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As Cuomo Banks on Federal Funds, Localities Grow Nervous

New York counties face spending cuts totalling $163 million from school districts, libraries, nonprofits and human services for low-income families if the multibillion federal aid that Gov. Cuomo is expecting doesn’t happen.

(TNS) — Receive from above, take from below. Such is the essence of one theme of the 2021 state budget plan unveiled last week by New York Gov. Andrew M. Cuomo.

The Democratic governor's budget plan has a basic premise: Red ink will be washed away only if his request for a bailout from the federal government happens.

Cuomo's new budget assumes the federal government will give New York at least $6 billion over two years as part of a broader $1.9 trillion Covid-related stimulus package being negotiated by Democratic President Joseph Biden and the Democratic-led Congress.

Even if he gets that amount from Washington, Cuomo is still proposing to reduce considerable state spending from localities — ranging from school districts and cities and villages to libraries and nonprofit agencies that provide a range of human services for low-income New Yorkers. Counties alone would face $163 million in state funding cuts, according to the New York State Association of Counties.

If Cuomo gets his dream bailout from Washington — $15 billion — his budget says those cuts to localities "may" go away or be reduced.

It's a time of worry for localities across the state, which, like Albany, have had to deal with falling tax revenues and a higher demand for services from the impact of the Covid-19 pandemic that has killed more than 40,000 New Yorkers the past 10 months.

The reductions, according to various state budget documents, include:

—Aid and Incentives for Municipalities. It's one of the chief unrestricted funding pots from Albany to cities, towns and villages that localities use to fund an array of expenses. A few years ago, it totaled about $720 million. Cuomo this year wants to fund the program called AIM at $612.5 million, and individual municipalities would face cuts ranging from 2.5 percent to 20 percent depending on their reliance on AIM funding.

—Aid to Localities. This is a wide-ranging portion of the budget that helps localities pay for everything from education to social services to transportation. Last June, Cuomo began withholding some of those funds promised last spring — nearly $300 million, in all, by the end of December. The summertime plan was to withhold 20 percent of the fund's spending by the end of the fiscal year on March 31, 2021. Cuomo now says rising tax revenues from an improving economy has changed his mind: he'll cut 5 percent of Aid to Localities.

—CHIPS. That's the Consolidated Local Street and Highway Improvement Program, first established in 1981 by then-Gov. Mario M. Cuomo, the current governor's father. It helps pay for local road, street and sidewalk repairs and construction. Cuomo's budget plan for 2021 is to hold CHIPS funding flat, which localities say doesn't nearly keep up with inflationary costs of their expenses for worker salaries and equipment and supplies. Also not part of the budget: $65 million for road and other repairs damaged by extreme winter weather conditions felt in much of New York.

—Video Lottery Terminal payments. This is part of a deal made years ago that would have the state share part of the tax revenues it receives from racetrack-based video lottery terminal casinos. The idea was local "host communities," which include such entities as Hamburg and Erie County, should get the money because of local government service costs associated with the casinos. The new Cuomo plan: eliminate all those VLT payments to 15 "host" localities, except Yonkers, to save $9.3 million.

Other cuts to localities in the new Cuomo budget include 5 percent across-the-board reductions at libraries and local human service providers, and a $15 million cut for localities' code blue homeless programs. Community colleges face a state aid cut of $35 million.

Array of Funding Cuts

The pain will be real, local officials say.

Consider Hamburg. In 2019, it lost 20 percent of its AIM funding. That was about $275,000 a year. As a host community to a VLT casino, it also had been getting $869,000 in VLT revenue proceeds before cuts in 2020 that has current VLT payments totaling about $693,000 to the town. The Cuomo plan would cut the AIM payments to Hamburg by 20 percent and zero out the VLT payments.

"It just puts the entire burden on local property taxpayers," said Hamburg Supervisor James Shaw.

But localities are limited in how much they can raise in property taxes because of a state-imposed annual property levy cap. "The revenues have to be made up somewhere, or we have to curtail services or consider layoffs," Shaw said.

Shaw said the new Biden administration will simply have to help localities with a major stimulus plan. "Somewhere, there's got to be life jackets and rescue boats," he said.

