There are 25 governments in fiscal stress in New York state — none in Chautauqua County and, surprisingly, not Jamestown, which the comptroller noted earlier this year has exhausted its constitutional tax limit.

The only area municipalities listed as susceptible to fiscal stress are the towns of Little Valley and Dayton in Cattaraugus County.

As for Jamestown, while it cannot raise taxes because the city has exhausted its constitutional tax limit, the city has generated surpluses over the past three years of $849,340, $1,851,368 and $2,257,197, bringing its total fund balance to $3,300,904. Because Jamestown hasn’t assigned much of its fund balance to pay for spending, and because the city has only had one year of operating deficits in the past three years, its finances raise no official worries with the state Comptroller’s Office in the fiscal stress rankings. In fact, the financial indicators for fiscal stress have gone down in each of the past three years.

“I want to make clear for the record here that we are making good strides,” said Mayor Sam Teresi. “There are categories in the fiscal stress exercise that we rightfully score well in — cash liquidity, cash in reserve, a lot of that is because of the public utilities that we own, our water and electric divisions in part help to improve the picture of our cash in reserves and cash liquidity.”

DiNapoli’s monitoring system, implemented in 2013, evaluates local governments on financial indicators and creates fiscal stress scores. Indicators assess year-end fund balance, cash-on-hand, short-term borrowing, fixed costs and patterns of operating deficits. The system also evaluates information such as population trends, poverty and unemployment in order to establish a separate “environmental” score for each municipality which can be used to help describe the environment in which these local governments operate.

“Nearly six million New Yorkers are living in a community struggling with fiscal stress. My Fiscal Stress Monitoring System is designed to keep the public informed about the factors impacting local governments’ financial health,” said DiNapoli. “For those in fiscal stress, effective long-term planning is critical for charting a better path. These municipalities should use the tools my office provides and engage the public in those difficult, but important, discussions about community priorities.”

EVIDENCE OF STRESS

While the comptroller’s office calculation does not place the city in the fiscally stressed category, there is plenty of evidence to suggest the city is having financial troubles.

First and foremost is the city’s exhaustion of the state’s constitutional tax limit. For the past two years, the city has been unable to raise taxes because it has reached the state limit. The constitutional tax limit is computed by multiplying the value of taxable real property by a constitutionally prescribed percentage. The specific percentage ranges from 1.5 to 2.5 percent and depends on the type of local government. Municipalities exceeding the constitutional tax limit can have state aid payments withheld in the amount the municipality exceeds the limit.

“The city of Jamestown represents one of the most serious CTL situations statewide,” DiNapoli wrote in an August report. “As of 2018, the city has levied 100 percent of its Constitutional Tax Limit for two consecutive years and has been over 90 percent exhausted since 2011. Additionally for Jamestown, the CTL was a more limiting factor than the 2 percent tax cap and prevented the city from levying the full amount allowed by the tax cap law. The city has instead relied on additional state assistance to head off more severe budgetary difficulties.”

Not including the constitutional tax limit as part of the fiscal stress rankings is the issue Mayor Sam Teresi takes with the rankings. The mayor said the rankings are a useful tool for municipalities to consider when evaluating their finances, but that the fiscal stress rankings are incomplete without taking into account a municipality’s ability to raise its own revenue.

“My position is we think that the report has indicated there is some limited stress in certain areas,” Teresi said. “But if you read down the report more it indicates we’re not even in moderate fiscal stress. We think in the categories it measures us on it was an accurate portrayal. Unfortunately, they chose not to include in their measuring the one category that we think is the mother of all indicators of fiscal stress, and that’s the percentage of the constitutional tax limit in play. If they would include that as part of their exercise, I think it would lead to a different conclusion about the city of Jamestown to be honest with you and it would be a better indicator and a better measuring tool for everybody across the state.”

One of the reasons the constitutional tax limit is important as a tool is that it would appear, for outsiders looking at DiNapoli’s fiscal stress report, that Jamestown has the ability to take on new projects and new contracts. The only way the city can raise new revenue is either sales tax, which relies on outside forces, or state and federal aid. For the past three years, New York state has appropriated roughly $1 million in additional aid to the city to help balance the city’s budget.

While Jamestown is not listed as being in fiscal stress due to its fund balance, credit rating and small amount of debt, the city receives more worry from the Comptroller’s Office for its environmental indicators, in which the city’s population decrease, number of households receiving public assistance, median household income, unemployment rate and change in home values put the city in significant environmental stress, the most serious of the comptroller’s four designations.

Jamestown’s change in population (-3.9%) is worse than all cities (-1.9%), cities in Western New York (-2.5%) and when compared to other medium-sized upstate cities (-2.2%), as are Jamestown’s percentage of households with public assistance. Jamestown has 34.5% of its households on a form of public assistance, while all cities in New York have a public assistance rate of 21.5%. Western New York cities have 24.8% of households on public assistance while medium-sized upstate cities average 23.3% of their population on public assistance. Jamestown (40.2%) also has a higher percentage of its population under the age of 18 and over the age of 65 than all other cities (36.5%), than Western New York cities (37.5%) and medium-sized upstate cities (35.4%).

Home values in Jamestown have only appreciated .9%, much less than the 8.9% growth in home values seen in Western New York cities or the 4.9% seen in other medium-sized upstate cities. Unemployment in Jamestown, at 9.1%, is still higher than all cities (7.5%), Western New York cities (7.7%) and medium-sized upstate cities (7.8%).

That all leads up to environmental stress of 50, much higher than the average environmental stress rankings for all cities (31.5%), Western New York cities (34.1%) and medium-sized upstate cities (32.9%).

WHY IT MATTERS

DiNapoli’s report wouldn’t matter much if the fiscal stress rankings were merely a diagnostic tool. But, the fiscal stress rankings made an appearance last year when the city was in the midst of binding arbitration with the Kendall Club Police Benevolent Association. Howard Foster, the Public Employee Relations Board arbitrator who wrote the binding arbitration award decision in 2018, noted the testimony of Kevin Decker, a witness for the Kendall Club, who noted the city’s low fiscal stress score from the state comptroller as part of his testimony that the city has the ability to give raises to the city’s police officers. Decker’s testimony was part of the reasoning Foster used to determine that the city has the ability to pay more money to its police officers.

The city is appealing that ruling.

“If you don’t throw in key factors like the constitutional tax limit percentage in play, it can send out a false sense of security and a wrong message as to the overall fiscal health of the community,” Teresi said. “The overall fiscal health of our community is improving, as evidenced by the fact that we had three surplus budgets in a row and, as the budget is released next week, there will be good signs and indicators. But we’re nowhere near out of the woods yet and somebody shouldn’t be taking this in an overly literal fashion and to an extreme because it skews the accurate picture of what’s going on here fiscally. That can be downright damaging and dangerous. … Do you have the ability to raise new revenues? The answer is no. That’s a very important piece of information that is left out of the analysis that can be leading to misinterpretation and have serious implications going on down the line if people think we’re healthier than we are.”