This post also appears on the Star Gazette’s website (link here), and will be published in the Star Gazette newspaper on February 4, 2018.
The City of Elmira is undoubtedly facing a fiscal crisis. Forced to either impose a 17 percent property tax increase – a measure that will close Elmira’s budget gap for 2018 but not solve its underlying economic problems – or lay off significant numbers of public safety employees, Elmira’s mayor, manager and councilmembers are in the unenviable situation of deciding between tremendously unpopular choices.
The reasons underlying Elmira’s fiscal crisis are complex. Most fundamentally, 38 percent of properties in Elmira, including large entities such as Elmira College, Arnot Ogden Medical Center, St. Joseph’s Hospital and all of Chemung County’s administrative buildings, are exempt from taxation. Even though it does not receive any revenue stream in return for its services, Elmira is required to provide police and fire protection to these properties, meaning that 62 percent of Elmira’s property owners pay for 100 percent of the services it provides.
Despite this substantial imbalance, Elmira was able to overcome a similar financial crisis approximately a decade ago. Between 2008 and 2013 Elmira moved from the brink of bankruptcy to a healthy and stable fiscal position, with an average yearly property tax increase of just 1.86 percent.
However, in his overview of the 2013 budget, John Burin, Elmira’s City Manager at the time, warned of difficulties to come, stating that “the state tax cap legislation, static aid to municipalities, excessive employer pension contributions as well as legislation restricting a city’s ability to receive revenue for services rendered on a variety of not for profit organizations will overtime deplete reserves and bankrupt cities.”
Later that year, the Chemung County Legislature passed a financial restructuring plan that changed the way sales tax revenue is distributed among Elmira and its local towns and villages, adding to Elmira’s mounting financial obstacles. As a result of the restructuring plan, Elmira’s share of sales tax revenue dropped from 12.33 percent in 2014 to 9.05 percent in 2018.
Over the past few weeks Chemung County officials have repeatedly denied that sales tax redistribution has a negative impact on Elmira, arguing instead that any losses in revenue are outweighed by gains Elmira receives through shared service agreements. To support their claims, County officials point to the fund balance strength enjoyed by some local municipalities who were also affected by the 2013 restructuring plan.
That rationale completely misses the mark. Although the combination of shared service agreements and sales tax redistribution works for some areas that are not strangled by tax exempt properties and public safety obligations, it is clearly not working for Elmira. Accordingly, any meaningful remedy to Elmira’s fiscal crisis is going to require genuine cooperation and creative problem solving to discover a new way of doing business.
But what incentive does the community have to come together to address this problem? With only 33 percent of Chemung County residents living in Elmira, some people argue Elmira should be left to figure this problem out on its own, regardless of the consequences.
This rationale also misses the mark. Elmira is the center of this community, the County seat, and its future will determine the direction of our County for generations to come. Allowing Elmira to fail, or simply shaking off these issues as something Elmira needs to deal with alone, is not an option.
Moreover, should Elmira dissolve outright, all of its properties north of the Chemung River – along with their attendant economic issues – would revert back to the Town of Elmira, with everything south of the river reverting to the Town of Southport. Clearly, residents of these municipalities have direct and immediate interests in encouraging local leaders to cooperate.
Previously a group called the “Council of Governments”, consisting of local elected officials from all levels of government across Chemung County, existed to deal with major issues like this. What happened to that group? Maybe it’s time to resurrect it so that all stakeholders have equal standing to voice their concerns and offer collective solutions. Could there be a better time to do this?