Thomas P. DiNapoli • State Comptroller 2015 ANNUAL REPORT · 2018. 12. 27. · 015 Annual Report2...

Office of the New York State Comptroller

Thomas P. DiNapoli • State Comptroller

2015ANNUAL REPORTON LOCAL GOVERNMENTS

FEBRUARY 2016

Division of Local Government and School Accountability

Division Mission 2

Comptroller’s Message 3

Executive Summary 4

The State of Local Governments 5

Local Government Revenues ................................................................................................... 5 Property Tax Revenue Constraints ....................................................................................7 The Property Tax Levy Limit .......................................................................................8 Foreclosures ............................................................................................................. 10 Slowing Growth in Sales Tax Collections ........................................................................ 11 State Aid Changes ........................................................................................................... 12 Municipal .................................................................................................................... 12 School District ............................................................................................................ 12 Expenditures .......................................................................................................................... 13 Fiscal Stress ........................................................................................................................... 15 Local Authorities ..................................................................................................................... 17 Off-Track Betting Corporations ......................................................................................... 17

2015 Proposed and Enacted Legislation Affecting Local Governments 19

Services Provided by the Division of Local Government and School Accountability in 2015 21

2015 Audits and Oversight ...................................................................................................... 21 Local Official Training ............................................................................................................. 24 Publications............................................................................................................................. 24 Local Financial Data Resources .............................................................................................25

Endnotes 26

Financial Data Table 27

Division Contacts 28

Central Office Directory .......................................................................................................... 28 Regional Office Directory .......................................................................................................29 Map of New York State Local Governments by Regional Office ............................................30

TABLE OF CONTENTS

Division of LocaL Government anD schooL accountabiLity 2015 Annual Report1

MISSION AND GOALSThe Division of Local Government and School Accountability’s mission is to serve taxpayers’ interests by improving the fiscal management of

local governments and schools in New York State.

22015 Annual Report Office Of the New YOrk State cOmptrOller

Office of the New York State Comptroller

Division of Local Government And School Accountability

To achieve our mission we have developed the following goals:

• Enableandencouragelocalgovernmentandschoolofficialstomaintainorimprovefiscalhealthbyincreasingefficiencyandeffectiveness,managingcosts,improvingservicedelivery,andaccountingfor and protecting assets.

• Promote government reform and foster good governance in communities statewide by providing localgovernmentandschoolofficialswithup-to-dateinformationandexperttechnicalassistance.

AsStateComptroller,oneofmyresponsibilitiesistooverseelocalgovernment finances. The 2015 Annual Report on New York State’s local governments describes the revenue and expenditure trends affecting our counties,cities,towns,villagesandschooldistricts,andhighlightssomeof the work the Office of the State Comptroller (OSC) is doing in the areas ofpolicyresearch,auditingandtraining.

Local government officials across the State continue to face growing fixed costs and limited flexibility in raising revenues as they strive to provide the services needed by their taxpayers. We are now in the third year of myFiscalStressMonitoringSystem,whichhasallowedustopinpointcommunitiesthatarestruggling,andprovidethetimeneededtoaddressproblems earlier and avoid crises.

Our Division of Local Government and School Accountability understands that local governments will always grapple with competing priorities and limited resources. That’s why we are more committed thanevertoprovidingneededtoolsandresourcesforpolicymakers,localleaders,researchersandtaxpayers to foster fiscally sustainable communities.

I hope you find the information in this report helpful.

Sincerely,

Thomas P. DiNapoli State Comptroller


A MESSAGE FROM

New York State Comptroller Thomas P. DiNapoli

Executive SummaryAlthoughNewYorkState’seconomyanditsfinancialconditionhaveimprovedinrecentyears,local governments in the State continue to experience budgetary challenges. The property tax levylimit,thecontinuingimpactofdecliningpropertyvaluesandsluggishsalestaxgrowthinmany parts of the State have contributed to over four years of tight local government resources while the costs of running local government and serving the public continue to increase.

Local government revenue growth has been slowing over the last several years. Overall growth was1.3percentin2014,comparedto1.6percentin2013and2.4percentin2012.Thisisinstarkcontrast to growth rates of between 5 and 7 percent experienced prior to the 2008-09 recession. Additionally:

• The tax freeze and the property tax relief credit have added pressure on local governments to stay under the property tax levy limit.

• Inmanycommunities,foreclosurescases,showntocausereductionsinpropertyvaluesanderosionofthetaxbase,continuetobefiledatlevelsconsiderablyabovethoseseenbefore the recession.

• Sale tax collection growth in 2015 has been below 2 percent across the State excepting New York City.

• Most on-going State general aid funds to municipalities have been held flat over the last few years.

Localgovernmentexpendituresoverallhaveremainedlargelyflatsincetherecession,increasing at a 0.9 percent annual average rate from 2010 through 2014. However:

• Fixedcostshavecontinuedtogrow,especiallythoserelatedtoemployeebenefits,withbenefitsincreasingata6.3percentannualaveragerateoverthelastfouryears.

• Tobalancetheirbudgets,localgovernmentshavehadtoholdthelineorreducefundingforservicessuchaspublicsafety,healthservices,economicdevelopmentandroads.

Astheserevenueandexpendituretrendscontinue,theOfficeoftheStateComptroller’s(OSC)Fiscal Stress Monitoring System has tracked an increase in the number of local governments thatareinsomeleveloffiscalstressintheState,reaching7.4percentfor2014,upfrom6.4percent in 2013.

OSChasissued460auditsonthefinancialcondition,accountability,informationtechnologyandperformanceoflocalgovernmentsin2015.Recommendationstocutwaste,reduceexpensesandenhancerevenuescouldbeworthover$7.8millionintaxpayersavings,ifadopted.

OSCisalsocommittedtoincreasingtransparencyintheactivitiesoflocalauthorities,whichaccountforover$1.5billioninspendingperyear.Inthelastyear,auditsandresearchreportshavebeenissuedonOff-TrackBettingCorporations(OTBs),IndustrialDevelopmentAgencies(IDAs),powerauthoritiesandhousingauthorities.LegislationsponsoredbyOSC,andenactedin2015,willimprovetheaccountabilityandtransparencyofIDAactivities.


The State of Local GovernmentsNew York State’s short-term financial condition continued to improve in 2015. Over $8 billion in resources from settlements by financial and other institutions in recent years has temporarily boosted the State’s fund balance.1

Local governments in the State have reaped some of the benefits of the stronger State economy andfinances.However,theystillfaceconstraintsonkeyrevenuesources.Thereisalsoupwardpressure on many local government costs. While the State has been active in addressing taxpayerconcernswiththepropertytaxlevylimitandrelatedmeasures,localgovernmentsstillawaitStatereforms,suchasmandaterelief,thatofferthepotentialtoreduceorcontrolcosts.

Local Government Revenues

Localgovernmentsdrawonamixofrevenuesourcestofundtheiroperations,includingpropertytaxes,salestaxesandchargesforservices,aswellasStateandfederalaid.2 This diversitycanbebeneficial,sincechangingeconomicconditionscanaffectrevenuesfromthedifferent sources in different ways.

In2014,NewYork’slocalgovernments had $75.3 billion in total revenues.3 Thelargestrevenuesource,44percentofthetotal,wasthepropertytax,whichisconsidered the most stable.

Salesandusetaxes,whichmade up 13 percent of localrevenues,growmorerapidly in good times and decline sharply in bad times.Stateaid,whichisnot in the direct control oflocalgovernments,accounted for 23 percent of the total.

Sources of Local Government Revenue, FiscalYearsEnding(FYE)2014,$75.3Billion

Source: Office of the State Comptroller (OSC) Includescounties,cities,towns,villages,schooldistrictsandfiredistricts;excludesNewYorkCity.

State Aid 23%, $17.1 Billion

Federal Aid 6%, $4.7 Billion

Real Property Taxes, Assessments and Items 44%, $33.4 Billion

Charges for Services 7%, $5.3 Billion

Other Local Taxes and Revenues 7%, $5.2 Billion

Sales and Use Tax 13%, $9.5 Billion


Other types of revenue can be important for certain classes of governments. Counties receive 11 percent of their revenue fromfederalaid,usuallyfrom the federal health and social service programs that they administer. Villages and cities receive 28percentand20percent,respectively,oftheirrevenues from fees for services,whiletownsandcounties receive somewhat smaller shares of their revenues from this source (14percentand10percent,respectively).

Total local government revenues have grown relatively slowly over the last few years. The 2009 federal American Recovery and Reinvestment Act (ARRA) helped soften the initial impact of the Great Recession of 2008-2009 on local governments. However,astheARRAfundingended,therewasasmall decline (0.1 percent) in local government revenues in 2011. Since then,localrevenueshavegrownby2.4percentin2012,1.6percentin2013and1.3percentin2014.Priortotherecession,theserevenuesgrewatratesofbetween5and7percentfrom2005 through 2007.

