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Fiscal problems widespread in state Comptroller's report notes taxing limits

Local governments across New York face mounting fiscal problems despite increased state aid, according to a recent report by the state comptroller's office.

Growing budget gaps, shrinking population bases and rising health insurance costs have contributed to what the comptroller's office described as a "dismal" fiscal outlook for many local governments.

Compounding the problem, the comptroller's office said, is that some cities are alarmingly close to their constitutional taxing limits. For example, Buffalo is at 92 percent of its tax limit, while Niagara Falls and Lackawanna are at 97 percent.

The annual report on local governments dissected data from more than 4,200 municipalities. Despite receiving large increases in state aid, additional school aid and a cap on local Medicaid costs, many municipalities face long-term fiscal woes, the comptroller's office warned.

Deputy Comptroller Mark Pattison, who heads the department's Division of Local Government Services and Economic Development, said increases in state revenue sharing to municipalities have not kept pace with inflation.

Even with the large increases in aid included in this year's state budget, the report said, local governments only received half of what they received in 1989 when adjusted for inflation.

The report also red-flags many counties' rising dependency on sales tax revenues.

Pattison told The Buffalo News the report underscores the need for local governments to continue looking for ways to save money and spur economic development.

"Systemic change needs to occur," Pattison said. "Some of it is at the state level. Some of it is at the local level."

For example, Pattison said municipalities should pursue shared-services agreements and in some cases consider outright consolidations of certain operations. He said local and state leaders also might want to look at "outmoded municipal structures" and, in the long term, weigh the pros and cons of expanding the boundaries of some municipalities.

The findings in the comptroller's report echo some concerns raised earlier this year by the state control board that monitors Buffalo's finances.

"A lot of municipalities have been struggling," said Dorothy A. Johnson, the control board's executive director, who spent 14 years in the state Budget Division.

"The pressures are increasing. What we're seeing in Buffalo seems to be the tip of the iceberg."

The city control board believes the state has two options: either provide municipalities ever-increasing pots of aid or revise state laws that they argue burden local governments with unreasonable fiscal pressures.

In particular, the panel has been lobbying for changes in labor laws, including the use of binding arbitration.

e-mail: bmeyer@buffnews.com

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