residents.
Local officials also wonder how a sewer district created a year ago and with 19 years to go on a borrowing could be merged with a 19-year-old sewer district with just one year left on the bond payments.
The special districts were created for sensible purposes, not the least of which is taxing those residents who use a specific service, she and McMahon, the tax watchdog, pointed out.
Special districts defended
“No one dreamed up to create bureaucracies,” Cooke said of the special districts. “People came to us and petitioned us for lighting districts. The point is, nobody out there is ginning this up.”
Other local officials make the same point. Eliminating a lighting district for the sake of cutting local units of government will have no real impact on property tax bills, they say.
“If we got rid of a lighting district and make it part of the general fund, somebody still has to pay for the lights,” Cheektowaga Supervisor Mary F. Holtz said.
There are also questions about the number of local entities.
Cuomo puts the number of local governments in New York at 10,500. The U.S. Census Bureau puts it at 3,454. In January, State Comptroller Thomas P. DiNapoli said the real number is 3,987; he does not include lighting districts or other special districts that are merely pass-through costs on a town’s balance sheet.
In Erie County, the governor counted 1,044 local government units. But 939 of those are special districts. And Cuomo’s count doesn’t take into account mergers in recent years, such as in Hamburg, which dissolved water and sewer districts in 2007 and 2010 and connected with the county system.
Hamburg does have a special district for storm water drainage, created when the town borrowed to make improvements near an industrial park. But only the companies in the industrial park – not town residents – pay the bond’s annual $12,000 debt. And when the bond is paid off, the special district goes away, Supervisor Steven J. Walters said.
Towns also have many special sewer districts.
The theory is that sewer costs should not have to be covered by all residents if many parts of a town are still on septic systems.
“These are not independent governments. They are simply ways to focus who gets taxed for a particular service when that service is not universal throughout a community,” Walters said.
But the rising cost of sewer systems makes it sensible, some local officials say, for towns to turn their systems over to the county, which can better spread out the expenses and afford the higher level of expertise needed to run some of these more complicated systems and the high expense of treating wastewater.
Walters is among those who say there is merit to looking at consolidation efforts.
In recent years, Amherst combined three drainage districts into one and two sewer districts into one.
“Just for efficiencies. It doesn’t really save any money,” Supervisor Barry A. Weinstein said.
It does mean that if there is a sewer problem in the older part of town, the entire town’s residents will now pay for it.
Many towns also have numerous volunteer fire districts, which have their own boards that set tax levies. Others have fire-protection areas, where the towns contract with the local volunteers for a set price, and the town then bills residents in those districts on their property tax bills.
Amherst, for instance, has 10 fire districts, which critics say only helps drive up property taxes because of duplicative services.
But there are political and financial obstacles to consolidation.
“The fire companies are vehement,” Weinstein said. “They each want their own turf and their own trucks, and they are all volunteers, so it’s hard to argue with them.”
And the financial obstacles of that consolidation?
The 10 districts cost taxpayers $8 million a year, he said, and a paid firefighting force would cost three times that.
The real cost drivers for property taxes are the mandates coming from Albany, local supervisors say, such as pension levels they must pay their employees or the Taylor Law, or the Wicks Law, which sharply drives up costs for construction projects.
‘Unrealistic’ pressure to cut
In Amherst, Weinstein said, he has cut expenses from $119 million to $115.1 million in the last few years. The town accomplished that despite costly state mandates, such as the requirement this year that the town pay 32 percent of a police officer’s salary as a contribution to his or her pension plan, he said.
“We’ve got these unfunded state mandates, and the governor is putting pressure on us to lower expenses. It’s unrealistic,” Weinstein said. “The state is the one causing the problems. If they want to eliminate governments in New York, it should be the state government.”
Using census data, McMahon says New York’s number of local government entities, relative to population, is below the national median. Many states with far lower tax levels than New York have far more local governments, while other high-taxed states, such as New Jersey, have significantly fewer units of government.
“There’s no correlation,” he said, “between high local taxes and the number of local governments.”