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July 18, 2013

DiNapoli: Binghamton Facing Fiscal Challenges,
But Outlook Improving

City Challenged by Population Declines, High Poverty, Unemployment Rates

The city of Binghamton is grappling with high rates of unemployment and poverty, but its outlook is improving as it builds up reserve funds, according to a fiscal report issued today by State Comptroller Thomas P. DiNapoli. The report is part of a series of fiscal profiles on cities across the state.

“Binghamton faces a sober fiscal environment, but progress is happening,” said DiNapoli. “Dramatic socio-economic changes in population and industry have resulted in systemic fiscal problems over the last several decades. During this changing fiscal environment, the city has accumulated a high level of debt, exhausted much of its constitutional tax limit and struggled with cash flow problems. Mayor Ryan and city officials are working to stabilize city finances, refinance and pay off debt, while building up critical reserves. Stepping up to address these challenges is not easy, especially as the city continues to recover from the 2011 flooding, but I commend city officials for working together.”

“I want to thank Comptroller DiNapoli for taking the time to work with my administration to address the city's fiscal concerns,” said Binghamton Mayor Matt Ryan. “Despite enduring a national economic collapse and multiple floods, we have made great strides in turning city finances around; however, we still face tough and dire issues.”

DiNapoli’s report found the city’s revenue grew 4.9 percent on average annually from 2001 through 2011, compared to 3.4 percent for all New York cities during the same time frame. Meanwhile, the city’s expenditures increased 3.6 percent on average annually during the decade, compared to a growth rate of 3.4 percent for all cities.

The city has exhausted 86 percent of its constitutional tax limit, which coupled with a recent change in the distribution of sales tax revenue from the county, even further constrains Binghamton’s ability to raise revenues.

Between 2009 and 2011, the city’s available fund balance grew from $1.8 million to $9.4 million.

Binghamton has a high level of outstanding debt. While debt has decreased by 10.5 percent from $129.6 million in 2008 to $115.9 million in 2011, the city’s debt burden, among other factors, led to a downgrade by Moody’s from A1 to A2 in January. Per-capita debt of $2,447 is well above other New York cities ($1,403).

The report also noted a number of demographic and environmental warning signs for the city. For example, in 2012 the unemployment rate of 9.2 percent was higher than the statewide rate of 8.2 percent. The city’s unemployment rate has been consistently higher than the statewide average since 2005. Binghamton’s median household income of $30,267 is just over half of the statewide median of $56,951. In addition, more than 42 percent of children in the city are living in poverty, compared to 20 percent statewide.

DiNapoli’s report also highlighted

  • State aid accounts for 13.9 percent of the city’s revenues, compared to 19.7 percent for all cities;
  • The city’s population has declined from 80,674 to 47,376, a 41 percent drop, between 1950 and 2000, but was virtually unchanged from 2000 to 2010;
  • Binghamton’s property values were climbing rapidly (9.1 percent) between 2007 and 2010, while property values were declining in other cities. Since 2010, property values have leveled out;
  • Median home values in Binghamton ($83,700) are lower than the median city home value ($99,700); and
  • Nearly 15 percent of Binghamton’s property is vacant, compared to the median city vacancy rate of 10.4 percent.

DiNapoli has issued nearly a dozen profiles on cities across the state. As part of this effort, DiNapoli will also release in-depth reports on some of the issues that contribute to the financial pressures on local governments.

DiNapoli also implemented an early warning monitoring system that gives local communities a fiscal stress score. Under his Fiscal Stress Monitoring System, DiNapoli identified 24 counties, cities and towns in fiscal stress. These local governments have fiscal years that coincide with the calendar year. Binghamton was not given a fiscal score because it had not filed required financial information, called an annual update document, with the Comptroller’s office. City officials have indicated they are in the process of completing this information.

DiNapoli’s system evaluates local governments on nine financial indicators and creates an overall fiscal condition score. Indicators include cash-on-hand and patterns of operating deficits. The scores are used to classify a local community as being in “significant fiscal stress,” “moderate fiscal stress,” “susceptible to fiscal stress” and “no designation.” The system also evaluates communities relative to 14 environmental stress factors such as population trends, poverty rates and property values. DiNapoli will issue additional fiscal stress updates for other local governments with different fiscal years on an ongoing basis.

For a copy of the Binghamton fiscal profile visit: http://www.osc.state.ny.us/localgov/pubs/fiscalprofiles/binghamton.pdf

For a copy of a 2011 financial audit of Binghamton by DiNapoli’s office visit: http://www.osc.state.ny.us/localgov/audits/cities/2011/binghamton.pdf

For more detailed information about Comptroller DiNapoli’s fiscal stress monitoring system and to view reports related to local government fiscal stress visit: http://www.osc.state.ny.us/localgov/fiscalmonitoring/index.htm

For access to state and local government spending and more than 60,000 state contracts, visit http://www.openbooknewyork.com/. The easy-to-use website was created by Comptroller DiNapoli to promote openness in government and provide taxpayers with better access to the financial workings of government.

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