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Buffalo tops state list of distressed cities

Over the past several years, Buffalo has been the state's poster child for cities in fiscal distress, but other large and small cities are increasingly feeling the financial pinch of declining revenues and rising expenses, State Comptroller Alan G. Hevesi reported Monday.

Buffalo led the pack of 61 cities from 2000 to 2004 in what Hevesi called financial "stress levels" that measured a number of key factors, including how much they overly rely on funding from other governments, such as state and federal funds; population loss; debt levels; and percentage of fixed government costs.

The news was not much better for Niagara Falls, which placed third on the list just behind Syracuse and just ahead of Yonkers. The conditions are so severe in the four cities that Hevesi's report said their "long-term viability" could be threatened.

The Hevesi report came as the New York Conference of Mayors, meeting in Albany, released its own report that found 31 percent of cities reporting their financial condition worsening in the past year, while 59 percent increased property taxes for 2006. Dozens of city and village officials from around the state used the report as they worked the halls in the Capitol on Monday searching for more state funding and a relaxation of programs mandated by the state without state funding.

"The financial condition of many once-flourishing cities in New York State is truly troubling," Hevesi said. "For decades, these cities have seen demands for municipal services increase while their tax bases continue to erode. Most troubling, cities all across New York State continue to lose population, which has made achieving fiscal stability even more challenging."

The Hevesi study, which looked at cities outside New York City, considered numerous measurements to determine a city's stress factor, including people living below the poverty line and percentage of residents without a high school diploma.

Lackawanna, Buffalo, Yonkers, Albany and Mount Vernon led the 61 cities with the highest percentage of fixed costs. Lackawanna, for instance, saw 69 percent of its expenditures go for salaries and fringe benefits, compared with a statewide average of 51 percent. Buffalo and Lockport saw 60 percent of expenses go to salaries and benefits of workers.

Buffalo's debt level -- 10.3 percent of expenditures -- was considered "far above average" among cities during the reporting period. At 12.3 percent, Niagara Falls' level was even higher.

The study's findings about Buffalo are not surprising, considering Buffalo's finances became so sour the state in 2003 stepped in to put a control board in place to oversee its fiscal operations. But the grouping of Buffalo with other cities depicts just how dire the finances of Western New York's biggest city were during the study period.

The study found a direct correlation between population loss -- Buffalo's population dropped 10.8 percent from 1990 to 2000 -- and a community's fiscal stress levels. "The relationship between demographic decline and fiscal stress is quite evident," the report said.

But there are also some structural explanations relating to revenues for a city's stress level. Buffalo, for instance, relies on other governments for 36 percent of its revenues to help pay its bills, a risky source of funds if the other governments, such as the state, face their own fiscal problems; the statewide average is 23 percent.

Niagara Falls, Lackawanna and eight other cities were cited in the report for relying on other government funding for more than 30 percent of revenues.

Buffalo, during the study period, also had approached 89 percent of its legal taxing limit, compared with a statewide average of 49 percent. Meanwhile, Buffalo relied on sales tax revenues during the period for about 16 percent of its revenues, which is about the statewide average; but the city saw its sales tax revenues grow just 5 percent from 2000 to 2004, compared with 14 percent statewide.

Across the state, per capita spending by cities rose an average of 20 percent -- about double the inflation rate -- during the five-year period examined. However, revenues received by the state's cities grew at 18 percent.

Mayors gathered in Albany on Monday pressed for a plan by the Democratic-led Assembly to add $100 million to the $50 million hike proposed by Gov. George E. Pataki in aid to local governments. The Assembly plan would provide for an across-the-board increase for the localities of at least 11.8 percent on top of the 11 percent increase the governor proposed in his 2006 budget plan.


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