0%10%20%30%40%50%60%70%80%90%

100%

County City Town Village SchoolDistrict

FireDistrict

Federal Aid

State Aid

Other Local Taxesand Revenues

Charges forServices

Sales and Use Tax

Real Property Taxes,Assessments andItems

$4.5 $6.8 $2.7 $37.3 $0.8$23.1

Percentage Contribution of Major Revenue Sources by Class of Local Government, FYE 2014 (Billions of Dollars)

Source: OSC

-4%-2%0%2%4%6%8%

10%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Personal IncomeLocal Government Revenues

Source: OSC and US Bureau of Economic Analysis

New York State Personal Income and Local Government Revenues, Annual Rate 2005-2014

Perc

enta

ge C

hang

e


Local government revenue as a percentage of personal income in the State has been generally declining over the last decade,asidefromaspike in 2009 and 2010 related to the recession andARRA.In2005,localrevenue was equal to 7.4 percent of personal income;by2014,thiswasdownto6.9percent.4 This 0.5 percentage point reduction was equivalent to$6.4billionin2014,anamount that would have represented about 8.5 percent of total local government revenue in that year.

Property Tax Revenue ConstraintsThere are several reasons why local revenues have been declining relative to personal income over the last few years. Increases in the largest revenue source – the property tax – have been between 2 and 3 percent annually since 2010,afterhavingbeensubstantially higher than that before the recession. Among the factors related to this change in tax growth are the property tax levy limit and foreclosures.

6.8%6.9%7.0%7.1%7.2%7.3%7.4%7.5%7.6%7.7%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Local Government Revenues Percentage of Personal Income, 2005 to 2014

Source: OSC and US Bureau of Economic Analysis

Perc

enta

ge C

hang

e

7.2%5.8%

5.3%

3.8% 3.8%

2.2%

2.7% 2.9%

2.0%

2.5%

0%1%2%3%4%5%6%7%8%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Property Tax Levy Increases, All Local Governments, FYE 2005 to FYE 2014

Source: OSC

Perc

enta

ge C

hang

e


The Property Tax Levy LimitThepropertytaxlevylimit(commonlycalledthe“taxcap”),enactedin2011,wasintendedtohelp address the impact of real property tax increases on property owners. The law generally limitslevygrowthtothelesserof2percentortherateofinflation,withsomeexceptions.Theformula includes a number of other components that can also affect the limit – sometimes by a large amount.

Therateofinflationwasconsistentlybelow2percentin2014and2015,whichledtosmallerincreases in the allowable levy limit when compared to 2013. The inflation rate used for the calculationofthetaxcapforthe2016budgetsoflocalitiesonacalendarfiscalyear(primarilycountiesandtowns)dippedbelow1percentto0.73percent,andhascontinuedtodeclinesincethen. The calculation of the “allowable levy growth factor” (just the first step of an eight-step calculation for the tax cap) for most villages with fiscal years ending on May 31 and for school districts (whose fiscal years end on June 30) is based on anear-zeroinflationrate,and therefore will allow little levy growth in their next budget cycle. While local government spending will benefit from a lower rate of inflation—saving on fuel costsinparticular,othercosts such as negotiated salary increases will likely exceed inflation and necessitate tough choices in balancing local budgets.

Tax Cap Overrides for Fiscal Years Beginning 2013 - 2015

Class of Local Government

Percentage of Class Reporting Plan to Override

FYB* 2013 FYB* 2014 FYB* 2015

City 25% 30% 16%

County 32% 26% 11%

Town 27% 28% 20%

Village 39% 34% 16%

School District 4% 4% 4%

Fire District 14% 19% 15%

* Fiscal Years Beginning (FYB)Source: OSC

8 2015 Annual Report Office Of the New YOrk State cOmptrOller

1.48%

1.25%

0.73%

0.45%0.31%

0.12% 0.12%

0.0%0.2%0.4%0.6%0.8%1.0%1.2%1.4%1.6%

Recent Allowable Levy Growth Factors by Fiscal Year of Local Governments

Source: OSC

Perc

enta

ge C

hang

e

8/1 to 10/1 to 1/1 to 3/1 to 4/1 to 6/1 to 7/1 to 7/31 9/30 12/31 2/28 3/31 5/31 6/30

Fiscal Years Beginning 2015

Fiscal Years Beginning 2016

MorerecentpolicydevelopmentsattheStatelevel,suchasthetaxfreezeandthenewlyenactedpropertytaxreliefcreditprovisions,5 mean that both local governments and school districtsfaceaddedpressuretostayunderthetaxcap,sinceoverridingthecapwouldrendertheir taxpayers ineligible for related credits. The percentage of localities reporting that they plan to override the tax cap decreased significantly in 2015. Villages reported the largest percentage decreaseinplanstooverride,decliningby18percentagepointsfrom2014to2015.

OutreacheffortscoordinatedwiththeNewYorkStateDepartmentofTaxationandFinance,which included email notifications and follow-up phone calls to ensure compliance with the Tax FreezeProgram,boostedcompliance with Tax Cap filing requirements. While counties,citiesandschooldistricts have maintained close to 100 percent reporting compliance since the start of the tax cap in 2011,allotherclassesofgovernment have improved their required reporting. Fire district reporting improved the most—increasingfrom75.6percent in 2014 to 94.9 percent in 2015.6

82.0% 85.2%75.6%

97.0% 96.5% 94.9%

0%

20%

40%

60%

80%

100%

Towns Villages Fire Districts2014 2015

Tax Cap Reporting Compliance

Source: OSC

The Real Property Tax Freeze Credit was included as part of the SFY 2014-15 Budget. Under the law, New York State will reimburse homeowners for increases in their local property taxes that are imposed by local taxing jurisdictions, if their home is considered their primary residence and their total household income is $500,000 or less.In the first year of the tax freeze, local taxing jurisdictions had to certify to the State Comptroller that the tax levy required by the adopted budgets did not exceed the State’s property tax cap and, for local governments, that any override legislation had been repealed.In the second year, local taxing jurisdictions must comply with the first-year requirements, and must also have adopted and submitted to the State Division of the Budget a Government Efficiency Plan which will reduce their operating costs over a three-year period.For more details on the real property tax freeze, see “Property Tax Freeze Credit Guidance,” Publication 1030, New York State Department of Taxation and Finance, July 2014: http://www.tax.ny.gov/pdf/publications/orpts/pub1030.pdf

Real Property Tax Freeze Credit


http://www.tax.ny.gov/pdf/publications/orpts/pub1030.pdf

ForeclosuresAnother trend that has been negatively affecting property tax revenue collections has been New York’s high levels of foreclosure activity. Properties that enter the foreclosure process frequently become vacant and abandoned. This contributes to reduced property values and eroded tax bases for associated communities.7

Foreclosurefilingsfor2014totaled43,868,wellabovepre-recessionlevels.Statewide,atthebeginningof2015,thependingforeclosurecaseloadforthecourtsstoodat92,070.OutsideofNewYorkCity,thependingcaseloadhasgrownsubstantiallyfrom2013to2015.Insuburbandownstate(theLongIslandandMid-Hudsonregions),thependingcaseloadgrewby63percent(from25,097to40,985).Upstate,pendingforeclosurecasesgrewby47percent(from14,852to21,776).8

Another indicator of the severity of foreclosures in the State is the “foreclosure rate,”whichisthenumberof pending foreclosure cases as a percentage of housing units.9 At the beginningof2015,thisratestatewide stood at 1.13 percent,or1in88housingunits. The areas of greatest concern are those that have high and increasing foreclosure rates. Both suburban downstate regions – Long Island and the Mid-Hudson region – stand out in this respect. Long Island has by far the highest foreclosure rate: 2.7 percent—more than twice the statewide rate. It also has a growing caseload. TheMid-Hudsonregionhadthehighestyear-over-yeargrowthinpendingforeclosurecases,with an 18 percent increase from 2014 to 2015. Only New York City and Western New York had decreases in the number of pending foreclosure cases over the last two years.10

-6% -4% -2% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18%Change in Pending Foreclosures 2014 to 2015

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

Fore

clos

ure

Rat

e 20

15

Western NY Southern Tier

NYC

North Country

Mohawk ValleyFinger Lakes

Capital District

Central NY

Long Island

Mid-Hudson

Median

0%

Greatest Concern:High Foreclosure Rate,

Increasing Caseload

Foreclosure Rate and Change in Pending Foreclosure Cases by Region

Source: New York State Unified Court System and U.S. Census Bureau with OSC calculations.The foreclosure rate represents pending foreclosures as a percentage of housing units. Housingunit data is from the American Community Survey (five-year, 2013). Foreclosure data is basedon snapshots from Term 1 of the court calendar.

Foreclosure Rate and Change in Pending Foreclosure Cases by Region

Source: New York State Unified Court System and U.S. Census Bureau with OSC calculations. The foreclosure rate represents pending foreclosures as a percentage of housing units. Housing unit data is from the American CommunitySurvey(five-year,2013).ForeclosuredataisbasedonsnapshotsfromTerm1ofthecourtcalendar.

