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Federal State Aid

Federal State Aid

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Published by JimmyVielkind

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Published by: JimmyVielkind on Jan 17, 2013
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Summary
From 2001 to 2011, total federal andstate aid combined, grew at an averagerate of 2.2 percent annually, slower thanthe rate of inflation (2.4 percent).
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To cover expenses, local governmentshave been forced to rely more heavily onrevenues generated through sales taxesand real property taxes, which grewat annual rates of 5.9 percent and 4.2percent, respectively.Federal aid to local governments grew by$932 million from 2001 to 2011, or by 3.5percent annually on average. However,this increase is largely attributable tothe infusion of temporary funds from the American Reinvestment and Recovery Act (ARRA) of 2009. If ARRA funds areexcluded, federal aid increased by $610million, or 2.4 percent annually.
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New York State’s support to localgovernments grew less than that of thefederal government. State aid grew by$412 million from 2001 to 2011, or 1.2percent on an average annual basis,half the rate of inflation. The majority of this growth (64 percent) was attributableto the creation and subsequentexpansion of the Aid and Incentives for Municipalities (AIM) Program, whichprimarily benefited cities.
NEW YORK STATE OFFICE OF THE STATE COMPTROLLE
Division of Local Government and School Accountability 
Thomas P. DiNapoli • State Comptroller 
 January 2013
Local GovernmentSnapshot
Financial Challenges Facing Local Governments:
Federal and State Aid Shrink as a Share of Revenues
0%5%10%15%20%25%30%35%40%45%50%2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
State AidFederal AidTotal RevenuesInflation
Total Revenues, Federal, and State Aid Growth Compared to Inflation
City15.5%County75.4%Town6.7%Village2.4%
Total Federal and State Aid Received: 2011
$6.9 Billion
 
The relative share of federal andstate aid as a percentage of totallocal government revenues hasdiminished over the past decade,from 22 percent of revenues in 2001to 20 percent by 2011.The level of federal and state aidfor local governments is unlikelyto change significantly in the near future, and may actually decrease.The Congressional Budget Officehad projected that, prior to the en-actment of the American Taxpayer Relief Act, federal deficit-reductionactions would reduce funding for some federal aid programs by asmuch as 35 percent between 2012and 2022,
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putting grants to statesand localities for education pro-grams, low-income housing vouch-ers, community development andworkforce development programsat risk.
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New York State’s Financial Plan holds AIM flat through 2015-16 and prior toSuper Storm Sandy, the State wasalready facing significant out-year budget gaps: $982 million in StateFiscal Year (SFY) 2013-14 and $3.6billion in SFY 2014-15.
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The impactof the storm on the State budget isyet to be fully determined.
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As such,the State’s ability to direct additionalfunds to local governments would befurther limited.
New York State Office of the State Comptroller 
Local GovernmentSnapshot
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0.3%1.2%1.9%3.5%
3.8%
4.2%5.9%
0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0%
Other Local RevenuesState AidCharges for ServicesFederal AidCharges to Other GovernmentsReal Property TaxesSales and Use Tax
Local Government Revenue MixAverage Annual Increases (2001 - 2011)
0.0%2.0%4.0%6.0%8.0%10.0%12.0%14.0%2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
State AidFederal AidARRA
State and Federal Aid as a Percentage of RevenuesCities, Counties, Towns and Villages
 
New York State Office of the State Comptroller 
Local GovernmentSnapshot
Federal and State Aid by Class of Government
In 2011, about 71 percent ($2.6 billion) of total state aid revenues ($3.7 billion) was concentrated in ahandful of program areas.
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With the exception of AIM ($646.2 million, 17.6 percent) and the ConsolidatedHighway Aid Program ($254.3 million, 6.9 percent), state aid revenues largely represent reimbursementsand aid for the administration and operation of various social service and public health-related programs.Combined, these aid categories account for approximately 65 percent of the aforementioned $2.6 billion.Likewise, federal aid is also largelydistributed to a few targeted programsand does not generally provide localgovernments with discretionary rev-enues. About 61 percent of the $3.2billion in federal aid received in 2011,was attributable to a few key programareas,
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the majority of which sup-port various social service and publichealth-related programs.Dependence on the differentcomponents of these aid streamsvaries significantly according to localgovernment type:
Cities.
In 2011, cities received $803million in state aid and $265 millionin federal aid, representing nearly 26percent of total city revenues com-bined. The most significant portionof state aid to cities ($591 million or 74 percent of state aid revenues) re-flects funding received through theState’s AIM program. The programwas restructured and enhanced dur-ing the middle part of the decade,which increased the share of stateaid to cities from 16.7 percent of revenues in 2001 to 19.5 percent in2011. However, state financial pres-sures since the onset of the GreatRecession have resulted in reduc-tions and flat funding of the programsince the SFY 2008-09.
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6.7%11.9%3.2%4.0%6.4%12.1%3.3%3.4%
0.0%2.0%4.0%6.0%8.0%10.0%12.0%14.0%Cities Counties Towns Villages
2001 2011
The American Recovery andReinvestment Act increasedfederal aid revenues to localgovernments between 2009and 2011.
Federal Aid as a Percentage of Total Revenues
16.7%15.7%4.7%4.2%19.5%11.6%3.8%3.3%
0.0%5.0%10.0%15.0%20.0%25.0%Cities Counties Towns Villages
2001 2011
Aid and Incentives for Municipalities(AIM) increased between 2005 and2009. While this level of aiddecreased between 2009 and 2012,it was significantly higher than inpre-AIM years.
State Aid as a Percentage of Total Revenues

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