No clear winners, losers in village dissolution cases

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By Geoff Samuels
In a recent interview with the Catskill Mountain News, soon-to-retire Margaretville Mayor Bill Stanton stressed that he saw no reason for the dissolution of the village.

Even though last month’s board of trustees’ meeting saw the raw nerve of skyrocketing property taxes exposed, the “bombshell” has been defused somewhat by recent efforts of the budget committee to gain some degree of control over the situation.

Nevertheless, the specter of substantially higher taxes has certainly risen more than a few taxpaying eyebrows.

State has big problems
It’s no secret, according to the Citizen Connects website at governor.ny.gov that New York’s property taxes are out of control. The median tax levy for the state is currently $3,755, or 96 percent higher than the national median of $1,917.

“When you add up all the governments…state, counties, towns, villages, cities…special lighting districts, water districts and sewer districts,” explained then Attorney General Andrew Cuomo, “the number is 10,521 governments, and that’s why our taxes are so high.”

Now is the time
In a more recent statement, the governor declared that the state needs government consolidation “now more than ever.” So it’s no wonder that we hear cries for “Consolidation” as a way to increase government efficiency, and hopefully bring down the state’s property taxes closer to the national level.

And, with the 2009 launch of the “New NY Citizens Empowerment Act,” which provides uniform procedures for the consolidation or dissolution of local governments, as well as the various monetary incentives that are available to municipalities who do consolidate, one might think the eventual dissolution of a small, tax-troubled village like Margaretville would be a forgone conclusion.

Many questions
However, further scrutiny of the problem casts a rather large shadow over the situation.
A closer look at the interactive map on the governor’s website shows that the median property tax for Delaware County is only $1,797, or slightly below the national median, and a perusal of previous village dissolutions, or dissolution attempts, reveals a mixed bag of results at best. To be sure, there are more than a few government reports, investigative news articles, as well as recent examples of government consolidations in New York State that are available for examination.

A new “manual” for dissolution
Under the 2009 “Citizens Empowerment Act,” unless enacted by the board of trustees, the dissolution of a municipality can be instigated by its residents, and requires only that a referendum be created by a petition of either 5,000 or 10 percent of the registered voters, whichever is less. The petition would then be sent to the town (or village) clerk for verification. The clerk then issues a notice of approval for referendum, which must be held 60-90 days after the date of notice. This referendum is for the approval of the idea of dissolution only, and would require a final vote only after the necessary studies and projections had been completed, which in some cases can take years.

Not only has the pathway to dissolution been made clear, but the state is providing several forms of incentives for municipal consolidations, one being a grant to municipalities just to conduct the necessary research before they make the final decision. Another is from the state’s Aid and Incentives to Municipalities or AIM, a (reportedly) ongoing subsidy given to communities that have in fact dissolved or consolidated.

Few villages actually dissolve
With all the fuss about “government efficiencies” what’s really been happening? Most of the residents of this area are aware that the Village of Andes was successfully dissolved into the Town of Andes in 2003, and likewise, the Village of Roxbury was dissolved into its township back in the 1920s.

On the other hand, in his recent interview with the News, Mayor Stanton made it clear that “The Village of Fleischmanns tried to do it, and they couldn’t.”

A look back at history shows that in the period between 1920 and 1949, 14 villages in the state went through dissolutions; between the years 1950 and 1979, seven were dissolved, and between 1980 and 2009, another 14 villages had done the same. This is not exactly what one would call a “fire sale” pace of government consolidation.

The good
A report penned in April of 2008 by the New York State Commission on Local Government Efficiency & Competitiveness (LGEC) looks at government consolidation in a positive light. Part of their executive summery states: “More services will be provided on a countywide or regional basis, which will both save money and provide better service. In most cases, this will be the result of a local choice to regionalize…”

The report claims to have identified more than $1 billion in potential state-wide savings to taxpayers from such things as school district restructuring, minimum employee contributions for health insurance, policing consolidations, coordinated snow-plowing, and other operations such as reformed state oversight of county jails and the sharing and consolidation of highway operations.

Another interesting point the report brings to light is that county and school taxes would no longer need to be apportioned using state-calculated “equalization rates,” which often cause big swings in tax rates.