Fore

clos

ure

Rat

e 20

15

Change in Pending Foreclosures 2014 to 2015


Slowing Growth in Sales Tax CollectionsThere has also been a slow-down in the rate of growth in sales tax collections over the last 5 years.Totallocalsalestaxcollectionsgrewby$439million,or3.0percent,from2013to2014,whichwastheslowestannualgrowthsincetheendofthe2008-09recession.About69percentof the dollar value of this growth took place in New York City. These trends continued into the first10monthsof2015,withoveralllocalsalestaxgrowthof3.1percentcomparedtothesameperiodin2014,andagainyieldedregionallydisparateresults–6.2percentgrowthinNewYorkCityandonly0.6percentgrowthintherestoftheState.

The North Country experienced a decline in sales tax collections of 2.7 percent in the first10monthsof2015,the steepest decline of any region of the State. The Mohawk Valley and Southern Tier also experienceddeclines,of1.4 percent and 0.9 percent respectively. The other six regions of the State outside of New York City had modest growth in sales tax collections (less than 2 percent) in the first 10 months of 2015.

This sluggish growth or decline in sales tax collections in most regions oftheState,limitedincreases in property tax collections and – at best – modest increases of State aid add up to highly restricted revenue sources for local governments in New York.

13.5%

5.8%

1.2%

3.6%

0.7%

3.0%

0%2%4%6%8%

10%12%14%

Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3

2010 2011 2012 2013 2014 2015

Trendline

Local Sales Tax Collections Percentage Change Over Prior Year, ByQuarter,Q12010toQ32015

Source:DepartmentofTaxationandFinance;additionalcalculationsbytheOfficeoftheStateComptroller.Numbers not adjusted for tax rate or tax law changes. Includes New York City.

Perc

enta

ge C

hang

e

1.7%0.3% 0.8%

-1.4%-2.7%

-0.9%

1.0% 0.7% 0.7%

6.2%

-4%-3%-2%-1%0%1%2%3%4%5%6%7%

Change in Local Sales Tax Collections by Region, First10Months,2012to2013

Source:NewYorkStateDepartmentofTaxationandFinance;additionalcalculationsbytheOfficeofthe State Comptroller. Includes counties and cities with a general sales tax. Numbers not adjusted for tax rate or tax law changes.

Perc

enta

ge C

hang

e

Capital Central Finger Mohawk North Southern Western Long Mid- New District NY Lakes Valley Country Tier NY Island Hudson York City

Upstate Downstate


State Aid Changes

Municipal MostongoingStateaidprogramsformunicipalgovernments(counties,cities,townsandvillages) have been held flat in the State budget over the last few years. Unrestricted funding forlocalgovernments,knownasAidandIncentivesforMunicipalities(AIM),fundingfortheConsolidated Local Street and Highway Improvement Program (CHIPS) and funding of the MunicipalStreetsandHighwayprogramwereunchangedforSFY2015-16fromtheprioryear.Someoftheseaidprograms,suchasAIM,havebeenunchangedsinceSFY2011-12.

However,therearepotentialsourcesofincreasedStatefundingforlocalgovernments,thoughmost of these sources are one-time revenues and require application by the local governments and some element of competition between the applicants for the limited funds.11

School DistrictSchool districts have recently done somewhat better than municipalities in regard to State aid. As a function of recession-related decreases in Staterevenues,Stateaidto school districts was reduced sharply from school year 2010 through 2012. Since then it has beenincreasing,andinschool year 2015 school aid exceeded the 2010 level. Schoolaidincreased6.0percent in the SFY 2015-16Statebudget.Evenwiththis,aidisstillwellbelowthe levels that the State committed to before the recession.

$19.7

$21.5$21.7

$20.9

$19.5

$20.2

$21.1

$22.2

$19

$20

$21

$22

$23

2008 2009 2010 2011 2012 2013 2014 2015

Total State Aid to School Districts, 2008 to 2015 (includes ARRA Fiscal Stabilization and Ed Jobs Funds)

Source:NewYorkStateDivisionofBudget(DOB), Description of New York State School Aids (2007-08 to 2015-16),TableII-A

Bill

ions

School Fiscal Year Ending


Expenditures

Inresponsetoconstrainedrevenues,localgovernments,withtherecentexceptionofschooldistricts,havekeptannualspendingfairlyflatsincetherecession.From2004-2008,localgovernmentspending(counties,cities,towns,villages,andfiredistricts)increasedby5.2percent on average annually,butinrecentyears (2008-2014) the annual average increase of expenditures slowed to just 0.7 percent. In fact,thecombinedrateof expenditure growth for counties,cities,towns,villages,andfiredistrictshas decreased every year since 2011.

While municipal government expenditure growth slowed early on in theeconomicdownturn,school districts continued to see moderate spending growthinto2010,inlarge part funded by the temporary federal ARRA funds. The annual rate of school expenditures slowed decidedly after thatfundingended,increasing just 0.5 percent or less from 2011 through 2013.However,in2014,school districts statewide increased spending by 2.7 percent,driveninlargepart by the rising cost of employee benefits.

3.6%

7.4%

0.0%

1.5%

-0.1%

5.2% 5.5%

0.0%

2.7%

-1%0%1%2%3%4%5%6%7%8%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Local Governments

School Districts

Change In Expenditures, Local Governments vs. School Districts, Fiscal Years Ending 2005-2014

Source: OSC

Perc

enta

ge C

hang

e

Ove

r Prio

r Yea

r


4.1%

0.9%

6.4% 6.3%

0%1%2%3%4%5%6%7%8% Total Expenditures Benefits

Annual Average Growth in Total Expenditures vs. Benefits

Source:OSC;Includesallcounties,cities,towns,villages,firedistrictsandschooldistrictsoutsideNYC.

From 2004 to 2010 From 2010 to 2014

Spending for employee benefits continued to far outpace total annual expenditure growth for all local governments and schools. Overall growth in expenditures has been slowing,decliningfroma4.1 percent average annual rate from 2004 through 2010,toa0.9percentaverage annual rate over the subsequent four years. Therefore,withthecostofbenefits growing steadily overthelastdecade,itisconsuming an even larger share of overall local expenditures.

Some of the pressure on local government benefit spending comes from increases in pension contribution rates. These rates increased annually from 2009-10 through 2013-14 as a result of substantial financial market losses in 2008and2009.However,recent market gains have resulted in declining employer contribution rates extending from 2013-14 into the2016-17fiscalyear.12


7.4%

20.9%

15.5%15.1%

28.9%

24.3%

0%

5%

10%

15%

20%

25%

30%

35%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Employee RetirementSystem (ERS)

Police and Fire RetirementSystem (PFRS)

Pension Fund Employer Contribution Rates, SFY 2007 to SFY 2017

Aver

age

Con

tribu

tion

Rat

e

Source: OSC

State Fiscal Year Ending

Local Government Expenditures by Function, 2014 ($73.3 billion)

Source: OSC

Other, 10%

General Government, 15%

Public Safety, 9%

Social Services, 8%

Employee Benefits, 21%

Transportation, 5%

Education, 32%

Giventheupwardpressureonfixedcostssuchasemployeebenefits,andthechallengesinrevenuegrowth,itisclearthatlocalgovernmentshavehadtomakedifficultbudgetarydecisionsandfrequentlycutspendinginotherareas.BasedoninformationreportedtoOSC,examplesofspending cuts include:

• In2014,countiescutspendingforhealth$77million,or4.6percent,andhavereduceditbynearly$425million,or21percent,since2009.

• In2014,townsreducedspendingontransportationby$79.4million,or5.3percent,statewide. Towns have also made significant cuts in garbage collection (21.3 percent or $128.5 million) over the last five years.

• From2009through2014,villagesreducedspendingforcultural/recreationalprogramsandeconomicdevelopmentby23.2percent($43.2million)and28.2percent($7.6million),respectively.

• Althoughnotacut,citiesstatewidehavekeptspendingnearlyflatonpublicsafety(up0.2percent) since 2009.

Fiscal Stress

Variations in the financial landscape of localities and school districts across the State highlight the importance of maintaining close oversight of their financial activities. This oversight will help identify potential financial crises so that local officials and taxpayers can discuss options and take timely corrective actions. OSC’s Fiscal Stress Monitoring System (FSMS) is intended to identify local governments that are either susceptible to or currently in fiscal stress. The FSMS evaluates a number of financial and environmental indicators for each unit of local government(counties,cities,towns,villagesand school districts) and assigns a score. Local governments with higher scores are placed in one of three fiscal stress designations: SignificantFiscalStress,Moderate Fiscal Stress or Susceptible to Fiscal Stress.13

0%5%

10%15%20%25%30%

2013 2014 2013 2014 2013 2014 2013 2014 2013 2014

Counties Cities Towns Villages School Districts

Significant Fiscal Stress Moderate Fiscal Stress Susceptible to Fiscal Stress

18.5% 21.4%

13.5%

25.9%

1.9% 2.4% 3.2% 4.4%

12.9% 13.4%

Local Governments in Fiscal Stress, by Type of Stress and Class, Fiscal Years ending in 2013 and 2014

Source:OSC,Percentagesareoflocalgovernmentsthatfiledfullfinancialdata.


