Cuomo Proposes N.Y. Panel as Step Before Financial Control Board

New York Governor Andrew Cuomo proposed creating a panel of officials to help struggling governments reorganize and merge, a step meant to avoid a state control board taking over a municipality’s finances.

The plan to create a Financial Restructuring Board, which needs legislative approval, is intended to help cities such as Yonkers, Syracuse, Rochester and Buffalo that are coping with rising retirement costs, falling populations and declining property values, Cuomo said today at a press briefing in Albany.

The board would serve in an advisory role, though if a local government accepts state funding from a pool of $80 million, it would be required to implement any recommended changes, said the governor, a 55-year-old Democrat.

State-imposed control boards, such as those overseeing Nassau County and Buffalo, have traditionally been imposed when a locality is veering toward bankruptcy. They have the power to refinance debt and force unions to accept wage freezes. Cuomo’s proposal is meant to prevent struggling governments from taking such drastic action, he said.

“If you have a chronic financial imbalance, let’s stop kicking the can down the road,” Cuomo said. “Let’s deal with it.”

The proposal is particularly intended to help local governments in upstate New York. From 2000 to 2010, the population there dropped by 1.4 percent as the cost of government rose by 47 percent, Cuomo said. The imbalance has left towns, cities and counties with expenses they can’t afford. Cuomo said sending more cash isn’t the answer.

Merging Functions

In his former role as New York attorney general, Cuomo backed programs designed to provide funding for local governments seeking to restructure and even merge. As governor, he’s sought to trim their costs, including having the state pay for increases in Medicaid, the joint state and federal health-care program for the poor.

The Financial Restructuring Board is the next step. The panel would advise localities on how they can cut costs by combining backroom functions, such as human resources, with their neighbors, Cuomo said. In some cases, it may suggest that municipalities merge entirely.

The panel would also help officials find ways to trim labor costs. Unlike a control board, though, the new panel wouldn’t have the power to force changes, he said. It may also recommend firings.

“It sounds right, it sounds easy, but politically, it’s very hard,” Cuomo said.

The board will be composed of the state budget director, secretary of state, attorney general, comptroller and one restructuring professional from private industry.

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