For Sullivan County, our own fiscal cliff
Sullivan County property owners face the likelihood that the county legislature will pass a 2013 budget with a double-digit tax hike. In these tough economic times, putting this burden on already financially strapped citizens seems just plain wrong. Legislators know that a 13.7% tax increase will be quite painful for many taxpayers, yet few other options appear. (The county manager has suggested that to fill the budget gap, the legislature should consider privatizing some county services, not automatically filling vacant job positions and cutting some capital expenditures, but the proposed 2013 budget includes no lay-offs or cuts in services.)
So, how we did we get to this point?
For too many years, past Sullivan County legislatures have failed to make the courageous decisions necessary to produce fiscally honest county budgets; Albany has failed to provide meaningful relief from spending to fulfill mandated state and federal programs, which Albany and Washington, DC do not fully fund; and all the while, the cost of government services continues to rise.
Just to refresh everyone’s memory:
Two years ago, the legislature produced a 2011 budget with no tax increases, no cuts in county services and no layoffs of county employees. It was based on a wing and a prayer that union employees would voluntarily agree to give-backs. This was just plain wishful thinking, and it didn’t work.
Then Albany passed a law establishing a two-percent cap on property tax increases. (More wishful thinking! With rising costs outpacing revenues by more than two percent, what good is an arbitrary cap?) Last year, although they could have asked for an exemption, legislators decided to comply with the new two-percent tax cap and, electing not to raise taxes, proceeded to raid the county’s reserve fund, taking more than $6 million to balance the 2012 budget.
This year there is not enough money left in the reserve fund to work that magic again. The county’s bill for employee pensions (up more than $4 million this year) and employee health insurance (up $1.8 million), leaves the taxpayer holding the bag. And that’s not even the entire bill.
Albany owns a share of the blame for this mess, too, because it requires counties to provide services the state does not fully fund. These so-called unfunded mandates go for Medicaid, public assistance, child welfare protection, pre-school special education, early intervention, public defenders, probation, youth detention and state pensions. These nine mandates alone (and there are more) consume nearly 90% of county property taxes statewide, according to the New York State Association of Counties (NYSAC).
Two years ago, Governor Cuomo convened a team to review and then cut unfunded mandates. Some reforms have been made, including a cap on what the state can spend on most Medicaid programs. Yet to date, the state has not provided meaningful relief to counties. NYSAC reports that in 2013, these top nine unfunded mandates will grow by $244 million statewide; yet the state’s 2% property tax cap would limit tax yield to $114 million. You do the math.
Medicaid is by far the most burdensome mandate. In 2011, Sullivan County’s share of that bill was $19.5 million. In 2013, it will be $22 million. Legislators have called on Albany to put an end to counties having to pay a share of Medicaid. (Only two states—New York and North Carolina require counties to pay such a share.)
Finally, Governor Cuomo, too, owns some blame for not doing enough to resolve this issue. In October, he indicated that no more mandate relief would be on the way from the state, and that local governments would have to balance their books on their own.
So here we stand on our own fiscal cliff, where the taxpayer is about to take the medicine for an unsustainable fiscal system.
Going forward, lawmakers must have the courage to abandon the wishful thinking that we can afford more services than we can pay for. Legislators must find new sources of revenue other than double-digit tax hikes or if they cannot, they must cut spending. Albany, too, must be involved in finding a long-term solution. If the state will not or cannot fund its own mandates, then counties need to be freed to control their own budgets without requirements to spend what they cannot afford. Citizens need to hold all parties accountable for their decisions.
Without a long-term solution, Sullivan and many other New York counties will end up standing on this fiscal cliff every year at this time.