TwoyearsofFSMSscoresprovidesomeinsights.Comparing2013and2014,wecanseethatthenumberoflocalgovernmentsinfiscalstresshasincreased.Forfiscalyearend(FYE)2013,6.4percentofalllocalgovernmentsthatfiledfullfinancialinformationwithOSCwerefoundtobeinfiscalstress(137of2,149thatfiled).14ForFYE2014,theshareoflocalgovernmentsinstresshadincreasedto7.4percent(159of2,146thatfiled).Thisincreasewasfoundinallclassesoflocal government and reflected an increase in all levels of fiscal stress: local governments in significantfiscalstressincreasedfrom1.2percentinFYE2013to1.3percentforFYE2014;localgovernmentsinmoderatestressincreasedfrom1.6percentto2.1percent;andlocalgovernments that were susceptible to fiscal stress increased from 3.5 percent to 4.1 percent.

Thereisnoobvioussinglecauseforthisincreasebut,aspreviouslymentioned,thepropertytaxlevylimit,theeffectsofincreasingforeclosuresandsluggishnessinthegrowthofrevenuessourcessuchasthesalestax,alongwithrisingfixedcosts,arecontributingfactors.Citiesexperiencedanespeciallysignificantincrease,from13.5percentinsomeleveloffiscalstressinFYE2013to25.9percentinFYE2014,anditisincitiesthatweseethemostchallengingdemographicandeconomicconditions:persistentlyhigherunemployment,lossofpropertyvalue,higherpovertyratesandaginginfrastructure.

There is considerable variation among regions in the percentage of local governments that were found to be in fiscal stress. ForFYE2014,LongIslandhad the largest share of local governments in fiscal stress,12.0percentor28 of the 234 that filed. The Capital District and Mid-Hudson region also had high levels of local governments in fiscal stress,at10.0percentand9.6percentrespectively.The Long Island and the Mid-Hudson regions are also those that we find to be suffering the greatest impact from foreclosures. At theotherendofthescale,the Finger Lakes region had only 0.8 percent of its local governments in fiscal stress,or2ofthe262thatfiled.


10.0%

7.4%

0.8%

6.4%

5.7%

7.6%

7.3%

12.0%

9.6%

Percentage of Local Governments in Fiscal Stress, By Region, FYE 2014

Source: OSC

Down

stat

eUp

stat

e

Mid-Hudson

Long Island

Western NY

Southern Tier

North Country

Mohawk Valley

Finger Lakes

Central NY

Capital District

Local Authorities

Inadditiontothemoretraditionalandwell-knownlocalgovernmententities,thereare675localauthoritiesinNewYorkState.Theseauthoritiescollectivelyspendover$1.5billionayear,have$17.7billioninoutstandingdebtandemployover4,000peoplewithapayrollof$182millionannually. Many local authorities exist to advance the goals and supply the needs of their local communities,oftenprovidingservicesthatlocalgovernmentscannotprovidedirectly.However,sincetheyactwithoutmanyoftheoversightandcontrolsplacedonlocalgovernments,itisoftendifficulttoassesshoweffectivelytheyoperate.Duetheirlimitedaccountability,localauthoritieshave the potential to leave taxpayers on the hook for the costs of inefficient operations or inappropriate projects.15

OSCisinterestedinhighlightingtheoperationsoflocalauthoritiesasaclass,especiallythosethatmightpresentfinancialrisks.Asaresult,OSChasinitiatedaseriesofreportstoincreasetransparencyandaccountability,inadditiontoincreasingthenumberoflocalauthorityauditstoidentifywaste,fraudandabuse,andanyotherpracticesthatmightputpublicfundsatrisk.

Off-Track Betting CorporationsOne such report was issuedin2015,detailingthe deteriorating financial condition of New York A report issued in 2015 detailed the deteriorating financial condition of New York State’s off-track betting corporations (OTBs),exploredpotentialpolicyimprovements,and examined the consequences of their continued deterioration.16 This research report accompanied an OSC statewide audit of the five regional OTBs.

OTBshavehadtodealwithadeclineinthe“handle,”whichisthetotalamountthatbettorswager on horse races. This decrease in handle reflects a nationwide decline in wagering on horseracing.Combined,theState’sexistingOTBshaveexperienceda$152.7million,or18.7percent,handledecreasefrom2009to2013,from$816.9millionto$664.3million.Shouldtheaverageannual5.0percentdecreaseinhandleforthatperiodcontinuethrough2018,theOTBs’total handle would be reduced to $512.9 million.

$816.9

$664.3

$512.9$17.6

$10.2

$5.1

$0

$5

$10

$15

$20

$0$100$200$300$400$500$600$700$800$900

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Actual Projected

Handle Distributions

OTB Finances, 2009-2013 Actual and 2014-2018 Projected

Source: OSC

Han

dle

( blu

e co

lum

ns )

Mill

ions

Mill

ions

D

istri

butio

ns to

Loc

al G

over

nmen

ts

( or

ange

line

)


OTBsarestatutorilyrequiredtodistributetheirhandletovariousentities,includinglocalgovernments that participate with a regional OTB. The average annual decline in distributions tolocalgovernments,excludingtheadditionalpaymentsforlocalgovernmentswitharacetrack,was 12.8 percent for the five years ended 2013. Continuation of this trend through 2018 at the samerate,wouldcausedistributionstolocalgovernmentstofallto$5.1millionby2018–halfof the $10.2 million distributed in 2013. This projection does not take into account the potentially negative effects of the new casinos that will be opening throughout the State.


Industrial Development Agencies (IDAs) are among the largest and most active local authorities. They were created by the State to advance job opportunities and general economic welfare. For the last several years, OSC has been issuing annual performance reports on IDA activities. In 2013, there were 109 IDAs active in the counties, cities, towns and villages of the State. These IDAs supported 4,709 projects with a total value of $76.8 billion, and provided these projects with $660.1 million in net tax exemptions. IDAs report that their currently active projects have created almost 200,000 jobs through 2013.17

IDAs are required to submit annual financial statements to OSC along with other information. In 2015, legislation developed by OSC was enacted that will improve the accountability and efficiency of IDAs. OSC has been working closely with IDAs to further improve their reporting and provide additional transparency. (See Legislation section on the following page for details.)

Industrial Development Agencies

Number of IDA Projects by Local Government Class, 2013

Source: OSC. Public Authorities Reporting Information System (PARIS). * Excluding New York City

City-Town, 1 Project, 0.02%

County, 2,891 Projects, 61.4%

Town, 794 Projects, 16.9%

City,* 431 Projects, 9.2%

New York City, 575 Projects, 12.2%

Village, 17 Projects, 0.4%

2015 Proposed and Enacted Legislation Affecting Local GovernmentsComptroller DiNapoli advanced legislative proposals in 2015 to further his goal of protecting the interests of New York’s citizens through increased local government and local authority accountability and transparency.18

Improved Transparency and Efficiency of Industrial Development Agencies (Chapter563oftheLawsof2015,effectiveJune15,2016)

AshighlightedinOSCauditsandannualreports,IDAsneedtoimproveandstandardizecertainof their processes. This new law requires the use of a standard application form for individuals orentitiesrequestingfinancialassistancefromanIDAandrequirestheIDAtodevelop,andadoptbyresolution,uniformcriteriaforassessingapplications.Also,IDAsarerequiredtodevelop uniform project agreements setting forth the terms and conditions under which financial assistanceisprovided.Thisuniformprojectagreementwillprovide,amongotherthings,forthesuspensionordiscontinuanceoffinancialassistance,ormodificationofanypaymentinlieuoftax(PILOT)agreement,inaccordancewithpoliciesdevelopedbytheIDA,aswellasthereturnof all or part of the financial assistance provided for the project if project goals are not met.

Grant of Authority to OSC to Audit Certain Local Development Corporations (A.7056/S.5690)

Localdevelopmentcorporations(LDCs),andcertainothertypesofprivateorganizations,havebeen utilized by local governments as a means to indirectly finance local government operations and projects. OSC audits of local governments have found that some of these organizations have been used to avoid constitutional or statutory provisions that would normally apply if these projects were undertaken directly by a locality. This bill would grant OSC the authority to directly audit the financial affairs of LDCs and certain other private entities when they are controlled by one or more local government entity.

Establish Other Post-Employment Benefits Fund (A.5525/S.5111-A)

This bill would provide express authority for the creation of irrevocable trusts so that the State and local governments would have a mechanism to accumulate funds to cover liabilities for “otherpost-employmentbenefits”(OPEB)providedortobeprovidedtotheirofficers,employeesortheirfamilies.OPEBgenerallyincludesbenefits(oftenhealthcarerelated),otherthanpensionsorotherbenefitsfundedthroughapublicretirementsystem,thatareprovidedtothese officers or employees (or their families) after service to the State or local government has ended.WhilethereisnomandatethattheStateandlocalgovernmentsfundOPEBliabilities,they would be able to accumulate funds to pay for OPEB liabilities in these trusts should they choose to fund them. Assets from the OPEB trusts would be placed in an investment fund in thecustodyoftheStateComptroller,andlocalgovernmentswouldbeprovidedwithseveralinvestment options.


