State: City mending fiscal issues
GLOVERSVILLE – The city is experiencing higher rates of poverty and unemployment than other cities around the state, but its fiscal condition is getting better, said state Comptroller Thomas DiNapoli, who visited the city Wednesday.
A report released by DiNapoli on the fiscal profile of the city also shows the city receives less state aid on a per-capita basis than the average for other Mohawk Valley cities and cities in the state.
“Gloversville is struggling to cope with considerable economic challenges,” said DiNapoli. “Like many upstate New York communities, Gloversville operates with very limited financial flexibility and often struggles with difficult budget decisions. Mayor [Dayton] King and past city officials have been aware of these challenges and have worked hard to build a healthy fund balance and improve the city’s financial operations.”
The report shows weak growth in property values forced the city to implement a series of tax increases during the early part of the decade. The increases nearly exhausted the city’s constitutional taxing limit. In 2005, the city had virtually no available tax margin, the report stated.
The city, however, has held the annual growth in its expenditures (2.1 percent) below the growth rate of its revenues (2.6 percent) for the past decade, which has helped to improve its fiscal condition, the report stated. The city now sits at 93 percent of its constitutional tax limit with an available margin of $505,000, limiting its financial flexibility.
“It is important for people to understand the challenges that local governments are facing that drives the tough choices that have to be made,” DiNapoli said. “It is important for the public to be part of that process.”
DiNapoli said if the city should experience an increase in property values, the tax margin and the city’s ability to raise taxes could grow. However, if the property values begin to decline, officials might be forced to lower taxes to stay within the tax limit.
The comptroller’s report said compared to other cities in the Mohawk Valley and statewide, Gloversville relies more heavily on property tax revenues (42.3 percent) and charges for services (24.3 percent) and relatively less on state aid, sales tax and other revenues.
DiNapoli noted the city receives significantly less in state aid, mostly from Aid and Incentives for Municipalities, on a per-person basis ($175) than the average for Mohawk Valley cities ($288) or cities statewide ($258).
King said he and the city’s commissioner of finance will work with the comptroller and budget adviser to lobby the governor and state officials to get the city more state aid.
“If we have really been getting the short end of the stick, we are certainly going to try to change that,” King said this morning. “If we had an extra $1.7 million, which would bring us on par with the rest of the Mohawk Valley cities, we would be able to maintain our budget every year and decrease our tax limit to bring some relief to the property owners.”
The comptroller said in his fiscal profile the inability to raise revenue through higher property taxation severely limits the city’s flexibility to address unforeseen expenses and make infrastructure investments.
“With our infrastructure in the city being over 100 years old, that is going to go at some point,” King said.
DiNapoli said the difficulty the city has faced over the last several decades has been caused by the long-term population loss, which has limited the city’s economic growth. He noted that because the city’s industrial base has declined, the population has taken a hit as well, dropping 34 percent since 1950 to 15,665 residents.
The city’s unemployment rate was estimated at 13.5 percent from 2007 to 2011, much higher than the state’s average unemployment rate of 8.2 percent over the same period.
In addition, the median household income of $31,994 in 2010 was below the median city ($37,607) and statewide average of $55,603.
The city’s credit rating was upgraded in December 2011 by Moody’s Investors Service from Ba1 to Baa2, due in part to the city’s controlled expenditures and its fund balances.
City officials said they expect to finish the year with a surplus of about $500,000, meaning the city’s fund balance by the end of 2013 would remain at about $2 million.
A large part of that will be from the new Walmart Supercenter in the city. The store, which is due to open this year, is estimated to bring additional sales tax revenue of $600,000 to $800,000 per year and about $100,000 in property tax revenue.
However, the comptroller’s report said, if these anticipated revenues and savings do not materialize, the city may once again face difficult choices to ensure that its tax limit is not exceeded.
King said although Walmart will bring additional revenue, after 2015, additional revenue sources may not be available.
“The superstore will help, but we all know that will only be a short gap and we may be able to add some raises for city employees, but to decrease tax, I think we will have to do some revenue sharing with our sister city and the town of Johnstown,” he said.
He said he will meet with city and town of Johnstown officials next week to discuss the possibility and already has had discussions with the town about providing sewer and water to the town.
“We really have a lot in common and we have both learned that we need to work together to grow our economy here in Fulton County,” King said.
DiNapoli said sharing services and personnel “would bare more fruit more quickly in terms of saving money than getting in a prolonged debate about consolidation.”
DiNapoli said he has finalized a stress monitoring system or early warning system for the state that will identify communities’ level of fiscal stress.
“The revenue has been growing higher than spending and has allowed the leadership in the city to develop a fund balance, something we don’t often see in other communities,” he said. “[There have] been tough choices made by the mayor and council over time, but as we often say, even when there are tough choices, there [are] always better choices to be made. I think the current standing of the city is showing the benefit and the wisdom of those tough choices.”
Among other findings in DiNapoli’s report:
In 2010, 24 percent of families in Gloversville were living in poverty, more than double the statewide rate.
More than 13 percent of properties in Gloversville are vacant, leading to the median home values of $75,200 to be well below the $96,000 median for all cities in the state.
The city relies more heavily on property tax revenues (42 percent) than other cities in the state.
“I look forward to partnering with the comptroller and his staff to find new ways to minimize costs while still providing the services that residents of Gloversville expect,” King said in a news release.
Levi Pascher can be reached by email at firstname.lastname@example.org.