Thomas DiNapoli

If you ask state Comptroller Thomas DiNapoli, not everyone is leaving the state, but enough taxpayers are moving elsewhere so that officials need to be cautious when it comes to budgeting.

DiNapoli shared his thoughts during a wide ranging interview with members of The Post-Journal and OBSERVER following his visit Friday to the Chautauqua County Chamber of Commerce’s annual meeting.

This is the second time DiNapoli visited the papers’ editorial boards in the last two years. His visit lasted around an hour, where he discussed a host of topics and answered questions.

An elected Democrat who just won re-election in November, DiNapoli started the conversation by discussing population loss. “A lot of folks and critics say everybody’s leaving New York. Well, not everybody’s leaving New York. On the other side though, too many folks on my side (Democrats) don’t realize that some people are leaving and that we continue to have a net migration out,” he said.

His comments came 24 hours before he publicly released his report “Taxpayer Movement during the pandemic: Comparing 2020 and 2021 to pre-pandemic baseline.”

In his report, as well as during the interview, DiNapoli noted that when it comes to residents who pay income tax, the most likely to have left in the last few years were those who earned between $100,000 and $500,000, which DiNapoli classified as “upper middle income” as well as people who earned less than $50,000 a year.

The year 2020 was the highest, with 41,366 upper middle middle income people leaving and 35,216 lower income people leaving. By 2021, those numbers dropped, but the state still saw 15,613 upper middle income people leaving and 12,778 lower income people leaving. Those numbers topped those who earned $50,000 to $99,999 and people who earned more than $500,000 annually.

Trying to figure out the exact reason why people leave, DiNapoli admitted, is difficult to pinpoint. “Some people leave because of taxes, some people leave because of crime, homelessness – these are big issues in the city – cost of everything, cost of housing,” he said. Other factors include family, marital status and career decisions.

But DiNapoli noted that personal income tax is New York’s largest revenue source. Recognizing this, he said officials need to be cognizant when they do their spending plans. “I understand folks don’t like cutting programs or spending less but the answer is not always ‘Whatever we’ve been spending is all valid, therefore let’s raise taxes to pay more.’ Of course when you don’t want to raise taxes, everybody wants to borrow more money but we’re so heavily indebted as well,” he said.

Instead, DiNapoli believes New York needs to be smarter when it comes to spending. Medicaid, for example, is an area where his audits often show waste.

DiNapoli also noted how SUNY Fredonia is cutting programs to “rightsize” what it offers, since enrollment has dropped 40% in the last decade. It’s not the only state college making these types of decisions. “Overall the SUNY system is down. Nobody sees a quick reversal of that so you’re going to have to rightsize the whole system, but do it carefully,” he said.

TAX RESERVES

Last month the Chautauqua County Legislature passed its 2024 budget plan with 13.6% remaining in its unobligated fund balance, which totals around $37.7 million. The county’s own policy calls for a reserve fund balance between 5% and 15.%

When County Executive PJ Wendel proposed the budget, he cut the tax rate from $7.80 to $6.91. It was the largest cut during his tenure.

Still, the Democratic minority caucus called for another $1 million to be applied to lower the tax rate. “The state comptroller recommends and is satisfied with county government having a ‘fund balance’ or ‘slush fund’ of 5% of county revenues or about $13 million. This county government has a ‘slush fund’ of about 13.9% of county revenues, or over $37 million, because of overtaxing the residents of Chautauqua County, not because of ‘conservative’ governing of the county,” Legislator Susan Parker said in late September, shortly after the budget was proposed.

DiNapoli was asked about Parker’s statement and if he believes Chautauqua County should lower its reserves.

He said he often gets asked about what municipalities’ fund balances should be and generally believes that is something local governments should determine, not the state. “We don’t have a policy on a hard and fast number. From my perspective, a range from 5-15% is not unreasonable,” he said.

According to DiNapoli, the state’s reserves are 16%, which is higher than Chautauqua County.

By comparison, school districts can only have 4% in undesignated reserves. The difference is that the state legislature passed a law requiring school districts keep their reserves at 4% maximum, but there are no laws regulating reserves for municipalities.

Personally, DiNapoli would not object if the state legislature raises the 4% reserves for school districts to something like 6%, but the way the law reads now, his office has and will continue to call out school districts that have their reserves higher than 4%.

DiNapoli said his office audits every school district in the state on a rotating basis. They do audit counties, villages, taxes and other taxing entities, however they focus on school districts more because they are the ones that have the most impact on property taxes.