Strengthening of Local Government Ethics Laws (A.7669)

OSC has identified ways in which the current statutes governing conflicts of interest of local officialscanbeimproved.Throughauditsandsurveysoflocalgovernments,OSChasfoundthatknowledgeandunderstandingof,andconsequentlycompliancewith,conflictofinterestandethics requirements may not be as high as desired. This bill would address these concerns by strengtheningthecurrentlawto,amongotherthings,prohibitmunicipalofficersandemployeesfrom acting in certain matters in which they or a relative have an interest. The bill also would require local governments to expand their codes of ethics to provide standards of conduct relating tonepotism.Currently,thelawallows,butdoesnotrequire,aboardofethicstobeestablishedinacounty.Thebillwouldrequiretheestablishmentoflocalboardsofethicsbyeverycounty,aswellasbycities,townsandvillageshavingpopulationsof50,000ormore,andeveryboardof cooperative educational services (BOCES). Local boards of ethics would be authorized to investigate citizen complaints. The bill would clarify that a municipality’s board of ethics has responsibilitytocollect,reviewandenforcerequirementsrelatedtoannualfinancialdisclosurerequirements. Each member of the board of ethics would be required to complete a training course approved by OSC. The bill also provides for a board of ethics to have the advice of counsel.

Increase Transparency and Accountability in School District Fiscal Operations (A.7675/S.5795)

OSC audits of school districts and boards of cooperative educational services (BOCES) have found a number of instances where certain significant fiscal activities had been undertaken without being adequately transparent to the governing board and taxpayers. These audits also found that school boards did not always have current information on the amounts in the district reservefunds,whichcouldpreventeffectivemanagementoftheschooldistrict’sfinances.Toaddresstheseissuesandincreasetransparencyinschooldistrictfiscaloperations,thisbillprovides that no moneys may be paid or transferred into a reserve fund to increase the reserve fundunlessexpresslyauthorizedbyresolutionofthedistrictgoverningboard.Inaddition,thebillwouldrequirethatascheduleofallreservefunds,andcertainrelatedinformation,beappendedto the district’s annual public budget document. This bill would require the posting on a district’s website,ifany,oftheirannualexternalauditreportandcorrectiveactionplanpreparedinresponsetoanyfindings,ofanyfinalauditreportissuedbyOSC,aswellasofthefinalannualbudget and any multiyear financial plan adopted by the governing board.


Services Provided by the Division of Local Government and School Accountability in 2015The Division of Local Government and School Accountability provides an extensive range ofservicestohelplocalgovernmentsoperatemoreefficientlyandeffectively,including:accounting,managementandtrainingmanuals;technicalassistancepublicationsandbulletins;andavarietyoftrainingopportunitiesandspecialconsultativeservices.Inaddition,theDivisionactivelypromotesgovernmentreformbyprovidingStateleaders,localgovernmentofficialsandthepublicwithauditandresearchreports,andinformationaboutcriticalandemerginggovernment policy issues.

2015 Audits and Oversight

Becauselocalgovernmentofficialsneedaccesstogoodfinancialinformation,anunderstandingof how to save taxpayer dollars through efficiency improvements and knowledge of how to safeguardmunicipalassets,onemajorservicethattheDivisionprovidesistheauditingoflocalgovernments. These audits provide officials and taxpayers with an independent analysis of their governments’financialcondition,waystoachievecostsavingsandrevenueenhancementsandmethodstoimprovecontrolsoveroperationsandassets.In2015,theDivisionissued460auditsoflocalgovernmentsandschooldistricts,includinglocalpublicauthoritiessuchasIDAsandhousingauthorities.Inaddition,theDivisionreviewed829propertytaxcalculationstohelplocalgovernments and school districts comply with the State’s property tax cap law.

InconjunctionwitheffortsrelatedtotheComptroller’sFiscalStressMonitoringSystem,theDivision has emphasized financial condition audits as a way to help local officials achieve andmaintainfiscalhealth.In2015,theDivisionconducted86financialconditionauditsthatidentifiedineffectivebudgetingpractices,excessivefundbalancesandreservesandinadequatepolicies,recordsandreports.Theresultingauditrecommendationsaredesignedtohelpofficialstake actions and make informed decisions for improvement.

Forexample,onesuchauditreportedthatoverathree-yearperiod,atownsignificantlyreducedthe amount of unrestricted fund balance on hand to a very low level by using these funds to finance the next year’s expenditures. This occurred because the board did not fully understand the impact that appropriating fund balance each year would have on the budget for the following year.Asaresult,thetown’sunrestrictedfundbalanceforthegeneralandhighwayfundsdeclinedby$463,316,leavingthegeneralfundwithjust$2,683(1percentofthefollowingyear’sappropriations)anda$75,952deficitinthehighwayfund.Anotherfinancialconditionauditofaschooldistrictfoundthatforthreeyears,districtofficialsconsistentlyunderestimatedrevenuesandoverestimatedappropriationswhenpreparingbudgets,causingthedistrict’sfundbalancetobehigherthanneededandunnecessarilyincreasingtheburdenontaxpayers.Inbothcases,auditors recommended that the boards improve their budgeting practices and develop multiyear financial plans to address their government’s long-term priorities.

OSC’s local government audit reports can be found at: http://osc.state.ny.us/localgov/audits/index.htm


http://osc.state.ny.us/localgov/audits/index.htm

The Division’s accountability audits generally assess operations to determine if control systems are in place to safeguard local government assets. A subset of these audits – fraud audits –show howthelackofadequatecontrolscanleadtocriminalabuseoflocalgovernmentassets.In2015,theDivisionfoundmorethan$585,000inlocalgovernmentassetsthatweremisappropriatedthroughfraudin14audits.Forexample,examinersfoundthatduetoalackofinternalcontrolsandadequatefieldemployeeoversightintheinformationtechnology(IT)department,oneemployee was able to work overlapping hours for one school district while he was on another district’spayroll.Asaresult,thisemployeeinappropriatelyreceivedmorethan$180,000insalaryand benefits for nearly three years without being detected. The district did not maintain time recordsdocumentingfieldemployees’actualtimeworked,employeeswerenotrequiredtosigntheir time statements and supervisors certified time statements for employees who they did not directlysupervise.Inaddition,districtofficialsdidnotalwayspreapproveovertime.

The Division also issued 10 audits covering multiple units of government during 2015. These performanceaudits,knownasstatewideauditsorregionalprojectsbecausetheyinvolveworkingwithseverallocalgovernments,agenciesorschooldistrictsinaparticularregionoracross the State to look at issues or programs over a group of local governments to determine if there are ways to improve efficiency and effectiveness. For example:

• Inonestatewideaudit,OSCauditorsfoundthattenlawenforcementagencieshadnotadequatelysafeguardedallpropertyintheircustody,resultingin293itemsmissing,includingcurrency,drugs,electronics,firearmsandvehicles.

• Inanothersuchaudit,examinersfoundthatsixschooldistrictsdidnotadequatelycontroltheirstudentgradingsystems,whichrecordinformationaboutstudents’gradesandprovidesystemaccesstoteachers,administratorsandstaff.Gradechangestestedthatweremadeby non-teachers after the marking periods closed did not have supporting documentation 44percentofthetime,andexaminersfoundthatgradechangeswerebeingmadetopriorschool years going back several years.

• Another audit found that none of the ten municipalities examined fully complied with their FireCoderesponsibilities.Forexample,officialsfromfivemunicipalitiesdidnotrevieworapprovefiresafetyorevacuationplans.Further,morethanthree-quartersofthe96buildingsvisited did not have a fire safety plan on file that met the minimum Fire Code requirements.

InsupportoftheComptroller’sreforminitiativeforpublicauthorities,theDivisionauditedfourhousingauthorities,onepowerauthority,onemarketauthorityand13IDAs,whicharepublicbenefitcorporationscreatedtofacilitateeconomicdevelopmentbyattracting,retainingor expanding businesses. Division examiners found that 10 IDAs did not always adequately monitor,evaluateorcontrolbenefitsandincentivesgrantedtobusinesses.Inaddition,nineIDAssometimesdidnotadequatelybill,collectanddistributepayment-in-lieu-of-taxes(PILOT)amountstotalingalmost$985,000.Auditorsalsofoundthattwohousingauthoritiesdidnothaveadequateproceduresforprocessingtenantrents,ensureestablishedfinancialpolicieswerealwaysfollowed,establishadequateinternalcontrolsoverfinancialprocessesandimplementcompensating controls when employees were performing incompatible financial duties.


However,twootherhousingauthoritiesappropriatelymanagedtheirfinancialconditionandadequately maintained and approved employee time sheets and leave records. OSC examiners also commended the power authority for establishing and implementing strong internal controls over its billing and collection process.

Division audit efforts have at times identified instances where local governments and school districtscancutwaste,reduceexpensesandenhancerevenues.In2015,41Divisionauditsmaderecommendationsforcost-savingsmeasuresorrevenueenhancementsthat,ifimplemented,couldproducemorethan$7.8millioninsavings.Forexample,duringanauditofaschooldistrict,examinersfoundthatthedistrictcouldsave$147,450byreducingexcesscapacityonbusesandcombiningruns,therebyeliminatingtheneedforthreecontractedbuses.Thedistrictalsodidnotcorrectlycalculatethefuelallotmenttothetransportationvendor,resultinginoverpaymentstotaling$3,101,anddidnotrecoup$5,841forexcessfuelgiventothevendor.

