Spitzer’s Buffalo Follies – By George J. Marlin

To get the media’s focus off the scandals plaguing his administration, Governor Spitzer unveiled an $850 million economic development plan he claims will revitalize Western New York’s largest ailing cities, Buffalo and Niagara Falls.

Spitzer’s “strategic investment” scheme, which includes the construction of housing, malls and a 200 thousand square-foot sporting goods store, is not going to turn around Western New York’s economy or stop the population decline.

Over 1 million people have fled upstate New York in this century because runaway taxes have wrecked their local economies, not because they lacked housing or shopping centers.

County taxes in recent decades have soared to finance unfunded state mandates.  Most upstate county executives control only about 20 percent of their operating budgets, the rest is dictated by Albany.

It’s even worse in Erie County.  In 2003 its Medicaid costs hit $175 million, while its total property tax levy was expected to be $128 million.  County officials told The New York Times that “Every penny we take in in county property taxes is used to pay for Medicaid.  This is before we pay for any libraries or plow any roads or pay for any police services.”

To raise the revenue to fund these state mandates, people living in modestly valued homes are paying exorbitant property taxes.

Here’s a comparison of the economic demographics of Buffalo versus Long Island’s Town of North Hempstead.

 

Buffalo

North Hempstead

 

 

Average Household Income

$38,378

$132,095

Median Household Income

$27,112

$92,336

Per Capita Income

$16,588

$45,582

Households with Incomes over $100M

5.6%

46%

Median Home Value

$71,380

$661,001

Total City Taxes per Capita

$533

$486

Property Taxes per Capita

$456

$397

These numbers explain why Buffalo is a textbook example of upstate New York’s municipal rot.

For over forty years Buffalo has experienced a long steady decline.  Instead of investing to rehabilitate aging plants, manufacturers moved to states that were lighter on taxes and regulation.  In the 1970s, Buffalo lost 88 factories and over 70,000 manufacturing jobs.

Job losses and an increasing tax burden, in turn, were the catalysts for a mass exodus.  Buffalo’s population was 532,000 in 1960; by 2004 it stood at 283,000 – a 47 percent decline.  “From 1990 through 2004,” the Manhattan Institute reported, “the Buffalo-Niagara region actually lost jobs, with a growth rate of -0.1 percent; the nation, during the same period, added jobs at a rate of 20.1 percent.”

Today Buffalo’s top employers are federal, state, and local governments.  In 2005, its 6.6 percent unemployment rate was the highest in the state, and 26.6% of its population was below the poverty line.  The City of Buffalo also has the highest foreclosure rates on single-family housing in the state and over 20,000 vacant homes.  Between 1998 and 2003, property values declined 10.79 percent, while during the same period New York City’s property values shot up 42 percent.

In 2004, when Buffalo’s annual deficit was projected to reach $110 million by 2007, then Mayor Anthony Masiello threw in the towel and called for the dissolution of the city.  He endorsed Erie County Executive Joel Giambra’s proposal that Buffalo be legally absorbed by the county.

The reason once-mighty New York cities like Buffalo are giving up the ghost is that the state has inflicted incredible financial pain on municipalities and their over-taxed citizens.

If Governor Spitzer truly wants to stem the tide in upstate New York, he must fix the iniquitous tax structure.  Until that happens, so-called initiatives will be nothing more than headline hunting political sop.

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Explore posts in the same categories: NY State Finances-SCC

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