[NYAPRS Enews] Cuomo Issues $74 Million 'Withhold' from 12 Cities while Advocates Press Washington for COVID Relief

[Harvey Rosenthal]

NYAPRS Note: The broader NYS advocacy community including NYAPRS continues to advocate for US Senate backing for another federal COVID-19 package that provides significant funding relief for the states and their localities. While the HEROES bill approved by House Democrats includes $540 billion for the states and $375 billion for cities, counties and towns, the Senate has been very resistant and has delayed action until next month.
But state budget pressures are mounting exponentially and, accordingly, NYS Senate Democrats sent a letter<https://www.scribd.com/document/466823442/06-24-20-Letter-to-Senator-McConnell> this week to Senate leader Mitch McConnell calling on him to take action on the measure.
Governor Cuomo has previously indicated that without such relief, he will cut $8 billion in state aid which is expected result in a devastating 20% cut to the nonprofit sector.
While he has thankfully held off on those cuts, his Administration announced this week a plan to withhold a total $74 million from 12 cities (see below for details) with a hope that these reductions might not be permanent if tax revenues are large enough and federal funding is forthcoming later this year.
The withhold is not expected to effect the majority of behavioral health providers, since very few get direct funding from budgets from those 12 cities.
Nonetheless, all the more reason why NYAPRS and several of our colleague behavioral health provider groups are both pressing Senate Republicans to take action and are also urging the Governor to exempt behavioral health providers from cuts given the extraordinary current and emerging demand for our services due to the traumatic impact of the pandemic. See our attached OP ED piece in the Albany Times Union and letter to Senate Minority Leader Chuck Schumer and stay tuned for more advocacy actions ahead.

No 'Drop Dead Date' For Cuts, Senate Dems Seek Federal Aid
By Nick Reisman  Spectrum News  June 25, 2020

The money isn't being cut, it's just being withheld.

When that money is officially cut, however, remains to be seen.

Gov. Andrew Cuomo on Wednesday said there is no firm date for when deep spending reductions to local governments, health care and education will be made permanent. More likely, he said, it's contingent whether there is any hope for federal aid to states whose budgets have been ravaged by the coronavirus pandemic.

"There is no drop dead date," Cuomo said of when the cuts would take effect. "We're dealing with an annual budget. So the drop dead date is what you declare, in some ways. If you conclude the federal government is not going to provide any aid, period, then these are the numbers and then you would act on those numbers. But we're not there yet."

But the cuts took one step closer to reality this week as the state withheld millions of dollars in funding for a dozen cities, including Rochester, Buffalo and Syracuse.

Local governments already have faced anemic sales tax revenue since March and some have started to cut municipal workers in an effort to trim costs.
Democrats in the state Senate, meanwhile, released a letter<https://www.scribd.com/document/466823442/06-24-20-Letter-to-Senator-McConnell> on Wednesday to U.S. Senate Majority Leader Mitch McConnell on Wednesday urging he back direct aid.

"Local governments affected by these measures have advised us that the loss of funding may mean job cuts for critical employees, halting infrastructure projects and curtailing other necessary services," the lawmakers wrote in the letter, which was signed by rank-and-file members as well as Majority Leader Andrea Stewart-Cousins. "These are unacceptable results. Your delay is causing real hardship and the time for politics passed long ago. Do the right thing and provide our localities the funding they require and deserve. Thank you for your prompt attention to this important matter."

Some advocates are pushing for a tax increase on billionaires in order to make up the difference in lost revenue, a move the governor has not embraced.

https://spectrumlocalnews.com/nys/central-ny/ny-state-of-politics/2020/06/24/no--drop-dead-date--for-cuts--senate-dems-seek-federal-aid
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NYAPRS Member Memo: 12 cities from across NY have been notified that they'll be receiving an estimated 20% 'withhold' in their state aid allocations with a hope that cuts of this kind might not be permanent if tax revenues are large enough and federal funding is forthcoming later this year.  Most cities do not directly fund behavioral health care services.