Local governments and school districts invest considerable resources in their IT assets and rely onthesesystemsforstoringimportantfinancialandnon-financialinformation,accessingtheInternet,communicatingthroughemailandreportingtoStateandfederalagencies.In2015,theDivision issued 42 audit reports and 19 confidential IT letters that identified ways local officials canbetterprotecttheircomputersystemsanddatafromunauthorized,inappropriateandwastefuluse.Thereports,whicharevaluedbylocalofficials,includemanyrecommendationsfor improving IT security that are no-cost or low-cost solutions and addressed issues such as patchmanagement,anti-virusprotection,accesscontrols,disasterrecoverypolicies,firewalland wireless network configuration and physical security. One IT audit identified the impact on a locality of two “ransomware” email schemes which caused their data to be encrypted and rendered inaccessible when employees opened falsified email messages containing a malware attachment. Local officials had to pay “ransom” amounting to hundreds of dollars each time to havethedatarestored.Inaddition,OSCauditorsconductedatotalofsixnetworkand/orwebapplication vulnerability assessments.

Chapter 97 of the Laws of 2011 established a property tax levy limit (generally referred to as the tax cap) that restricts the amount of property taxes local governments and school districts canlevy.Aspartofitsauthoritytoconductexaminations,theComptrollerhasauthoritytoreview the tax cap calculations filed by local governments and school districts. Of the 829 tax capfilingsreviewedbytheDivisionin2015,OSCfoundthat696(84percent)leviedtaxesthatcomplied with the cap. Ninety-eight local governments and schools (12 percent) exceeded theirtaxcaplimit,butproperlyoverrodethelimit.Only35localgovernmentsandschools(4 percent) exceeded their tax cap limits without a proper override. Auditors provided these local governments and school districts with assistance to help them reserve the excess taxes collected pursuant to the legislation.


Local Official Training

The Division provides a comprehensive array of training opportunities including accounting schools,statewideandregionalconferences,variousworkshops,andwebinars.In2015,Divisionstaffconducted129trainingsessionsforlocalofficialsandstaffatstatewide,regional,andonlineevents.Totalattendanceatthesesessionswasnearly8,500.

Toexpanditsoutreach,theDivisionrecentlylaunchedanewinitiative-The Academy for New York State’s Local Officials. The Academy provides municipal officials a convenient way to improve their knowledge of local government finances and delivers a focused curriculum to help them carry out their duties.

Publications

The Division’s website contains a wealth of valuable information for municipal officials and others interested in local government issues and finance. These can be accessed online at:

http://www.osc.state.ny.us/localgov/researchpubs/index.htm Printed copies can be obtained by calling (866) 321-8503 or emailing [email protected].

In2015,theDivisionissued12researchreportsthataddressmajorissuesfacinglocalgovernments,taxpayersandStatepolicymakers,suchas:salestaxtrends;thecontinuingforeclosurecrisis;NewYork’slocalpublicauthorities;theeffectofthetaxcaponcountiesoverthepastfouryears;andseveralreportson OSC’s Fiscal Stress Monitoring System.

Inaddition,LGSAissuesregularguidancetolocalofficials through its Professional Standards Unit and Local Government Management Guide series. Some technical topics covered in 2015 included a number of technology and cybersecurityissues,includingprotectingindustrialcontrolsystems,avoidingandmitigatingproblemsfromransomwaredemands,andinformationtechnologycontingencyplanning.

Division of Local Government and School Accountability

Avoid Crisis Tomorrow with Fiscal Awareness Strategies for Today

ACT FAST

New York State Office of the State Comptroller


Fiscal Stress Monitoring System

Fact Sheet

The Fiscal Stress Monitoring System provides:

• Anearlyw

arningoffisc

alstresstol

ocalgovernm

entsandsch

ooldistrictsb

yexaminingt

heirfinancial

informationa

ndaspectso

ftheirextern

alenvironme

nt;and

• Feedbackt

olocalleade

rs,Stateoffic

ialsandtaxp

ayersabout

fiscalstress

conditionst

ohelpthem

prioritizethe

needsofthe

ircommunity

,understand

trade-offsa

ndfollowthr

oughwithtou

ghdecisions.

The System has two main components:

Financial indicatorsevaluateb

udgetarysolv

ency,theab

ilityofaloca

litytogenera

teenoughre

venueto

meetexpens

es,bymeas

uring:

• Year-endf

undbalances

• Operating

deficits/surp

luses

• Cashposi

tion

• Useofsho

rt-termdebtf

orcashflow

• Fixedcost

s(evaluated

forlocalgov

ernmentson

ly)

Environmental indicatorscapturetre

ndsthatinflu

encerevenu

e-raisingcap

abilityandde

mandsforse

rvice:

Local Governments

Schools

•Population

• Propertyva

lues

•Age

• Enrollment

•Poverty

• Budgetvo

tetrends

•Propertyva

lues

• Graduatio

nrate

•Employme

nt

• Freeorred

ucedpricelu

nchparticipa

tion

•Dependenc

eonrevenue

fromothergo

vernmentun

its

(whichcanb

ehighlyvari

able)

•Constitution

altaxlimits

•Salestaxr

evenue

The System uses information that local governments

and school districts already submit/report; there are

no new reporting requirements.

Although environmental factors are largely outside a locality’s control, they

provide insight about additional challenges confronting a community.

• Off-trackbettingcorporations(OTBs),

atypeoflocalauthority,employedabout

1,200peoplein2015.• Wageringonhorseracinghasbeenin

decline,bothintheStateandnationally,

forseveraldecades.• OTBhandle(totaldollarvalueofbets)

was$664.3millionin2013,an18.7percent

decreasefromahandleof$816.9million

in2009.• OTBsfaceincreasingcompetitionfrom

casinos,onlinewageringandothergamblingoptions.• OTBsarerequiredtopayoutnearly13

centsofeverydollarwageredtotheracing

industry,theStateandparticipatinglocal

governments.• TheNewYorkCityOTBceasedoperations

in2010.TheSuffolkOTBfiledforbankruptcyin2012,butiscurrentlyemergingfrombankruptcyprotection.

• OTBdistributionstolocalgovernmentsdeclinedfrom$17.6millionin2009to$10.2millionin2013.

Local Authorities by the Numbers

September 2015OFFICE OF THE NE W YORK STATE COMP TROLLER

DIV IS ION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABIL ITY


Are Off-Track Betting Corporations Nearing the Finish Line?

ResearchBrief Introduction

The financial condition of off-track betting

corporations (OTBs) in New York State has

deteriorated in recent years, raising the question of

their long-term viability. This has had a negative

effect on OTB employees, their communities

and the local governments that receive a portion

of OTB revenues. OTBs are classified as local

authorities, distinguishing them from other

gambling venues that exist in the State. This report, which is part of a series of reports

by the Office of the State Comptroller (OSC)

on local authorities, discusses the financial

condition of OTBs, potential policy changes and

the consequences of continued deterioration. It

accompanies OSC audits of each of the five regional

OTBs, plus a summary audit report that covers the

overall financial condition of OTBs.Declining trends in the horse racing industry and

an increase in gaming options have taken their toll

on OTBs. With the advent of commercial casinos

in the State, policymakers have an opportunity to

re-examine the viability of OTBs and how they

fit into State-authorized gambling. This should

include a comprehensive reassessment of OTBs’

gambling-related revenue streams and distributions

to the State, local governments and other

participating entities.

Information on the Academy and available training opportunities can be found at: http://osc.state.ny.us/localgov/academy/index.htm


http://osc.state.ny.us/localgov/academy/index.htm

http://www.osc.state.ny.us/localgov/researchpubs/index.htm

Local Financial Data Resources

Forthosethatdesiremoredetailedcurrentinformationonlocalgovernments,OSCprovidesaccesstofinancialdataforcounties,cities,towns,villages,schooldistrictsandfiredistricts.Thisdata is derived from the Annual Financial Reports that these local governments are required to filewithOSC.Inaddition,financialandotherdatafrommanykindsoflocalauthoritiesisalsoavailable. This local authority data is derived from information that is submitted through the Public Authority Reporting Information System maintained by OSC.

Open Book New YorkTheComptroller’sonlineresourcethatprovidesdataonlocalgovernments,Statecontracts,public authority information and State spending and payments. The local government information includesdataonthePropertyTaxCap,localrevenuesandexpendituresandlocalgovernmentdebt-related activity. It can be accessed at www.openbooknewyork.com/index.htm.

Financial Data for Local GovernmentsThisresourceincludesdetailedfinancialdatasetsforlocalgovernments,schooldistricts,firedistricts,industrialdevelopmentagencies,localdevelopmentcorporationsandotherlocalgovernmental entities. The data covers up to 18 years and can be download in spreadsheets. This data is available at: www.osc.state.ny.us/localgov/datanstat/findata/index_choice.htm.

Real Property Tax Rates and LeviesThisresourceincludeslocalgovernmentrealpropertytaxlevies,taxablefullvalueamountsand full value tax rates from 2013 on. Data on overlapping real property tax levies and rates is available for 2000 to 2012. School district real property tax rates are available from 2000 on. www.osc.state.ny.us/localgov/orptbook/index.htm.

