Many municipalities in New York have begrudgingly borrowed to pay off annual pension costs in recent years, but they are doing less of it, state records show.

In the current year, 112 local governments borrowed $346 million to cover retirees’ pension costs, a drop of 27 percent from 2014, records from the state Comptroller’s Office said.

Those who have done so this year include the largest counties in the state, including Monroe, Rockland and Westchester. So too have some cities, including Yonkers, Poughkeepsie and Elmira.

Local leaders said they can either borrow for their pension expenses or cut program and services and raise taxes. They generally choose the borrowing.

“I really don’t like borrowing at all,” said Yonkers Mayor Mike Spano. “I think it’s unfortunate that cities are put in this situation, but we don’t have a choice but to balance the books.”

The impact, however, appears to be lessening. Pension rates have dropped in recent years after spiking soon after the recession amid a downturn on Wall Street. Also, local revenue, particularly sales tax, has generally improved.

“As expected, as the economy has begun to improve and contribution rates have declined, we’re seeing fewer employers opting in for the program,” said Nikki Jones, a spokeswoman for Comptroller Thomas DiNapoli.

But while the cost has dropped for local governments, the borrowing has increased for state government as it paints a gloomier pension future and defers the pension expenses to help fund Gov. Andrew Cuomo’s initiatives.

The state expects to borrow, or amortize, nearly $2 billion to cover its pension obligations over the next four years, state budget documents show.

“Amortization takes volatility out of the state’s pension contribution costs and helps us maintain stability,” said Morris Peters, a spokesman for the state Budget Division.

The plan is drawing criticism from fiscal watchdog groups, who said the state is merely deferring costs at a time when it claims to be flush with cash. Cuomo has estimated New York will have budget surpluses, and the state plans to spend $5 billion from a recent windfall from bank settlements on a variety of initiatives.

“This is one of the important caveats to what he says about the financial condition of the state,” E.J. McMahon, president of the Empire Center for State Policy, a fiscally conservative group in Albany. “The state’s budget would not be balanced now if it wasn’t borrowing from the pension fund.”

New York started the controversial system in 2010 to let local governments and the state essentially borrow off the $177 billion pension fund, which provides benefits to 1 million government workers and retirees.

The governments have to pay back the money, but can defer some of the annual costs. They have to pay an interest rate of about 3 percent on the borrowed money.

So for those who haven’t borrowed for pension expenses, they are now reaping the benefits of lower pension rates without the debt. Pension costs will drop by as much as 11 percent next year, DiNapoli’s office said.

Some local governments have weaned themselves off borrowing for their pensions. The city of Rochester and Putnam County, for example, were among municipalities that borrowed in 2014, but didn’t do so this year, the records show.

In a statement, the city of Rochester said that Mayor Lovely Warren pressed to no longer borrow for pension costs. Additional state aid has helped allow the city to pay its pension in full during the 2014-15 fiscal year, which runs until June 20.

“In addition, she was willing to keep taxes within the cap limit in accordance with the state’s tax freeze plan,” the city’s statement said. “These options, combined with a modest use of reserves, were deemed preferable to amortization.”

But others said they have to still borrow.

Broome County said sales-tax revenue last year was lower than expected. As a result, it agreed to borrow $5 million for pension expenses; the county hadn’t done so in prior years, shunning it as bad fiscal policy.

“After an unanticipated shortfall in sales tax revenue in 2014, we developed this plan to keep costs low in the 2015 budget,” Marie Kalka, the county’s budget director, said in a statement. “We decided to amortize a portion of our pension costs as a way to keep costs low as opposed to raising taxes a significant amount for the people of Broome County.”

In Westchester, the county borrowed nearly $27 million in the current fiscal year, which runs until Dec. 31. Last year, the county borrowed nearly $44 million to pay for annual pension costs, state records showed.

Westchester County spokesman Ned McCormack said the amount borrowed is a small fraction of the county’s budget, but he also panned having to do so. He knocked unfunded state mandates, which makes up most of the county’s budget.

“The county reluctantly uses this state program, but found it necessary to avoid layoffs and severe service cuts,” he said in a statement. “When it comes to paying for unfunded state mandates, this is an unfortunate reality. Fortunately, the trend is that the costs of this program look like they will continue to go down in the future.”

Cuomo in 2013 offered an alternative “pension smoothing” option for local governments that allows them to spread out payments over 12 years instead of 10 years.

Some of the largest local governments in the state have went that route, including Nassau and Suffolk counties on Long Island, Monroe County and Yonkers.

Monroe County, for example, borrowed about $19 million for its pension tab this year, compared with $22 million last year. Yonkers borrowed $16 million compared with $21 million last year.

“Amortizing our pension contribution provides long-term predictability to the county budget process, while also providing the stability necessary to hold the line on taxes,” Robert Franklin, Monroe County’s chief financial officer, said in a statement.

Rockland County Executive Ed Day blamed state-mandated expenses for the problem. If the county, which has struggled financially, had fewer unfunded mandates, it wouldn’t have to borrow about $10 million this year for its retirement expenses – down from $14 million a year ago.

“One of the challenges we face are unfunded state mandates exacerbated by being wholly unquantifiable,” he said in an email. “A reduction is welcome; full relief is desired.”

© 2015 Gannett News Service