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Our tone-deaf governor: Cuomo and the cities

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Our governor is one tough guy. He is Getting Things Done. And as he reminds us frequently, he plans to Get Lots More Things Done.

One of the latest things he's doing is ending the financial crisis in the cities of New York State. "Let's stop talking about the issue," he said when he announced his Distressed Cities plan last month, "and let's start doing something about it."

You might think that's a tough challenge, given our cities' problems, but the governor knows how to Get Things Done.

When he announced his plan, some officials gushed. "This is the first time I can say there has been an overall recognition and attempt to understand the deep seeded [sic] structural economic problems the cities in particular and local governments in general across the upstate region have been facing for multiple generations," said Jamestown Mayor Samuel Teresi.

In his announcement, the governor named some of those problems: exploding retirement costs, shrinking population, shrinking property values, the recent national financial crisis. But all except the national financial crisis are long-term facts of life for cities. They're not things we can just ride out by patching a few things here and there. We need substantial, long-term solutions.

So what does the governor recommend? That we take our medicine: Cut. Reorganize. Live within our current means.

No money, though. "More money," Cuomo said, "is not the solution to help local governments solve their fiscal issues."

Cuomo figures we just have to get better at managing the money we have, no matter the cost. There's no need to preserve and strengthen cities.

This is a callous, pass-the-buck approach, made all the more callous by the fact that the governor is a smart man whose previous jobs include service as US Secretary of Housing and Urban Development. He knows cities. He knows that they house the state's neediest citizens: people who need their city's services, and whose ability to pay taxes is small.

This is an intolerable situation, one that will eventually starve the cities to death – and cause irreparable damage to the surrounding suburbs.

Here's what the governor offers as help:

• A Financial Restructuring Board, which would help "fiscally distressed governments" draw up a restructuring plan so they could cut costs. Board members would be the state budget director, the secretary of state, the state attorney general, the comptroller, and a "private-sector restructuring professional."

• Money to help city governments restructure. And governments accepting the money would be bound by the recommendations of the Financial Restructuring Board.

• The board's service in union negotiations, which — if the cities and the unions agree – would act as an arbitration panel in negotiations with police and fire unions.

Rochester Mayor Tom Richards had a temperate but wry official response after Cuomo made his big announcement: He thanked Cuomo for "his attention to our situation and for another opportunity to make our case to the state."

"We will anxiously look into the proposed board," he concluded, "to see if there are new ideas, strategies, and perhaps funding to help Rochester."

When I called Richards to ask him for more thoughts, he repeated what he had said in his official statement — and what he has said numerous times: We need a better way to finance cities.

We can't cut our way out of this. We've already cut. The problem, as Richards says, is that the city has to rely too heavily on the property tax, and that's an outmoded, unsustainable way to finance cities today.

Does the governor just not understand? "I think he thinks we can substantially reduce the problem through efficiencies," Richards said. We can't.

While he said he wishes the governor's plan were "a little more concrete in terms of directly helping us," Richards said he's happy that Cuomo is at least paying attention to the plight of the cities now.

"And," said Richards, "some of the people who are on the commission – the comptroller's office, even the budget director – are farther along on this issue than he is."

"Although I don't think we're as high up on his priorities as I wish we were," Richards said, "if I can convince these guys on the commission, then we've made some progress."

Even before Cuomo announced his plan, Richards said, Rochester had made some progress: both the Senate and the Assembly approved an increase in our Aid to Municipalities funding.

"In Albany, that's how it has to happen," Richards said: "Get it started, chip away at it, and then it becomes the norm."

Cuomo has been making a big deal out of his regional economic development programs. They're needed, Richards said, because economic development in Upstate New York is a big problem. "But that will not fix cities," Richards said. "There are two different problems here," he said, "needing two different solutions. And we've got to solve them both."

Economic development, he said, "isn't going to produce this big tax base."

"We are essentially dependent on the real estate tax," Richards said. "That's the only revenue we control. We can only tax this contained area we have."

"The real property tax was invented in feudal times in England," Richards said. "It was. We need a different base, and a broader base."

Richards doesn't criticize the entire Cuomo plan. He thinks changing the system of arbitration with police and fire fighters could be important. Under the current system, when the public-safety employees and their city can't agree on a contract, it goes to binding arbitration. The intent was good: Public-safety municipal employees can't strike, so they need a way to get their employer to settle contract disputes. But Richards and others complain that arbitrators haven't considered cities' ability to pay, forcing them into contracts that, over the years, have become excessive.

Richards doesn't begrudge police and firefighters their salary or their benefits. And he praises Rochester's unions for agreeing to small salary increases and changes in benefits. Negotiations with Rochester police and firefighters haven't gone to arbitration for about five years.

"These people don't have high salaries," he said. And, he said, "Fundamentally, providing benefits is a good thing." The problem is that the city's ability to pay has changed.

When Cuomo announced his Distressed Cities plan, he made a big point of its not being a one-size-fits-all plan, meeting the specific needs of individual cities. The implication: in the past, the state treated all of the cities the same.

But that's decidedly not the case. The governor's press release about his new plan showed the disparity: Buffalo got nearly twice as much Aid to Municipalities money this year as Rochester did: a little over $161 million compared to our $88 million. AIM aid represents 33.21 percent of Buffalo's budget this year, compared to 18 percent of Rochester's.

Buffalo, said Richards, "is an example of the principal that you only respond to a crisis." Unlike Buffalo, Rochester has managed over the years to cut services, cut staff, keep employee raises low – "doing things," as Richards puts it, "to keep us out of trouble." And, by the way, Rochester contributes much more to its school district's budget than Buffalo does.

The reward from the state: the conclusion that Rochester doesn't need much help.

How much difference would it make to Rochester, I asked Richards, if the state's aid to cities was more equitable and we got our fair share?

"It would come close to eliminating the problem for us," he said.

Rochester has managed to hang on, avoiding Buffalo's fate of getting into such a hole that it had to have a control board. But if the state doesn't reform the way cities are funded, Richards said, "we'll eventually get in trouble." And at some point, we'll have to cut services so deep that people no longer will want to live in Rochester. Even if it's still a decent place to live, when you keep cutting services, "inadvertently, you send a message," Richards said.

Years ago, having the property tax as the base of cities' revenue made sense. Cities housed the region's wealth. But the nature of cities has changed. New York State government seems to have recognized that change with respect to urban school districts, notes Richards: As the population of city schools has gotten poorer and the property-tax base has dropped, the state has boosted its aid to schools substantially. It needs to get its mind to that point in its treatment of cities.

Richards says he'll keep preaching his message to state officials. I asked him whether he's optimistic. "I am," he said, "because I think it's really in nobody's interest for these places to fail."

"You gotta believe," he said. "I think the danger is less that they'll not do something but that they won't do it on time."

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