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DiNapoli Urges Smart Budgeting to Avert Financial Disaster
🚨 February 25, 2025 – Local governments across New York may be heading straight for a fiscal cliff, as pandemic-era federal aid dries up and state funding fails to keep up with inflation. In a new report, State Comptroller Thomas P. DiNapoli warns that many municipalities could face serious budget shortfalls unless they take urgent action.
Federal Pandemic Aid: A Vanishing Lifeline
Between 2020 and 2022, billions in federal relief funds kept local budgets afloat. But that money is running out, and cities that relied on these one-time payments for ongoing expenses now face tough choices. Some are already raising property taxes, while others may need to cut services or scramble for new revenue sources.
Federal aid skyrocketed by 50% between 2019 and 2023, giving local governments a financial cushion. However, with these funds set to expire by 2026, municipalities that used them to cover recurring costs—like payroll and public programs—are now at serious risk of budget shortfalls.
Sales Tax Slowdown & State Aid Stagnation
The post-pandemic boom in sales tax revenue is fizzling out, returning to pre-pandemic growth rates. Local governments that relied on these revenues to close budget gaps could soon be in trouble. Meanwhile, state aid remains stuck at 2011 levels, losing nearly 30% of its value due to inflation—meaning local governments are getting less money for the same expenses.
Property Tax Dilemma: A Double-Edged Sword
Property taxes remain one of the most stable revenue sources, bringing in $13.6 billion in 2023. But strict tax caps limit how much localities can raise, making it harder to plug budget holes. Some governments lowered taxes when they received federal aid—but now, they may be forced to reverse course and hike levies, putting more strain on taxpayers.
Transparency Crisis: Governments Keeping Taxpayers in the Dark?
Adding to the chaos, an alarming 233 local governments (nearly 15%) failed to file financial reports on time in 2023—leaving taxpayers clueless about how their money is being spent. Without these reports, the Comptroller’s office can’t assess financial stability, making it harder to prevent fiscal disasters before they strike.
What Needs to Happen NOW?
DiNapoli is urging local leaders to act fast to avoid financial disaster:✅ Use remaining ARPA funds before the 2026 deadline✅ Find long-term revenue sources to replace one-time aid✅ Be transparent with taxpayers about financial decisions✅ Engage in multi-year budget planning✅ Monitor budgets closely & adjust spending before it’s too late
With federal dollars vanishing and economic uncertainty ahead, local governments must take control of their finances—before it’s too late!
👉 Read the full report and see how your town is affected!
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