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Local Pols Speak On Municipal Bankruptcies

LI relatively stable so far, but macro clouds still loom 

Local municipalities are among the areas hardest hit by the economic recession, and a handful have gone so far as to declare bankruptcy — although none yet in New York State. 


 At the Theodore Roosevelt Legislative Building in Mineola on Tuesday, Aug. 27, Sen. Jack Martins and State Senator Carl Marcellino held a public hearing entitled, “Fiscally Distressed Municipalities: Preparing for and Preventing Municipal Bankruptcy in New York.” 


The hearing’s purpose was to review state laws and state-imposed municipal finance oversight boards as they relate to fiscally distressed municipalities and take testimony from local community leaders on issues and possible initiatives. 


Fortunately, for Long Island villages, bankruptcy does not seem to be an immediately pressing problem. East Williston Village Mayor David Tanner, speaking not only as mayor, but as the recently elected president of the Nassau County Village Officials Association, noted that while our local governments are facing financial hardship, others are faring far worse.


“We’re very fortunate on Long Island because we are a satellite economy of New York City, where the economy is thriving,” he said. “Generally, the villages of Nassau County are fiscally healthy.” Communities upstate, where two similar hearings have already been held, are “teetering on the brink,” according to Martins. “It’s a wake-up call for all of us,” he said. 


The Buffalo hearing focused on control boards, state-mandated oversight committees that monitor a local government’s finances. In that respect, Buffalo is like Nassau. 


“Nassau County is another community that has a control board for the past 13 years,” Martins said at the Mineola hearing. “Today, we’re going to talk about the interfaces between Control Boards and local governments - what works, what doesn’t work – and perhaps better approaches to municipal insolvency.”


Steve Levy, former Suffolk County Executive and current president of Common Sense Strategies, a finance efficiency consulting firm, testified that the three main issues facing municipalities and local government in New York State are the rising costs of pensions and health care, plus disability fraud, especially among police and civil service positions.


“We need to start eliminating overtime when calculating the amount of pensions...We have people retiring and earning pensions that are over $100,000 a year,” he said. “This is starting to bankrupt local governments.”


Tanner said that tax collection has become a big hurdle for many local villages face.


“I want to talk about the need for assistance in collecting taxes,” he said. “There are some instances where municipalities have to sell tax liens. We’d like to develop more efficient ways of collecting taxes.”


Richard Ravitch, co-chair of the advisory board of the State Budget Crisis Task Force, testified that it is vital to help local municipalities to the point where they are able to meet their financial obligations and deliver the essential services they are charged with providing to citizens.