Gov. Andrew Cuomo proposes to tie future state funding for local tax relief to a requirement that local governments consolidate or enter shared service agreements. His argument is that consolidation and shared services at the local level will reduce burdens on local taxpayers by increasing efficiency. In other words, he believes that large governments can provide services more efficiently than small ones, because of economies of scale.
Do the data support the governor's argument? They do not.
A review of town spending data provided by the state Comptroller's office for 2012 shows that there is no relationship between the population of localities and the amount that they spend per capita.
For communities that have the lowest property wealth per capita in New York (the lowest 25 percent), spending per resident for towns with a population of less than 10,000 was $546. For larger towns in this group, the average spending was $617.
For the second 25 percent of towns by property wealth, smaller towns spent an average of $612, while larger towns spend $650. For the third 25 percent, smaller towns spent $682 per capita, while larger towns spent $728. For the wealthiest 25 percent, smaller towns spent $1,428, while larger towns spent $1,142.
The reality is that residents of larger towns do not pay lower property taxes than those in smaller ones, when property wealth per capita is considered. Encouraging communities to consolidate or share services is unlikely to provide the benefits that the governor promises to state residents who feel that their property taxes are too high.
State residents concerned about costs need to look at the fact that local employees in New York are paid more than the national average — an average of more than $63,000 compared with $50,000 for the nation. And they also need to understand that New York's local governments have more employees per capita than the national average — 47 per thousand residents compared with 38 nationally. High state and local government pension costs and state mandates contribute. Those factors help explain why New York's state and local governments spent more than 50 percent more per resident than the national average in 2011.
Consolidating governments sounds like a good solution to the high property taxes that New Yorkers pay. Unfortunately, the data shows that approach does not work. Only by addressing the factors that drive New York's levels of local and state spending can leaders reduce them.
John Bacheller is a member of the state's Board of Real Property Tax Services; he's a former vice president/deputy commissioner for policy and research at Empire State Development Corp./state Department of Economic Development.