Division of Local Government and School Accountability Website: www.osc.state.ny.us/localgov • Email: [email protected]


www.openbooknewyork.com/index.htm

http://osc.state.ny.us/localgov/datanstat/findata/index_choice.htm

http://osc.state.ny.us/localgov/orptbook/index.htm

http://osc.state.ny.us/localgov/index.htm

Endnotes1 OfficeoftheStateComptroller,Report on the State Fiscal Year 2015-16 Enacted Budget,April2015.

http://osc.state.ny.us/reports/budget/2015/2015-16_enacted_budget.pdf.

2 Inthisreport,localgovernmentsincludecounties,cities,towns,villages,firedistrictsandschooldistrictsunlessstatedotherwise.

3 Unlessotherwisenoted,allfiguresinthetextandgraphsuseOSCdataanddonotincludeNewYorkCity.

4 Personal Income data from United States Bureau of Economic Analysis.

5 SeeLawsof2015,chapter20,PartC,SubpartB,Section1.

6 Localgovernmentscanlegallyexceedthetaxlevylimitbypassingalocallaw(counties,cities,townsandvillages)oraresolution(firedistrictsandothers)tooverridethecap.Anoverriderequiresatleasta60percentsupermajorityvoteofthegoverningboardinordertopass.Schooldistrictsmayseekanoverrideofthetaxlevylimitaswell,butthisoverriderequiresapprovalfromatleast60percentofthevoters.

7 LarryCordellandLaurenLambie-Hanson,“ACost-BenefitAnalysisofJudicialForeclosureDelay,”FederalReserveBankofPhiladelphia,WorkingPaperNo.15-14(March2015);KristopherS.Girardi,EricRosenblatt,PaulS.Willen,andVincentW.Yao,“ForeclosureExternalities:SomeNewEvidence,”FederalReserveBankofBoston,PublicPolicyDiscussionPapers No. 12-5.

8 Data on foreclosure filings and the number of pending foreclosure cases are from the New York State Unified Court System. Years are based on Court System reporting periods.

9 DataonthenumberofhousingunitsisfromtheU.S.CensusBureau(AmericanCommunitySurveyfive-yearestimates,2013).

10 For more information on foreclosures see OSC’s The Foreclosure Predicament Persists,August2015. http://www.osc.state.ny.us/localgov/pubs/research/snapshot/foreclosure0815.pdf.

11 OfficeoftheStateComptroller,Report on the State Fiscal Year 2015-16 Enacted Budget,April2015. http://www.osc.state.ny.us/reports/budget/2015/2015-16_enacted_budget.pdf.

12 See OSC’s Employer Projections and Rates, http://www.osc.state.ny.us/retire/employers/epr/index.php.

13 Formoreinformation,seeOSC’sFiscalStressMonitoringSystemwebpage: http://www.osc.state.ny.us/localgov/fiscalmonitoring/index.htm.

14 All percentages in this section are of local governments that filed full financial data to OSC in time to receive a FSMS score for the fiscal year indicated.

15 OfficeoftheStateComptroller,Local Authorities in New York State – An Overview,April2015. http://www.osc.state.ny.us/localgov/pubs/research/localauthorities0415.pdf.

16 OfficeoftheStateComptroller,Are Off-Track Betting Corporations Nearing the Finish Line? September 2015. http://www.osc.state.ny.us/localgov/pubs/research/otb0915.pdf.

17 The latest OSC report on IDAs is Annual Performance Report on New York State’s Industrial Development Agencies: Fiscal Year Ending 2013,May2015. http://www.osc.state.ny.us/localgov/pubs/research/ida_reports/2015/idaperformance.pdf.

18 FormoreinformationonlegislationadvancedbytheComptroller,pleasevisit: http://www.osc.state.ny.us/legislation/index.htm.


http://osc.state.ny.us/reports/budget/2015/2015-16_enacted_budget.pdf

http://www.osc.state.ny.us/localgov/pubs/research/snapshot/foreclosure0815.pdf

http://www.osc.state.ny.us/reports/budget/2015/2015-16_enacted_budget.pdf

http://www.osc.state.ny.us/retire/employers/epr/index.php

http://osc.state.ny.us/localgov/fiscalmonitoring/index.htm

http://www.osc.state.ny.us/localgov/pubs/research/localauthorities0415.pdf

http://www.osc.state.ny.us/localgov/pubs/research/otb0915.pdf

http://www.osc.state.ny.us/localgov/pubs/research/ida_reports/2015/idaperformance.pdf

http://www.osc.state.ny.us/legislation/index.htm

Sou

rce:

OS

C a

nd U

nite

d S

tate

s C

ensu

s B

urea

u.

SUM

MA

RY

OF

FIN

AN

CES

FO

R M

AJO

R C

LASS

ES O

F LO

CA

L G

OVE

RN

MEN

T –

Fisc

al Y

ear E

nded

in 2

014

(Exc

ludi

ng N

ew Y

ork

City

)( A

ll do

llar a

mou

nts

in m

illio

ns )

Cou

nty

City

Tow

nVi

llage

Scho

olFi

re D

istr

ict

Tota

lP

opul

atio

n - C

ensu

s E

stim

ates

11,255,148

2,227,332

9,018,242

1,923,013

Full

Valu

e of

Rea

l Pro

pert

y $1,102,838.5

$112,334.1

$993,516.4

$239,664.4

$1,126,664.9

Deb

t Iss

ued:

Bon

ds$1,416.8

$345

.8$6

82.0

$221

.1$1,289.3

$56.7

$4,0

11.7

Oth

er D

ebt

$1,682.8

$414

.3$3

51.7

$211

.9$3,013.9

$25.

5$5

,700

.1O

utst

andi

ng D

ebt:

Bon

ds (G

ross

)$11,165.0

$2,643.5

$4,123.9

$1,699.7

$15,426.8

$306

.6$3

5,36

5.4

Oth

er D

ebt

$2,101.9

$631.5

$923

.8$4

13.4

$2,848.8

$50.

7$6

,970

.1

Tota

l Out

stan

ding

Deb

t$1

3,26

6.9

$3,2

75.0

$5,0

47.7

$2,1

13.1

$18,

275.

6$3

57.3

$42,

335.

5

Rev

enue

s:

Rea

l Pro

pert

y Ta

xes

and

Ass

essm

ents

$5,089.3

$1,045.9

$3,573.3

$1,272.5

$18,256.5

$710

.5$2

9,94

8.0

Oth

er R

eal P

rope

rty

Tax

Item

s$336.3

$137

.3$8

4.0

$33.

2$2,891.4

$5.1

$3,4

87.3

Sal

es a

nd U

se T

ax$7,578.6

$844

.3$6

62.3

$159

.0$2

80.2

$0.0

$9,5

24.4

Oth

er N

on-P

rope

rty

Taxe

s$74.6

$82.6

$199

.8$2

4.1

$0.0

$0.0

$381

.1

Cha

rges

for S

ervi

ces

$2,337.6

$900

.9$9

60.6

$762.7

$350

.4$0

.0$5

,312

.1

Cha

rges

to O

ther

Gov

ernm

ents

$481

.4$7

5.4

$158

.4$9

0.9

$129.6

$14.

1$9

49.9

Use

and

Sal

e of

Pro

pert

y$3

10.2

$59.

9$1

43.4

$42.

7$4

44.8

$11.

4$1

,012

.4

Oth

er L

ocal

Rev

enue

s$1,675.8

$286.3

$361.6

$108

.4$4

61.5

$12.

5$2

,906

.1

Tota

l Loc

al R

even

ues

$17,

883.

8$3

,432

.7$6

,143

.4$2

,493

.4$2

2,81

4.3

$753

.6$5

3,52

1.2

Sta

te A

id$2,719.4

$836.1

$439

.7$1

21.3

$12,981.8

$2.8

$17,

101.

1

Fede

ral A

id$2,545.3

$271

.5$2

20.3

$83.

4$1,542.5

$2.2

$4,6

65.3

Tota

l Sta

te a

nd F

eder

al R

even

ues

$5,2

64.7

$1,1

07.6

$660

.0$2

04.7

$14,

524.

3$5

.0$2

1,76

6.3

Tota

l Rev

enue

s $2

3,14

8.5

$4,5

40.3

$6,8

03.4

$2,6

98.2

$37,

338.

6$7

58.6

$75,

287.

6

Exp

endi

ture

s:

Per

sona

l Ser

vice

s$5,080.0

$1,658.1

$2,086.5

$836.2

$17,677.7

$146.8

$27,

485.

3

EmployeeBenefits

$3,435.5

$1,178.8

$1,228.1

$517

.4$8,737.5

$165.5

$15,

262.

8

Con

tract

ual

$12,84

8.4

$1,086.3

$2,378.8

$923

.5$8,007.8

$231

.5$2

5,47

6.2

Tota

l Cur

rent

Ope

ratio

ns$2

1,36

3.9

$3,9

23.1

$5,6

93.5

$2,2

77.1

$34,

423.

0$5

43.8

$68,

224.

