Syracuse Mayor Sees Debt as Path to Insolvency: Five Questions

March 13 (Bloomberg) -- Syracuse Mayor Stephanie Miner sees bankrupt Detroit as an example of the perils of borrowing. That stance has put her at odds with a powerful fellow Democrat: New York Governor Andrew Cuomo.

Miner, 43, last year attacked Cuomo’s plan to let municipalities defer part of their pension payments, which he later dropped for an alternative that she characterized as another form of borrowing to pay current obligations. Miner said Detroit, which in July filed the biggest U.S. municipal bankruptcy, underscores the danger of viewing debt as a solution to fiscal problems.

Syracuse’s annual pension costs have more than doubled to $32.4 million this year from $15.5 million in 2009, she said. Still, Standard & Poor’s last month raised the outlook on the city’s debt to positive from stable because of “improved financial performance” the past two years. Syracuse is rated A-, S&P’s seventh-highest investment grade.

Miner, who as a child in Syracuse helped her grandmother stuff envelopes for political candidates, became its first female mayor in 2009. Last year, she won her second and last term as mayor for the city of 144,000 in the central part of the state, about 250 miles (402 kilometers) northwest of Manhattan.

The following is condensed from a recent phone interview:

Q: What do you see as the biggest challenge to the health of the state economy?

A: Cities across New York state are struggling with infrastructure. In Syracuse, we’ve been paying off these extraordinarily high pension bills, taking away money from maintaining our infrastructure. We’ve had a record-breaking year in terms of water mains breaking. Our roads are the worst that they’ve ever been in terms of potholes, because of the severity of the winter.

That is up and down New York state. So if you can’t deliver water to their buildings or drive on the roads, how are you going to have economic development? How are you going to recruit businesses to come here or have businesses expand?

Q: What would help cities pay for retirement costs?

A: Both the federal government and the state government need to step in to help us meet these obligations. All of the stakeholders need to get together and have a discussion. It could run the spectrum of government reform, allowing cities to have more control to make decisions. It can be looking at things like if you have large nonprofits in a city, is it really fair and equitable to allow them to utilize all of the expensive services and yet not pay for them? Because of the way state and federal regulations are, governments don’t have a lot of leverage.

Q: You have supported merging services, yet you signed a letter against Cuomo’s property-tax-freeze proposal that is supposed to encourage consolidation. Why?

A: The property-tax cap is really attacking the symptoms of the problem and not the problem. When you look at what is driving property taxes, it’s Medicaid, pension contributions and health care. Those are three things we as local governments have no control over. The real problem is not a proliferation of governments. The real problem is the proliferation of bills that the state is pushing down to us.

Q: What is the biggest opportunity for Syracuse?

A: We are a city where, because of our size, you can implement policy changes relatively quickly and then measure them to see if they are successful. We’re one of the first cities in the state to put together a land bank to deal with vacant, deteriorated property. That’s been successful. We have a desire to be innovative, and we have a size that makes it doable.

Q: What has been the biggest barrier to women entering public service?

A: The ability to raise money. There’s not a built-in network for women to tap into to raise money.

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To contact the reporters on this story: Romy Varghese in Philadelphia at rvarghese8@bloomberg.net; Freeman Klopott in Albany at fklopott@bloomberg.net

To contact the editors responsible for this story: Stephen Merelman at smerelman@bloomberg.net Mark Schoifet