DiNapoli: Fiscal Stress May be Looming for Glens Falls
Risks Include High Debt Costs, Decreased Reserves and Low Cash Ratio
The city of Glens Falls’ financial condition has declined due to burdensome debt costs, the subsidization of a downtown civic center and expenses that outpace revenues, according to a report issued last week by State Comptroller Thomas P. DiNapoli. The report, part of DiNapoli’s fiscal stress initiative, is the latest in a series of fiscal profiles on municipalities across the state.
“The city’s financial struggles are making it harder to maintain needed services, avoid tax increases and keep the budget in balance,” said DiNapoli. “But city officials are working hard to turn things around and have already consolidated several city functions and combined services with Warren County. I urge Mayor Diamond to continue to make the difficult, but necessary, budget decisions that will help revitalize his city’s financial future.”
“We will put an increased emphasis on shared services and consolidation with Warren County, with the idea of improving our financial position and easing the burden on the tax-paying citizens of the city of Glens Falls,” Mayor John Diamond said.
DiNapoli’s report noted, over the past decade, Glens Falls’ revenue has not kept pace with expenditures. From 2002 to 2012, the city’s expenditures grew by 4.5 percent annually, higher than the 3.3 percent growth for all cities in the state. By comparison, the city’s revenues increased only 4.1 percent.
Compounding this problem, the Glens Falls Civic Center has become increasingly onerous to city finances. In recent years, the city has spent roughly $600,000 annually in subsidies, nearly 2 percent of its annual budget, for the civic center. To alleviate the burden, the city is offering the civic center at public auction in August 2014.
Although the city has tried to cut costs by consolidating a number of government functions, including police dispatch services, Glens Falls is now operating with minimal fund balance and an extremely low cash ratio.
At the end of 2012, Glens Falls’ available fund balance stood at $600,000, or 3.7 percent of expenditures, much lower than that of the median city in New York (9 percent). The city had year-end cash balance that barely covered its average monthly expenditures during 2012.
Glens Falls, however, does have a number of positive socio-economic factors working in its favor.
Thanks to a stable and diverse range of employers, the city’s median household income ($45,533) is higher than that of the median city ($38,913). The city’s child poverty rate of 15.9 percent is lower than the statewide rate of 21 percent and noticeably lower than the median city rate of 28.4 percent. In addition, the population in Glens Falls has increased 2.4 percent between 2000 and 2010.
The Comptroller’s fiscal profile of Glens Falls also noted:
- The city’s debt per capita ($3,056) is more than double that of the median city ($1,385);
- Debt service as a percentage of revenues is 14.9 percent, compared to 8.7 percent for the median city;
- State aid accounts for 10.4 percent of the city’s revenues, lower than the average of 18 percent for all cities in the state;
- Taxable full value of property in Glens Falls increased by a total of 58 percent from 2003 to 2013, surpassing the 33 percent total growth for all cities; and
- The median home value in Glens Falls is $152,900, more than the median city value of $102,300.
Previous fiscal profiles issued by DiNapoli’s office include: Albany, Binghamton, Buffalo, Colonie, Elmira, Gloversville, Middletown, Niagara Falls, Plattsburgh, Rochester, Rye, Salamanca, Syracuse, Utica, Watertown, White Plains and Yonkers.
The Comptroller’s fiscal stress initiative has included the creation of an ‘early warning’ fiscal stress monitoring system for municipalities and school districts.
Based on financial information provided to DiNapoli’s office by local communities, the Comptroller’s system evaluates local governments on nine financial indicators and creates an overall fiscal stress score. Indicators include fund balance, cash-on-hand and patterns of operating deficits. The scores are used to classify a local community as being in “significant fiscal stress,” “moderate fiscal stress,” “susceptible to fiscal stress” or “no designation.” The system also evaluates communities relative to environmental stress factors such as population trends, poverty rates and property values.
To date, DiNapoli’s monitoring system has identified a total of 142 municipalities in some level of fiscal stress. This includes 16 counties, five cities, 18 towns, 16 villages and 87 school districts.
The city of Glens Falls is listed in the no designation category, but its score fell just short of the ‘susceptible to fiscal stress’ category.
For a copy of the Glens Falls fiscal profile, visit:
www.osc.state.ny.us/localgov/pubs/fiscalprofiles/glensfalls.pdf
For more detailed information about Comptroller DiNapoli’s fiscal stress monitoring system and to view reports related to local government fiscal stress visit: http://www.osc.state.ny.us/localgov/fiscalmonitoring/index.htm
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