Stress ratings are deceiving
In theory, state Comptroller Thomas DiNapoli’s fiscal stress rankings are a great idea.
DiNapoli’s office reviewed 2012 financial information for the state’s 1,607 municipalities and then ranked them in four categories – no designation, which means the municipality is facing no fiscal stress; significant, meaning that there’s a problem now; moderate, meaning that there is some trouble now and could be more; and susceptible, meaning that there could be a problem depending on what happens, including things out of the government’s control.
The higher a municipality’s score on DiNapoli’s scale, the more likely it was the municipality would have financial problems.
State officials plan to use the rankings as a guide to help municipalities before they are too far gone to save.
If only DiNapoli’s system worked as well as he had hoped.
Despite the high taxes in the state, only 24 of New York’s 1,607 local governments, a whopping 1.5 percent, are classified as facing any sort of fiscal stress. Six municipalities are listed as significant, with six more listed as facing moderate stress and 12 listed as susceptible to fiscal stress.
The state Comptroller’s Office recently issued a report noting Fulton County’s ratings were financial and environmental indicators were 19.2 percent and 14.2 percent, respectively, which puts it on the lower end of the fiscal stress scale. Environmental indicators refer to such criteria as poverty, unemployment rates and reliance on aid. That is actually the key flaw in DiNapoli’s system.
The fiscal stress rankings consider a municipality’s year-end fund balance, operating deficits, cash position, use of short-term debt and fixed costs. Consideration of taxation is only included in the environmental rating.
So it appears, as far as the state is concerned, as long as governments run a surplus each year and show they can pay their bills, they aren’t under fiscal stress. A municipality’s taxes and fees can increase 5 percent a year and the population can drop every year, but that community won’t show signs of stress in DiNapoli’s rankings.
An outsider who knows nothing about New York state would look at DiNapoli’s fiscal stress rankings and think everything was fine.
Those of us who live in the real world know differently.