Cuomo’s “too many local governments” fallacy

by E.J. McMahon |  | NY Torch

Committed to an inflated number?

Committed to an inflated number?

“Why are property taxes so high? Because we have 10,500 local governments,” Governor Andrew Cuomo said yesterday, repeating (yet again) his favorite mantra. Cuomo clearly wants to imply that he’s referring to 10,500 autonomous entities, falling over one another in a virtual orgy of bureaucratic excess.

“Every morning you wake up and you’re turning on 10,500 light switches, you’re starting 10,500 fleets of cars, you’re paying 10,500 insurance policies,” he has said.

But it’s just not true. Not even close.

By a commonly accepted national standard, New York doesn’t have 10,500 local governments–much less 10,500 local government light switches, auto fleets or insurance policies. The true number of local governments with any level of taxing authority is about one-third as large as the governor would have you believe.

Notwithstanding Cuomo’s claim, the data indicate that New York’s exceptionally high property taxes are not driven primarily by the number of local governments.

Counting localities

New York had 3,453 local governments as of 2012. They included 57 counties, 614 cities and villages, 929 towns, 715 school districts and 1,174 special districts, according to the U.S. Census Bureau, which has been counting local governments in all 50 states for decades now.* Here’s how the Bureau defines what gets on the list:

A government is an organized entity that, in addition to having governmental character, has sufficient discretion in the management of its own affairs to distinguish it as separate from the administrative structure of any other governmental unit.

To be counted as a government, any entity must possess all three of the attributes reflected in the foregoing definition: existence as an organized entity, governmental character, and substantial autonomy.

Relative to population, based on the Census count, New York does not have an especially large number of local governments compared to most states. As of 2012, the Empire State as a whole had 176 governments per one million residents, which would rank us among the least intensively governed states.  Even excluding the population of New York City, a single local government covering 8 million people, New York doesn’t rank high by this measure, as shown in yellow-highlighted row in the rankings table below.

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Note that some low-tax states, such as New Hampshire and Oklahoma, have more local governments per capita, while some high-tax states, such as New Jersey, have fewer. There’s simply no clear correlation between local tax levels and the number of local governments.

The governor’s misinformation

So where does the governor’s claim of “10,500 local governments” come from?  He’s counting roughly 6,900 town-only special districts, most of which have no independent existence. They exist mainly as lines on a map and lines within a town budget–staffed by town employees and created to apportion the costs of public services to the people who actually receive them. A must-read Buffalo News story yesterday put it all in perspective:

To the governor, [the town of] Grand Island would be a poster child of such excess.

Besides the town itself, Grand Island has 62 “special districts,” 58 of them created just to provide streetlights in various neighborhoods.

How, the governor’s mantra goes, can towns like Grand Island possibly justify such numbers? It should be merging and sharing as many services with neighboring communities as possible, he says, to help beleaguered property taxpayers.

But here’s where the rhetoric doesn’t necessarily tell the complete story.

Consider Grand Island’s 58 lighting districts. Not one has a single employee drawing a salary or getting health benefits from the town or waiting for a big pension upon retirement. These lighting districts are simply lines on a balance sheet, ensuring that a neighborhood’s residents pay for the electricity they use.

Moreover, getting rid of such lighting districts would not cut property taxes, town officials say. The 12 hours of clerk time to administer the billing for the 58 lighting districts in Grand Island: $250.

Now consider what the town paid last year for one small state mandate.

To write, print and mail a highly technical annual water-quality report to all residents – the state insists the letters be sent in writing via mail – cost Grand Island $2,700, and that’s among the least costly state-imposed mandates.


But would merging those 58 lighting districts into one on Grand Island save money?

Grand Island Supervisor Mary S. Cooke explained what would happen.

A special district for one neighborhood has a total lighting tax bill of $15,000 annually. Another neighborhood’s lighting district, with fewer, less fancy streetlamps that uses less power, costs $2,000 a year.

Imagine, she says, how people in the areas with lower lighting costs would react to getting lumped in – and therefore subsidizing – the more costly neighborhoods?

“There would be a mutiny,” Cooke said of the town’s 20,374 residents.

The context for Cuomo’s repeated invocation of those mythical 10,500 local governments is his convoluted budget proposal to link a temporary state-funded property tax “freeze” rebate to local government consolidation plans. But on closer inspection, it’s apparent the plan won’t make a dent in New York’s overall tax burden. Indeed, it will subsidize continuing high levels of local spending while punishing localities that do the best job of restraining their tax levies.

More on that in this space tomorrow.

* The comptroller’s office estimates 3,179 Local Government Entities and 808 Special Purposes Entities, for a total of 3,987, as shown on page 30 of this report. But those numbers include Community Colleges, Off-Track Betting operations, Industrial Development Agencies, Soil & Water Conservation Districts and Consolidated Health Districts, none of which are truly autonomous, tax-collecting (or -imposing) governments.



- E.J. McMahon is the Research Director at the Empire Center for Public Policy.