4

Equ

ipm

ent a

nd C

apita

l Out

lay

$1,347.6

$530

.3$9

09.7

$353

.2$1,707.7

$189

.1$5

,037

.6

Deb

t Ser

vice

$1,364.5

$354.6

$609.6

$230

.5$2,383.8

$58.

2$5

,001

.1

Prin

cipa

l$874.6

$243.6

$471

.2$176.1

$1,702.6

$45.

7$3

,513

.8

Inte

rest

$489

.9$1

11.0

$138

.4$5

4.4

$681.2

$12.

5$1

,487

.3

Tota

l Exp

endi

ture

s $2

4,07

6.0

$4,8

08.0

$7,2

12.8

$2,8

60.8

$38,

514.

5$7

91.1

$78,

263.

1


Mailing Address for all of the above:

Office of the State Comptroller, 110 State Street, Albany, NY 12236

email: [email protected]

DirectoryCentral OfficeDivision of Local Government and School Accountability

Andrew A. SanFilippo, Executive Deputy Comptroller

Executive .................................................................................................................................................................. 474-4037 Gabriel F. Deyo, Deputy Comptroller Tracey Hitchen Boyd, Assistant Comptroller

Audits, Local Government Services and Professional Standards .................................................. 474-5404 (Audits, Technical Assistance, Accounting and Audit Standards)

Local Government and School Accountability Help Line ...............................(866) 321-8503 or 408-4934 (Electronic Filing, Financial Reporting, Justice Courts, Training)

New York State & Local Retirement SystemRetirement Information Services

Inquiries on Employee Benefits and Programs ...................................................................474-7736

Bureau of Member and Employer Services ............................................ (866) 805-0990 or 474-1101Monthly Reporting Inquiries .....................................................................................................474-1080 Audits and Plan Changes ...........................................................................................................474-0167 All Other Employer Inquiries .................................................................................................... 474-6535

Division of Legal ServicesMunicipal Law Section ..........................................................................................................................474-5586

Other OSC OfficesBureau of State Expenditures .......................................................................................................... 486-3017Bureau of State Contracts ................................................................................................................... 474-4622

(Area code for the following is 518 unless otherwise specified)


DirectoryRegional OfficeDivision of Local Government and School Accountability

Andrew A. SanFilippo, Executive Deputy Comptroller

Gabriel F. Deyo, Deputy Comptroller (518) 474-4037

Tracey Hitchen Boyd, Assistant ComptrollerCole H. Hickland, Director • Jack Dougherty, Director Direct Services (518) 474-5480

BINGHAMTON REGIONAL OFFICE - H. Todd Eames, Chief Examiner State Office Building, Suite 1702 • 44 Hawley Street • Binghamton, New York 13901-4417 Tel (607) 721-8306 • Fax (607) 721-8313 • Email: [email protected] Serving: Broome, Chenango, Cortland, Delaware, Otsego, Schoharie, Sullivan, Tioga, Tompkins counties

BUFFALO REGIONAL OFFICE – Jeffrey D. Mazula, Chief Examiner 295 Main Street, Suite 1032 • Buffalo, New York 14203-2510 Tel (716) 847-3647 • Fax (716) 847-3643 • Email: [email protected] Serving: Allegany, Cattaraugus, Chautauqua, Erie, Genesee, Niagara, Orleans, Wyoming counties

GLENS FALLS REGIONAL OFFICE - Jeffrey P. Leonard, Chief Examiner One Broad Street Plaza • Glens Falls, New York 12801-4396 Tel (518) 793-0057 • Fax (518) 793-5797 • Email: [email protected] Serving: Albany, Clinton, Essex, Franklin, Fulton, Hamilton, Montgomery, Rensselaer, Saratoga, Schenectady, Warren, Washington counties

HAUPPAUGE REGIONAL OFFICE – Ira McCracken, Chief Examiner NYS Office Building, Room 3A10 • 250 Veterans Memorial Highway • Hauppauge, New York 11788-5533 Tel (631) 952-6534 • Fax (631) 952-6530 • Email: [email protected] Serving: Nassau, Suffolk counties

NEWBURGH REGIONAL OFFICE – Tenneh Blamah, Chief Examiner 33 Airport Center Drive, Suite 103 • New Windsor, New York 12553-4725 Tel (845) 567-0858 • Fax (845) 567-0080 • Email: [email protected] Serving: Columbia, Dutchess, Greene, Orange, Putnam, Rockland, Ulster, Westchester counties

ROCHESTER REGIONAL OFFICE – Edward V. Grant Jr., Chief Examiner The Powers Building • 16 West Main Street – Suite 522 • Rochester, New York 14614-1608 Tel (585) 454-2460 • Fax (585) 454-3545 • Email: [email protected] Serving: Cayuga, Chemung, Livingston, Monroe, Ontario, Schuyler, Seneca, Steuben, Wayne, Yates counties

SYRACUSE REGIONAL OFFICE – Rebecca Wilcox, Chief Examiner State Office Building, Room 409 • 333 E. Washington Street • Syracuse, New York 13202-1428 Tel (315) 428-4192 • Fax (315) 426-2119 • Email: [email protected] Serving: Herkimer, Jefferson, Lewis, Madison, Oneida, Onondaga, Oswego, St. Lawrence counties

STATEWIDE AUDIT - Ann C. Singer, Chief Examiner State Office Building, Suite 1702 • 44 Hawley Street • Binghamton, New York 13901-4417 Tel (607) 721-8306 • Fax (607) 721-8313



Nas

sau

Suffo

lk

Col

umbi

a

Dut

ches

s

Gre

ene

Ora

nge

Putn

am

Roc

klan

d

Uls

ter

Wes

tche

ster

Cay

uga

Che

mun

g

Livi

ngst

on

Mon

roe

Ont

ario

Schu

yler

Sene

ca

Steu

ben

Way

ne

Yate

s

Bro

ome

Che

nang

oC

ortla

nd

Del

awar

e

Ots

ego

Scho

harie

Sulli

van

Tiog

a

Tom

pkin

s

Alb

anyC

linto

n

Esse

x

Fran

klin

Fulto

n

Ham

ilton

Mon

tgom

ery

Ren

ssel

aer

Sara

toga

Sche

nect

ady

War

ren

Was

hing

ton

Her

kim

er

Jeffe

rson

Lew

is

Mad

isonOne

ida

Ono

ndag

a

Osw

ego

St.

Law

renc

e

Alle

gany

Cat

tara

ugus

Cha

utau

qua

Erie

Gen

esee

Nia

gara

Orl

eans

Wyo

min

gA

lban

y

Am

ster

dam

Aub

urn

Bata

via

Beac

on

Bing

ham

ton

Buff

alo

Can

anda

igua

Coh

oes

Cor

ning

Cor

tland

Dun

kirk

Elm

ira

Fulto

n

Gen

eva

Gle

nC

ove

Gle

nsFa

lls

Glo

vers

ville

Hor

nell

Hud

son

Itha

ca

Jam

esto

wn

John

stow

n

Kin

gsto

n

Lack

awan

na

Litt

leFa

lls

Lock

port

Long

Beac

h

Mec

hani

cvill

e

Mid

dlet

own M

ount

Vern

on

New

burg

h

New

Roc

helle

Nia

gara

Falls

Nor

thTo

naw

anda

Nor

wic

h

Ogd

ensb

urg

Ole

an

One

ida

One

onta

Osw

ego

Peek

skill

Plat

tsbu

rgh

Port

Jerv

is

Poug

hkee

psie

Ren

ssel

aer

Roc

hest

erR

ome

Rye

Sala

man

ca

Sara

toga

Spri

ngs

Sche

nect

ady

Sher

rill

Syra

cuse

Tona

wan

da

Troy

Utic

a

Wat

erto

wn

Wat

ervl

iet W

hite

Plai

ns

Yonk

ers

Cou

ntie

sC

ities

Vi

llage

sTo

wns

Bing

ham

ton

Reg

ion

Buffa

lo R

egio

nG

lens

Fal

ls R

egio

n

Hau

ppau

ge R

egio

n

New

burg

h R

egio

n

Roc

hest

er R

egio

nSy

racu

se R

egio

n

New

York

Sta

te

Loca

l Gov

ernm

ents

By

Reg

iona

l Offi

ce(D

oes n

ot sh

ow S

choo

l Dist

ricts,

Fire

Dist

ricts,

Lo

cal A

uthor

ities o

r othe

r loca

l gov

ernm

ent e

ntitie

s.)

LikeusonFacebookatfacebook.com/nyscomptrollerFollow us on Twitter @nyscomptroller

ContactOffice of the New York State Comptroller Division of Local Government and School Accountability

110StateStreet,12thfloor Albany,NY12236 Tel: (518) 474-4037 Fax:(518)486-6479 or email us: [email protected]

www.osc.state.ny.us/localgov/index.htm

http://www.osc.state.ny.us/help/lsdisclaimer.htm

http://www.osc.state.ny.us/localgov/index.htm

Thomas P. DiNapoli • State Comptroller 2015 ANNUAL REPORT · 2018. 12. 27. · 015 Annual Report2...

Documents

Transcript of Thomas P. DiNapoli • State Comptroller 2015 ANNUAL REPORT · 2018. 12. 27. · 015 Annual Report2...