Rockland , Suffolk and Nassau Counties in New York are all on the brink of financial emergency (Suffolk has already declared one).
Even as there are glimmers of a national economic recovery, cities and counties increasingly find themselves in the middle of a financial crisis. The problems are spreading as municipalities face a toxic mix of stresses that has been brewing for years, including soaring pension, Medicaid and retiree health care costs. And many have exhausted creative accounting maneuvers and one-time spending cuts or revenue-raisers to bail themselves out.
The article focuses on pension costs, as well as falling property values (although responsibility for that particular toxic mess, in particular the close relationship between property values and foreclosure rates, is not often mentioned). And the question of debt looms large:
The concerns of municipal officials are validated by the ratings agency Moody’s, which downgraded the debt of Rockland County and Utica last month, and Yonkers and Long Beach last year. New York is hardly alone, and certainly not the worst; for four straight years, Moody’s has had a negative outlook for the country’s local governments. And the problems are likely to persist.
For most of these counties (as with Stockton and Detroit), the solutions proposed always include additional borrowing, which usually requires state backing (and sometimes state policy changes), increasing the power of state governments and private ratings agencies to control the fate of local governments.