New York to Withhold $74M in Aid to 12 Cities
Rensselaer Is Among Those To See At Least Temporary Reduction
By Amanda Fries Albany Times Union  June 24, 2020

ALBANY - The fear of reduced state funding has become a reality for 12 cities across New York as the Cuomo administration plans to withhold a total $74 million from municipalities.

The state Conference of Mayors on Tuesday shared on Twitter a spreadsheet of 12 cities, including Rensselaer, that will see a 20 percent reduction in their "aid to municipalities" (AIM) funding. The support is usually dispersed to communities at the end of their fiscal years; the 12 cities that received notice of the reduction from the state comptroller - a slate that also includes Buffalo and Yonkers - will wind up their current fiscal years on June 30. (Albany, Schenectady, Troy and Saratoga Springs have fiscal years that kick off Jan. 1.)

"It certainly is going to pose serious cash-flow issues, particularly because it's at the end of (the cities') fiscal year," said Peter Baynes, executive director of the Conference of Mayors. "The other challenge is they just don't know if and when the payment ever will arrive."

Baynes said municipalities rely on state aid as well as sales and property taxes as their main sources of revenue, and even withholding a portion of the AIM funding will make paying for essential services difficult.

The withheld amounts run from $138,787 in the city of Rensselaer to $19.5 million in Yonkers, according to figures compiled by the Conference of Mayors.

Syracuse Mayor Ben Walsh said before coronavirus pandemic, the city was expecting a $1.5 million surplus, but as costs went up in responding to the virus and revenue dropped from lost sales tax revenue, they have had to contend with an $8 million deficit. Tack on the over $12 million in state aid being withheld from Syracuse and Walsh said the impact is "devastating."

"What is so difficult about this news is this is the final state aid payment, and by far the largest for the city just as we are closing out our fiscal year," he said. "There is no time to adjust our spending to account for it, and we can't assume that the remaining funding is coming."

Early on, state officials hinted that state aid could be reduced to help deal with the roughly $10 billion deficit New York faces from the economic impact of the coronavirus. Local governments, in turn, have stressed the need to keep state aid intact as they, too, have seen lost sales tax revenue from the mass closure of businesses in response to the pandemic.

The state said the reduction might not be a permanent loss.

"We are not reducing support for AIM at this time and instead are holding back 20 percent of the funding as the state contends with a cash crunch caused by a 14 percent drop in revenue due entirely to the pandemic (and) the federal decision to delay income tax filings to July, and awaits clarity on federal assistance to offset this revenue loss," said Freeman Klopott, spokesman for the state Division of the Budget, in a statement.

State and local officials across New York have called on the federal government to provide aid to help offset the deep revenue losses they've experienced during the pandemic. However, some Republican congressional leaders have stalled that effort, arguing that the aid amounts to "bailouts" for Democratic-controlled states with excessive budgets.

So far, the federal government has provided funding that helps New York and local governments cover expenses directly related to responding to the coronavirus pandemic - but none of that funding addresses the lost revenue from business restrictions and other measures taken to reduce the spread of the virus.

As a former mayor, state Assemblyman John McDonald, D-Cohoes, said he's not happy with the state withholding some of the funds from communities, but he noted that the action is comparable to what the state is doing across all departments.

McDonald added that due to Gov. Andrew M. Cuomo's sweeping executive powers, granted during this year's budget process to respond to the pandemic, the Legislature cannot act to undo the state's decision to merely withhold funds unless the reductions become permanent cuts.

See below for more details:
State aid withholdings
Below is a list of the 12 cities expected to receive reduced AIM funding (aid to municipalities) at the end of the month. Each are receiving 20 percent less than initially budgeted.
Amsterdam: $559,116
Auburn: $4,934,426
Buffalo: $78,689,496
Corning: $1,151,034
Lackawanna: $4,998,670
Long Beach: $2,478,635
Rensselaer: $555,147
Rochester: $70,245,617
Syracuse: $49,440,494
Watertown: $3,695,805
White Plains: $2,548,670
Yonkers: $77,958,730


Harvey Rosenthal
NYAPRS Chief Executive Officer
Office: 518-436-0008; C: 518-527-0564
harveyr at nyaprs.org<mailto:harveyr at nyaprs.org>
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