Local governments across the state lost more than $400 million during the economic recession, forcing them to cut back on public safety, recreation and garbage collection, Comptroller Tom DiNapoli’s office found in a report issued this morning.

Compounding the problem, eight local governments are “dangerously close” to going over their constitutional tax limit: Cortland County, Binghamton, Gloversville, Jamestown, Lackawanna, New York City, Village of Herkimer and Village of Lyons.

From the report:

“… as the economy continues to recover from the Great Recession, local governments are faced with serious fiscal challenges. Local officials must prepare budgets with fewer resources (property, mortgage, and sales tax revenues) to fund rising expenditures. Further, due to the recently enacted property tax cap legislation, local officials are more limited in their ability to raise property taxes than in the past. To meet these fiscal challenges, local officials must carefully analyze their budgets and make informed decisions so that they can continue to provide adequate services with the resources available.

But while municipalities face financial strains for a variety of external factors — declining property values, reduced state aid and rising pension costs among them — there are steps the local officials can take to stem financial concerns, the report found.

That includes good record keeping on the local level and responsible use of a fund balance or “rainy day fund” such as offsetting property tax increases and debt service.

To reduce this budgetary strain, such local governments must seek additional revenues and/or reduce expenditures in the current and succeeding fiscal years. Local governments should institute effective multiyear financial planning processes to identify structural imbalances between revenues and expenditures, and allow them to set long-term priorities and goals. If a local government’s financial condition continues to deteriorate, taxpayers will pay the price through higher tax levy increases which could have been avoided through more accurate budgeting and financial planning.

Last week on the show, Liz took a look at the strained budgets of local governments around the state, interviewing leaders from Syracuse, Yonkers and fiscal experts to get the root of the problem. Those interviews can be found under our media and interviews tab.

Fiscal Realities 2012

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