Reflections on Rye – Outsourcing the Deficit
 
– By Warren Ross –

The good news is that Rye has dodged a budgetary bullet. The bad news: that it doesn’t make up for many previous cuts. The topic: New York State revenue sharing.
Let’s start with the good news. Earlier this year, David Paterson, our accidental Governor, called the Legislature back for a special summer session to cope with an exploding State budget deficit. As part of a menu of unpleasant options, he suggested a six percent cut in what used to be called revenue sharing with local municipalities and is now called AIM.  As the New York Conference of Mayors pointed out, such a cut would have blown “significant holes” in municipal budgets, including Rye’s. 
Fortunately, the Legislature found this particular item in the Governor’s menu not to its taste and voted to leave the appropriation untouched for this year – making no promises about next year. Also still up in the air is whether there will be a cut in State aid for highway improvement. Meanwhile the County has been informed that funding for the State Office of Children and Family Services is being cut, with a likely impact on either County taxes or services, or maybe both.
In 1990 we were not so fortunate, which accounts for the bad news: that beginning that year revenue sharing was cut substantially and has been shrinking ever since.
Possibly because it was my first year as mayor and not yet inured to unpleasant surprises, I have a vivid memory of our having to scramble to balance the budget for 1991. What made the cut particularly painful was the timing. Because Rye is on a calendar fiscal year, we adopted our 1991 budget late in 1990, based on promised State aid amounting to roughly ten percent of our revenue. Then, unexpectedly, the Legislature, still working on the ’91 State budget and faced with a deficit, slashed our appropriation by $128,000. That left us with the choice of making cuts of our own, or raising the real estate tax rate we already adopted.
Should we have known better?
Even in retrospect, it’s hard to see how we could have, because the whole premise (and promise) of revenue sharing was that it should be reliable and predictable. The system was adopted in 1970 to take the place of year-to-year special purpose appropriations, which made it hard for municipalities to plan ahead. There was even what was called a permanent statute that specified the formula on which revenue sharing was to be based, tying the amount to that year’s State income tax revenue.
Well, the Albany definition of reliable and predictable turned out to mean that each year the Legislature overrides the “permanent” statute to meet its own budgetary needs. Since revenue sharing peaked in 1988-89 at nearly $1.1 billion, it has not even kept pace with either inflation or growth in the State budget. In fact, back in 2005, the then State Comptroller reported that while inflation had increased by more than 65 percent since 1989, the money shared with the municipalities had actually decreased by about 26 percent. Which is why this year help from the State makes up 4.4 percent of Rye’s total revenue – less than half of what it used to be.
It’s as if parents made up for their profligacy by cutting their kids’ allowance. Just another example of  how dependent supposedly autonomous local communities are on the whims of the Legislature.
My thanks to City Comptroller Michael Genito for his help in tracking the numbers, and to former City Manager Frank Culross for refreshing my recollections.