Local governments struggle; tax cap presents new challenges

Jun 21, 2012

Local governments continue struggling in the wake of the recession. At a Local Government Leadership Institute meeting in Syracuse Wednesday, officials looked for answers to  some of the problems they still face following the Wall Street meltdown.

New York state Comptroller Thomas DiNapoli says the end may be near as returns on investment funds should turn around in two years.

"My view is that when we get past these five years, we'll see rates going in the other direction. When you look at trends, the rates are up and down over a 30-40 year period. We just never had as big an increase driven by such a large market loss in '08 and '09," DiNapoli said.

That's not much consolation for some city leaders, like Ithaca Mayor Svante Myrick, who says his city has hit rock bottom.

"We thought if we could get by these four-five years we'd make it, but here we are in year five and we still have two more years of difficult budgets, so we've made the decision now is the time to cut," Myrick said.

Myrick expects the city will be forced to reduce its workforce by five percent in the coming budget.

Effects of the tax cap

The two percent property tax cap, approved a year ago by lawmakers in New York state, is another thing that local governments and school districts have to take into account while they plan their budgets.

DiNapoli says that it's something they'll have to live with.

"Moving forward, as communities have increasing demands for services, living within that cap will result in not having the ability to raise as much money from property tax as has been allowed in the past," DiNapoli said.

DiNapoli says municipalities must deal with a new fiscal reality, and  do more to collaborate and share potential solutions to some of the problems they face.

This institute is meant to bring local government officials together to do that.