The bad
On the other hand, another report commissioned in May of 2008 by the Association of Towns of the State of New York, and submitted by Wendell Cox of Demographia, Inc. takes a less sanguine view of the subject.

In the forward to the document the association states, “Wendell Cox of Demographia is a recognized expert in preparing reports that compare efficiency and costs of local governments to larger regional governments…his analysis makes it quite apparent that smaller local governments afford New Yorkers a greater voice in their governance and more access to local government officials.”

In the document’s executive summary, Cox makes the case that “government consolidation does not improve government efficiency,” and that “the actual national and international experience with consolidated governments, in general, provides no support for the ‘bigger is better’ theory of government efficiency.”

Cox further opines that the Commission on Local Government Efficiency and Competitiveness, established by former Governor Eliot Spitzer, was based on a false premise; “that New York’s competitiveness and efficiency problems will be alleviated by consolidating and regionalizing local governments and services.”

Successful scenario?
Capitol Confidential, a blog on the timesunion.com website, contains an article penned back in August of 2011 by investigative reporter Jimmy Vielkind entitled, “Dissolution: A new law isn’t working.” In his missive, Vielkind asserts that nine villages have petitioned to dissolve under the recently enacted New NY Citizens Empowerment Act, and of those nine, eight villages have failed in their attempt. “So far, the only place in New York in which Cuomo’s downsizing mechanism has actually worked,” says Vielkind, “is Altmar (pop. 407), an inland fishing village in Oswego County,”

Vielkind proceeds to unravel some of the seemingly glorious results of Altmar’s dissolution process. When the village is formally dissolved on May 31, the total savings after dissolution is projected to be $31,290. The town will also receive the Citizen’s Empowerment Tax Credit from New York State in the amount of $58,000 annually, of which 70 percent will be applied toward property tax relief. As a result all residents should see a 45 percent reduction in property taxes, all very fine. But on the other hand, a brand new district will have to be created to pay for village lighting, which will counteract some of the savings accrued by the dissolution.

Furthermore, Vielkind says that in a sense, state taxpayers are paying $58,000 for a savings of $31,290 to Altmar residents. Also, the onetime cost of the dissolution itself to the those residents was $75,000

The ugly
With eight out of nine attempts at dissolution ending in a no vote, it’s not surprising that discord within many communities would surface. And even in a success story like Altmar, Vielkind points out that the undermining emotional distrust that surfaced among some of the residents is part and parcel of the process.

Tale of two cities/
In its failed attempt at dissolution, Johnson City, conducted a study employing the aid of the Center for Governmental Research (CGR), a Rochester, NY based firm often involved in these situations. According to the firms’ 2010 Policy Brief, penned by Michael Hattery and JoAnn Lindstrom of Binghamton University, after a 22-month study and considerable conflict within the community, (including the resignation of the mayor), Johnson City residents rejected the option to dissolve the village by a tally of 2,256 to 2,216, a miniscule 40 votes that were certainly a heartbreak for some.

The policy brief concludes: “More work is needed to document and learn from the experiences of local communities in trying to make such institutional change. Local leaders would benefit from both the experience and the advice of others who have worked through a similar, but infrequent process.”

In another tale of consolidation woes, the story of the dissolution of Seneca Falls, written by Leah George for the YNN news site, centralny.ynn.com, recounts the ultimate letdown after that village’s dissolution went into effect on January 1, 2012. In this case, the dissolution of the village, with a population of just over 6,600, (the largest village to dissolve to this date), presented a significant financial challenge to the township that it dissolved into.

“After 20 months of working to transition services to the town,” writes George, Diana Smith, the last mayor of the village, said she believed the original plan was unrealistic. “The savings that were touted as part of this plan really won’t be realized,” said Smith as she described Seneca Falls Town residents as the, “victims” of dissolution.

No easy way out
So what can be said about the enigma of government consolidation so far? Vielkind says in another article he penned for capitolnewyork.com that the effort to pare down local governments in the state is “a nebulous problem without any clear solutions.”

Dede Scozzafava, a former assemblywoman whom Governor Cuomo appointed deputy secretary of state for local governments says it this way: “Sure, the process is imperfect…but this is like digging in Manhattan: you’ve got to deal with 300 years of odd structures that made sense when they were erected, but of course serve little purpose now… We would never design this now, but it’s already here. The question is; how do you deal with this without slicing a water main?”