Local government capital spending on roads, bridges and water and sewer systems declined by approximately 8 percent between 2010 and 2012 according to a report issued today by New York State Comptroller Thomas P. DiNapoli. After a review of infrastructure studies, DiNapoli’s office estimates that municipalities should be spending about $3.9 billion annually to keep up with deteriorating capital assets but are only spending roughly $1.2 billion - less than a third of what is necessary.

DiNapoli’s report found that local governments, excluding New York City, spent $927 million on roads and bridges in 2012, a decrease of $49 million (five percent) from 2010. A 2013 study projected local transportation needs would total about $35 billion through 2030. This would require an average annual spending of $2.3 billion by municipalities on roads and bridges.

The decline in local government spending on water and sewer systems was significant. In 2012, combined spending was $291 million, which is $69 million, or 19 percent, less than the $360 million spent by municipalities in 2010. Individually, spending on water systems was 35 percent ($47 million) less during that time frame and spending on sewer systems was 10 percent less ($22 million). Estimates calculate the annual investment needs in local water systems at $535 million and local sewer systems at $1 billion.

These declines reflect, in part, the phase-out of additional funding received through the federal American Recovery and Reinvestment Act of 2009. Local government officials also cite the rising costs of such items such as asphalt, fuel, steel and other construction items as major impediments to infrastructure investment as well as spending restraints from the state’s property tax cap. Municipal infrastructure spending in recent years has also been negatively impacted by severe weather-related disasters. The costs for cleanup and repairs erode monies that could have been otherwise spent on infrastructure maintenance and improvements.

Local debt issuance continues to be a primary source of funding for infrastructure projects. Outstanding capital debt for all counties, cities, towns and villages in New York topped $22 billion in 2012, up two percent from 2010 and 58 percent from 2002. In 2012, local governments reported the issuance of $4.4 billion in new debt to fund capital expenditures. By comparison, the next largest funding sources for local projects – state and federal aid – accounted for $748 million in 2012.

The relative burden of servicing debt has increased only slightly because low interest rates continue to help keep debt service costs low. Local governments, however, may find it more difficult to finance future capital projects if interest rates climb in the coming years, said DiNapoli.

To help alleviate the pressure on municipalities, the Comptroller made a number of recommendations to local officials, including:

• Identify long-term and short-term infrastructure needs using a comprehensive capital planning process, and then work with the applicable state agencies to coordinate their approach to address these needs;
• Partner with state policymakers and work with federal agencies to develop strategies to provide additional funding for water, sewer and transportation systems;
• Seek additional grant funding and state and federal expertise as a component of the local capital planning process; and
• Explore the potential of public-private partnerships to address specific infrastructure needs.

For a copy of the report, visit: http://www.osc.state.ny.us/localgov/pubs/infrastructure2014.pdf

For access to state and local government spending and more than 50,000 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.