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Regional Archives The Altamont Enterprise, December 17, 2009
By Melissa Hale-Spencer
Local municipalities and school districts, like those across the state, are grappling this week with the governor’s announcement that December payments in aid from the state will be delayed. David Paterson made the announcement on Dec. 13, two days before the school aid payments were due.
“As the governor says, you can’t spend what you don’t have,” Matt Anderson, spokesman for the state’s Division of the Budget, told The Enterprise on Tuesday.
According to the Division of the Budget, a current-year deficit of $3.2 billion is forecast while the deficit reduction plan that the State Legislature enacted on Dec. 2 included only $2.7 billion in current-year savings actions. That leaves a gap of about $500 million.
The state comptroller has said the deficit could be more than $4 billion, making the gap even larger.
Paterson used a “certification provision,” included in the 2009-10 enacted budget, that governs local assistance appropriations, directing the Division of the Budget to withhold certification of local assistance payments for appropriations subject to the provision.
“This is the first time this mechanism is being used,” said Anderson, adding, “This is the first time there has been such a severe cash-flow crunch.” Asked on Tuesday if the move is likely to be challenged in court, he said, “I believe we’re on sound legal ground.”
On Wednesday, a coalition of education groups held a press conference announcing a lawsuit against the governor. The suit, brought by New York State United Teachers, New York State School Boards Association, New York State Council of School Superintendents, and the School Administrators Association of New York State, claims the governor, in withholding funds allocated by the State Legislature for school districts, acted unconstitutionally and illegally.
The governor ordered $750 million in reductions to scheduled December payments.
The Division of the Budget identified the biggest payments totaling $4.9 billion that the state was to make in December, including:
$2.3 billion to school districts for the STAR (School TAx Relief) program;
$1.5 billion in school aid payments;
$450 million in payments to cities through the Aid and Incentives to Municipalities (AIM) program;
$398 million in payments to counties for human services reimbursements; and
$247 million in payments to health insurers for state employee fringe benefits.
Municipalities and school districts were expected to receive payments for AIM and school aid by Dec. 15, and the certificates for those payments would each be reduced by 10 percent, according to the Dec. 13 announcement from the Division of the Budget
Certifications for payments for STAR, human services, and state employee fringe benefits, scheduled for later in the month, were to be reduced by about 19 percent. “The higher percentage,” the office announced, “reflects the significant uncertainties related to cash availability at the end of the month due to risks associated with potential receipts volatility.”
Asked if the payments will be delayed or never made up, Anderson said, “It’s our hope that, once sufficient revenue becomes available, we’ll make these payments.”
Asked if payments in months after December might also be delayed, Anderson said it would depend on “economic volatility.” He added, “Typically, January is a large revenue month for the state as bonuses come in from Wall Street.”
School leaders react
Leaders of local school districts and towns expressed frustration on Monday and Tuesday about both the delays in payment and also about the lack of information on exact amounts to be withheld.
“Sadly, we don’t have a clear indication,” said John McGuire, Guilderland’s superintendent of schools, on Tuesday afternoon. “No district-specific information is available.”
Expected payments vary widely among school districts because of the irregular schedule for awarding aid.
Based on the 10-percent reduction announced by the governor, Guilderland, which has an $85 million budget this year, was figuring on just under $105,000 being withheld in December.
Late in the day on Tuesday, Anderson said, “We’ve just put out a run for the Dec. 15 payments.”
McGuire reported Tuesday evening that Guilderland had just gotten the numbers from the state comptroller’s office and the reduction was greater than expected the excess cost aid reduction is $101,161.80; combined with a lottery aid reduction of $7,192.36, Guilderland will be missing $108,354.16 in aid this month.
McGuire said that Guilderland was fortunate, through years of prudent management, not to be in a position to have to borrow funds to meet expenses. “That adds to your debt,” he said.
He also said, “If we use part of our rainy-day funds, part of our fund balance, it may not be available for other emergencies.”
