Wednesday, May 1, 2013

Avoidance dance 2/21/13


Bashng Cuomo, Ducking Mergers

3

For Upstate mayors, scapegoating is easier than regionalizing

Next week in Toronto, a policy institute will host a session that every Upstate New York mayor, county executive, comptroller, and chamber of commerce leader should but probably won’t attend. The panel is called “Municipal Mergers in Montreal and Toronto: Is Bigger Better?” and it will feature economists, planners, and other people who know how to count the many ways in which those two cities crunched lots of squabbling little municipalities into big, successful, efficient, regional governments that have helped turn big urban economies into gigantic regional economies.
They’re polite enough to pose the issue of local-government merger and consolidation as a question, but there really isn’t any question about whether it has worked for the big cities. The only question remaining is how well it has worked for the medium-sized cities. (Hint: See answer number 1.)
Meanwhile, back in the land of permanent fiscal crisis, the mayor of Syracuse and the New York State comptroller are slamming Governor Andrew Cuomo for his new deal for the cash-strapped cities of the old Empire State rust belt. Cuomo, eager to clean up the devastation of Hurricane Sandy so that the economic engine of the state recovers, offered a deal to Buffalo, Rochester, Syracuse, Utica-Rome, Schenectady, and all those other Upstate cities that complain about their police, fire, and municipal-worker pension obligations. Cuomo’s budget wonks put forward an optional plan that would let these shrinking cities stretch out their employee pension payments, borrowing long-term to enjoy some short-term savings, on the very reasonable assumption that in coming years the tab for new employees that have new, less-generous benefit packages will cost less than today’s benefit plans.
“Gimmick,” the critics are saying. “Give us more money,” the mayors are saying. In response, Cuomo dispatched his lieutenant governor, former Rochester Mayor Bob Duffy, to tell recalcitrant mayors that they had a choice: Either take Cuomo’s offer or get a control board just like Buffalo has.
What Cuomo is not saying, at least not yet, is that the structural fiscal distress of Upstate’s cities, counties, and school districts has a Toronto solution, a Montreal solution, indeed, a New York solution: Hang together instead of hanging separately.

50 years of avoidance

Regional failure results when cities and suburbs are governed separately within urban regions. That’s because all those little self-ruling municipalities—former Albuquerque Mayor David Rusk called them “iron boxes”—work as hard as they can to steal taxpayers from one another, with the active connivance of the bankers and real-estate developers who make big campaign contributions to the politicians. Cuomo knew that the iron boxes were breaking cities, but he also knew that no governor can impose a new structure from on high. So what he did was to embrace two very centrist ideas: a property tax cap and an optional consolidation bill.
The tax cap was a political necessity, because the property tax—which funds school districts, cities, villages, towns, and counties—is everybody’s gripe. In places where the market value of real estate rises, the gripe is harder to sustain, because paying a lot of taxes on an asset that an owner can cash in is just a part of the deal that still favors the owner. Paying a growing share of income for taxes on a modest, non-appreciating asset—like a median-value $110,000 house in Erie County—is a harder deal to sell.
Everybody wanted to cap annual tax increases at two percent, so Cuomo got out ahead and embraced it. But with an irreducible cost of providing services, and some rising costs, some of these municipalities and school districts started feeling the pinch this past year. In the Buffalo area, the Kenmore-Tonawanda School district has been sounding the alarm that a combination of rising employee-benefit costs and shrinking enrollments would force service cuts. In Cheektowaga, the five separate school districts have been holding consolidation talks, because the price of going it alone—with five separate sets of school administrators and no sharing of high-cost services—is eating up budgets.
More than a decade ago, an Erie County executive candidate defeated a three-term incumbent by campaigning on consolidating the two largest Buffalo-area governments, the city and the county. Almost a decade ago, a Monroe County executive candidate was crushed for suggesting that Rochester needed to merge with Monroe County, so that there would be one big government, with one set of employees, with a single, county-wide tax base against which to spread the costs of employee salaries and pensions, and the rest of the cost of providing services. Since those campaigns, nobody in politics in New York State has talked about merging cities and counties. Incremental mergers of school districts are being discussed, but only a little: There are 28 school districts in Erie County, but only five of them are discussing any structural change at all.
The issue, by the way, is not anything fiscal or legal. As our draft legislation and legal research showed almost 10 years ago in Erie County, Article 1 Section 9 of the New York State constitution allows cities and counties to merge under what’s known as the “alternative” county law, with the resulting city-county merger resulting in a county-wide government, which is a logical way to organize things, since the next step—combining town governments into the county—would be a finger-snap.
The issue, of course, is that the status quo enriches some bankers, some developers, and some other politically connected folks who profit handsomely from keeping everything sliced up expensively, illogically, and inefficiently. Racism is a principal tool for separatism, but so is the suburban mentality of escape, and the urbanite tendency to regard suburbanites as irredeemable racists. Parochialism is not mandated by law, only by self-interested profiteers and their elected servants.

More crunch coming

But the crisis ahead may be too great even for the resilient, 50-year status quo of the developer-financier-politico class to endure.
The New York State comptroller surveys all the local governments. He publishes a “fiscal distress” monitor, and lots and lots of reports. The latest is entitled “Financial challenges facing local governments: Federal and state aid shrink as a share of revenues.” There’s nothing new here. Everybody in the governing business can recite the conclusions, if not the numbers, and here they are: Buffalo is so unable to pay its own bills that it has a fiscal control board; Syracuse is so unable to pay its own bills that its mayor wants a politically impossible escape from the rules that govern every other city, town, village, school district, and county; Utica and Rome are in free-fall; ditto every other Upstate urban entity except Rochester, which is scraping by notwithstanding the demise of Kodak.
That’s not news. What is new is that there is a governor in Albany who understands two issues. First, he knows that governments have the option of combining instead of going it alone. Second, he knows that he controls their bailout money.
Right now, Cuomo is fresh out of extra money, due to Hurricane Sandy. He has succeeded in negotiating new contracts with public employees. He also succeeded in creating a new pension tier, so that future public employees won’t have it so good.
Former Governor Mario Cuomo, like Malcolm Wilson before him and George Pataki after him, convened blue-ribbon commissions that all recommended that Upstate regions regionalize their local governments. On at least three occasions when Cuomo came to Buffalo promoting his consolidation legislation while attorney general, he told audiences that he was extremely supportive of the great preparatory work done by the city-county consolidation commission chaired by late UB President Bill Greiner.
Now we have the tax cap, the 50-year legacy of suburban sprawl without regional population growth in every single Upstate metro area, and every kind of technology, from customer-relations databases to just-in-time dispatches to remote GPS tracking devices, to enable and encourage efficient regional service delivery. Cuomo evidently got tired of telling local government leaders that they could restructure, merge, do shared services agreements, maybe even regionalize the way that Toronto, Montreal, Hamilton, and faraway, exotic places like New York City, Indianapolis, Louisville, or Nashville have. Now, one guesses, he’s waiting for some of these mayors and county executives to come to the realization that all the tools they need are at hand, requiring only the dawning recognition that they can’t go to the governor for money—but they might be able to ask him for some help.
Bruce Fisher is a former deputy executive for Erie County and currently director of the the Center for Economic and Policy Studies at Buffalo State College. His recent book, Borderland: Essays from the US-Canada Divide, is available at bookstores or at www.sunypress.edu.

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