Peter Baynes, executive director of the New York Conference of Mayors, said the state's improving tax revenue picture should allow Cuomo to send all the money withheld since June to localities — and not proceed with a permanent 5 percent cut of that money. With the AIM cut factored in, localities face a "dramatic impact" of reduced state aid amid rising Covid-related costs. Buffalo, for instance, would see a $12.1 million state aid loss under Cuomo's plan.

"This aid can and must be paid to avoid municipal service reductions and job losses throughout New York," Baynes said.

Buffalo Mayor Byron Brown said he is "optimistic" a large federal aid package will come to assist the state and city "to prevent significant cuts to our operations or services."

School Aid Confusion

Aid to 700 public school districts is the single-largest portion of the state budget. Cuomo wants to grow it by $2.1 billion to about $31 billion. But the state, under Cuomo's plan, would actually pay the schools $607 million less in the coming year than the current fiscal year. How can there be an overall increase, then? Washington is the fiscal solution, both in Covid-era special payments already made to New York schools and the hoped-for additional funding down the road.

The Cuomo school plan calls for canceling $300 million in claims made by schools for expenses incurred in past years. Cuomo also is seeking to eliminate various teacher training programs, saving $27.4 million, according to budget documents.

The New York State School Boards Association said the Cuomo plan is causing "a lot of unknowns and uncertainties" for schools. The chief unknown: How much more in state aid will Cuomo try to cut if Washington does not meet his bailout demands?

Two top education policymakers are raising alarms about Cuomo's approach. Regents Chancellor Lester Young Jr. and interim State Education Commissioner Betty Rosa issued a scathing assessment of the Cuomo budget and its heavy reliance on federal money to fund schools.

"While understanding the current fiscal realities our state is facing, we cannot balance the state budget on the backs of our students by forcing school districts to use federal funding to fill the holes left in their budgets by a decrease in state aid," the two officials said last week.

Any new federal infusion of funds to schools, they wrote, should be used as "one-shot" revenues to help districts pay for costs associated with the pandemic and student learning disruptions over the past 10 months and not as operational funding the state budget generally pays for day-to-day expenses. They noted direct state aid to schools is disproportionately hit compared with other areas in the Cuomo budget, and that $393 million in state reimbursements will be reduced for things like aid to BOCES, textbooks and transportation.

Robert Lowry, deputy director of the New York State Council of School Superintendents, has been involved in education budget issues for decades in Albany. "This is harder to explain than anything I recall in 30 years," he said of Cuomo's school budget plans.

Schools overall are getting a big funding increase. But behind the curtain is a heavy reliance on Washington for that hike, and federal Covid-related funds are not going to last. Then the question becomes: How can Albany ever expect to keep school funding going at the levels Cuomo is proposing when federal money goes away?

Cuomo: Many Positives

The Cuomo administration, in its budget documents, puts a different spin on the local government portions of the plan. It notes that there are new efforts to reduce state mandates on localities for certain services; maintenance of funding to help localities reduce duplicative services by sharing programs with government neighbors; and continuation of a program in which the state pays for cost increases in the Medicaid health insurance program.

The Cuomo budget, documents state, results in a "net positive" impact of $1.8 billion to localities, assuming the federal bailout money Cuomo is budgeting for. It also gives new sources of tax revenues, like local sales taxes on vacation home rentals and the ability for some to collect sales taxes if, as Cuomo wants, marijuana sales are legalized.

The New York State Association of Counties said it has concerns about the Cuomo budget, such as the ongoing $250 million diversion of county sales tax revenues for a fund earmarked for financially distressed hospitals and nursing homes. But, the group said, the governor did adopt a number of their ideas in his budget, like flexibility in jail staffing rules and giving counties the permanent authority to set local sales tax up to 4 percent without the need for periodic approval from Albany. 

If Cuomo and localities are on the same page, it is the need for a big money flow from Washington to New York's state and local governments.

"Without this aid, the governor said he will be forced to make dramatic cuts, which would impact county budgets, place new burdens on local taxpayers and jeopardize county health and human service programs for the New Yorkers most in need," the association of county leaders said.

(c)2021 The Buffalo News (Buffalo, N.Y.) Distributed by Tribune Content Agency, LLC.

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