There are no plans now to cut programs or services, McGuire said, concluding, “I want to reassure the community we’re monitoring this every single day.”
Kevin Callagy, Berne-Knox-Westerlo’s new business official, said on Tuesday that BKW’s general aid payment was reduced by 10 percent.
“We were expecting about $200,000, and we’re getting about $180,000,” he said of general aid. “That’s supposed to be deposited tomorrow.”
BKW will receive about $314,000 in excess cost aid, about $35,000 less than scheduled, and its lottery aid will be reduced from $29,000 to $26,000.
“All told, the good news is, we should be receiving tomorrow” the state aid, said Callagy. According to the Division of the Budget, BKW was slated for about $578,000 in December aid, but will actually get about $520,000.
“The bad news is that $57,000 that we had budgeted for has been delayed, and I use the word ‘delayed’ because that’s what I’m hoping for,” said Callagy. “That battle still needs to be fought.”
BKW, which has a $20 million budget this year, is “looking hard at our spending right now, trying to do only the essential things,” he said.
How the district responds will depend on if the reduction is a delay or a cut, he said.
“I guess that’s what’s the frustrating part not knowing,” said Callagy. “Literally, for districts around the state, these monies were expected around this time, and we’re just getting guidance today.”
At Voorheesville, Assistant Superintendent for Business Sarita Winchell said Wednesday that the district, with a $22 million annual budget this year, had instituted an immediate spending freeze.
The district is losing about $22,500 now in state aid for December, and anticipates a $276,345 reduction, or 19-percent loss, in STAR funds, she said.
The district is unsure if the lost funds are a delay or a reduction. “That’s not clear,” said Winchell.
Voorheesville has $9.7 million “in the bank,” Winchell said, and she will analyze district spending to date to gauge the general fund.
The district has a good cash flow because it depends on tax money, she said, rather than state aid.
“We’re going to move ahead as if we’re losing the money,” she said.
Toll on towns
Several local towns escaped unscathed from the aid delays.
Guilderland’s supervisor, Kenneth Runion, said on Tuesday night that he had just been notified that Guilderland is getting all of its December aid but he is concerned about future funding of grants for the McKownville Reservoir project.
The town received five grants for the project $100,000 from the state’s Office of Parks and Recreation, $200,000 from the state’s Department of Transportation, two grants totaling $200,000 from the State Assembly, and $100,000 from Stuyvesant Plaza.
The $600,000 would turn the former McKownville reservoir into a pocket park and recreational area, and a 24-inch culvert that slows stormwater drainage, contributing to the frequent flooding on Route 20, would be replaced with a 36-inch culvert.
Runion had said earlier in the week, if there were a delay, the town would use some of its substantial fund balance to make up the difference and restore the balance when the state payments eventually came through. “We’d be closing our books out later in 2009 than normal,” he said.
New Scotland is not affected by the aid delay, according to supervisor Thomas Dolin.
Berne’s supervisor, Kevin Crosier, said on Tuesday that he didn’t yet know what delays Berne would face, but he felt the town would be able to handle the reductions.
“Obviously, I’m not happy about it,” said Crosier, “but, in the end, the town has a surplus, and has the capability to weather the storm. The real problem for municipalities is going to come next year with the big increase in state retirement.”
He also said, “A large portion of the town’s budget is based on sales tax revenue. That’s what hurts people the most.”
Supervisor Michael Hammond of Knox said, similarly, that he was not sure yet what the reductions would be, but that the town board would monitor the situation closely.
“We don’t know yet,” Supervisor Richard Rapp said on Wednesday of reductions for Westerlo. “Everything I’ve put in for, we got so far. What’s going to happen in the future, God only knows.”
Zach Simeone contributed information on BKW and the Hilltowns; Saranac Hale Spencer on the Voorheesville schools and New Scotland, and Anne Hayden on Guilderland.