Cuomo's Local Government Consolidation Proposal Draws a Mixed Response

Gov. Andrew Cuomo is renewing his push to consolidate the thousands of local governments in New York, and this time around he is making his proposal more enticing by linking it to a tax credit in his new tax cut package.

Cuomo, who made consolidation a policy goal as attorney general, took aim at the nearly 10,500 towns, villages, water districts, sewer districts and fire districts in New York, arguing that their sheer numbers are driving up property taxes and calling them “the next big problem for us to tackle.”

“As long as you have 10,498 things that you support every morning, you’re not going to make a significant difference in property taxes,” the governor said during a press conference to unveil his tax cut package ahead of this week’s State of the State address. “If you don’t make a significant difference in property taxes, you can’t fundamentally get the taxes of this state under control. You just have to reduce that bureaucracy. You can’t feed that many mouths every morning.”

The incentive for local governments to consolidate or share services, such as back office functions or procurement, is Cuomo’s proposed two-year freeze on property taxes. In upstate municipalities that have agreed to abide by the governor’s 2 percent property tax cap, homeowners would get a 2 percent tax rebate in the first year. In the second year, homeowners would only qualify for the credit if the municipality also submits a plan to consolidate or share services with their neighbors.

State officials said that the two-year “freeze” would cost about a billion dollars a year and would benefit an estimated 2.8 million taxpayers in upstate New York.

Yet it is unclear how exactly a local government would qualify outside of actually consolidating. Many already share some services, such as 911 call centers and emergency response. For municipalities that come up with other ways to share services, the governor did not provide an objective benchmark that they would have to meet, and his press office did not respond to a request for comment.

“What we’re going to want to see is real progress and numbers,” Cuomo said at the press conference when pressed for more details.

The lack of specificity left state lawmakers waiting to see the final plan or offering cautious support. Outside of the Legislature, the idea drew opposition from both the right and the left.

E.J. McMahon, president of the conservative-leaning Empire Center for Public Policy, is a supporter of the 2 percent tax cap that is already in effect, but he doubted whether the consolidation or service-sharing plan that municipalities would have to submit would be workable and dismissed the proposal as a “gimmick.”

“Ultimately, spending a billion dollars on this so-called freeze is, in terms of its fiscal impact, like setting fire to a billion dollars so everybody in the Capitol can stand around and warm their hands in it,” said McMahon.

The proposal is also likely to meet with opposition from unions representing local government workers. Steve Madarasz, a spokesman for the public sector union CSEA, said that it would hurt municipalities that are already struggling by pressuring them to cut their workforce and reduce services. The loss of jobs, he argued, would harm local economies.

“Every time that issue has come up and it’s gotten to a vote, it’s been voted down by localities, because people want their local services,” Madarasz said. “They like the services that they’re getting, and they don’t want to lose the control over it. To tie that into the tax relief is just more political rhetoric and denies the reality of what localities are actually facing and the likelihood that people will actually see the relief—but it makes a nice slogan for the re-election campaign.”

Other obstacles loom as well. Stephen Acquario, the executive director of the New York State Association of Counties, said the governor’s proposal was promising, but that it should be part of a broader discussion that includes more mandate relief for local governments. Acquario also noted that state regulations prevent the sharing of certain services, including workers’ compensation and health insurance, a significant cost driver.

“There is no reason why a county should not be authorized to reach out to towns, villages, cities, school districts and centralize procurement of health insurance for all of the local governments within its jurisdiction. We can’t do that,” he said. “That is just one example of the problems where the state has barriers to reform to save the local taxpayers money.”

With consolidation likely to be difficult politically, the emphasis may shift to shared services, a point that Cuomo acknowledged.

"I support consolidations. I think if you said to the taxpayers of most districts in this state, I know you like to have your name and your identity. Is it worth $2,000 a year to have your name and your identity? They would say, change my name.”

McMahon countered that any savings would be paltry.

“There is no suggestion or evidence anywhere that anyone anywhere in New York state will save anything close to $2,000 from any merger. Not even a fraction of that,” he said.

With reporting by Matthew Hamilton