Finance

California, New York Eye Greater Fiscal Scrutiny Over Localities

California and New York are considering heavier oversight of their financially troubled cities, according to a Stateline report. Bill Lockyer, California’s state treasurer, wants to create a system that would monitor local finances and issue a warning to flag cities and counties when their fiscal situation becomes troubled. New York’s comptroller, Thomas DiNapoli, wants to score cities based on their financial strain, according to Stateline.
by | December 17, 2012

California and New York are considering heavier oversight of their financially troubled cities, according to a Stateline report.

Bill Lockyer, California’s state treasurer, wants to create a system that would monitor local finances and issue a warning to flag cities and counties when their fiscal situation becomes troubled. New York’s comptroller, Thomas DiNapoli, wants to score cities based on their financial strain, according to Stateline.

Cities in New York have collectively not spent within their means in recent years. According to a report DiNapoli issued in September, 61 New York cities have combined t increase their spending by $2.7 billion since 1980 but revenues went up just $2.1 billion. In California, three cities – Stockton, Mammoth Lakes and San Bernadino – have filed for bankruptcy while nine others have declared financial emergencies in recent years.

As it stands now, states have to wait for cities to ask them for help. And sometimes that request comes too late.

“Cities are like the famous line from Greta Garbo, you know, ‘I just want to be left alone,’” Peter Detwiler, a longtime finance staffer in the California Legislature, told Stateline. “We’re terribly decentralized in California. We love it that way.”

Lockyer said he’s not proposing a control board that takes over city finances, as has been done in Washington, D.C. and Philadelphia. And California would not seek to bail out cities as the state has its own financial woes. But it would allow the state to keep tabs on localities’ financial health and to offer help or advice when the state sees signs of strain.

New York has a more hands-on approach than its counterparts. In 1975, it helped New York City avoid bankruptcy by advancing it money and setting up an independent corporation to that would sell bonds backed by the state. The state has also he state has set up oversight boards for the cities of Buffalo and Troy, and Erie and Nassau counties.

As localities already send reports to the comptroller throughout the year, DiNapoli is proposing using that data, adding nine financial indicators and creating a distress scoring system.

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