Are Detroit’s Problems Similar To New York?
Can Detroit’s problems inform what’s happening here in New York?
Yes and no.
That’s the general sense I got speaking with budget experts and financial watchdogs when it comes to struggling local governments and whether there are any parallels between the Motor City’s bankruptcy and the troubles facing upstate cities like Rochester, Syracuse and Utica.
From my story that aired last night on Capital Tonight:
Detroit last week became the latest and largest city to declare bankruptcy in American history. That distinction however nearly fell on New York City in the 1970s.
“Certainly, had New York City slipped into bankruptcy, it would have been devastating for the entire state, probably for the entire nation,” said State Comptroller Tom DiNapoli.
The nation’s largest city and financial center going bankrupt seems unthinkable in 2013. But it was a real possibility more than 30 years ago until state and city officials worked to resolve the crisis through a control board and massive bonding plan.
Former state Senator Seymour Lachman, now the director of Wagner College’s Carey Center said it was then-Gov. Hugh Carey’s ability to seek compromises with labor and business that drove the success.
“He and his best and the brightest team of assistants were only able to do that because he said we’re all going to give up something,” Lachman said.
Lachman is the author of “The Man Who Saved New York” — a book chronicling Carey’s efforts to stave off a bankruptcy filing for the city.
But is New York prepared for the next local government on the verge of bankruptcy? Cities like Rochester, Syracuse and Utica face similar problems that Detroit is saddle with — a shrinking tax base and population combined with soaring costs for pensions and public services.
At the same time, fiscal control boards have become politically unsavory options, especially for mayors who would lose broad control over their city’s finances.
“There certainly are situations that are similar to Detroit, but not yet as severe,” said EJ McMahon, Empire Center for NYS Policy.
McMahon also points to affluent communities like Rockland County and Long Beach that face significant budget problems due to bad decisions from local officials. Cuomo this year pushed for a new restructuring board to help local governments work through their budgetary problems.
Last year Cuomo successfully pushed through a new, less generous pension tier over the opposition of public-sector labor unions.
But McMahon says the state’s efforts haven’t gone far enough.
“Governor Cuomo’s creation of what he calls a local financial restructuring board seems to be a way to put off confronting these problems and put off creating these types of mechanisms to really force change on the local level,” said McMahon.
DiNapoli disagrees. Combined with the governor’s restructuring board, which he sits on, and an early warning system for fiscally distressed communities, DiNapoli said state officials hope to avoid any municipalities officially going broke.
“I think we need to look at how we can coordinate these different efforts in a positive way because none of us want to see the failure that would be represented by a community feeling they have to go into bankruptcy,” said DiNapoli.
|Print article||This entry was posted by Nick Reisman on July 23, 2013 at 12:47 pm, and is filed under NYS Budget. Follow any responses to this post through RSS 2.0. Both comments and pings are currently closed.|