2007-2008 Aid and Incentives for Municipalities (AIM)

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AIM Program Description

The 2007-08 Enacted Budget restructures the Aid and Incentives for Municipalities (AIM) program to target additional State aid primarily to fiscally distressed municipalities. An AIM increase of $50 million is authorized in 2007-08, and in each of the three following years, for a four-year total of $200 million. These increases are tied to enhanced accountability requirements that encourage local fiscal improvement. Finally, the 2007-08 AIM program continues to provide incentive grants to local governments that consolidate or share services under a $25 million Shared Municipal Services Incentive (SMSI) grant program.

Key features of the 2007-08 AIM program include:

A four-year, $200 million commitment of annual increases in State aid targeted to distressed municipalities: Beginning in 2007-08, AIM increases ranging from 3 to 9 percent will be provided to municipalities based upon their level of fiscal distress. Fiscal distress is measured using indicators that include:
- Full valuation of taxable real property per capita less than 50 percent of the statewide average.
- More than 60 percent of the Constitutional property tax limit exhausted.
- Population loss greater than 10 percent since 1970.
- Poverty rate greater than 150 percent of the statewide average.

Over the four-year period from 2007-08 to 2010-11, annual increases are awarded to eligible cities, large towns and large villages with per capita taxable property wealth below the statewide average as follows:

- 9 percent if all four distress indicators are met.
- 7 percent if three distress indicators are met.
- 5 percent if one or two distress indicators are met.
- 4.5 percent maximum additional increase if these municipalities receive significantly less aid than their peers on a per capita basis.

A 5 percent increase in aid is provided to small towns (population less than 15,000) and small villages (population less than 10,000) that meet at least one of the distress criteria and have per capita taxable property wealth below the statewide average.

Municipalities that do not meet the above criteria receive a 3 percent inflationary increase.

Accountability requirements: Distressed municipalities that receive over $100,000 in additional aid are required to use the AIM funding to: (i) minimize or reduce the real property tax burden; (ii) invest in economic development or infrastructure to achieve economic revitalization and generate real property tax base growth; or (iii) support investments in technology or other reengineering initiatives that permanently minimize or reduce operating expenses.
In addition, these municipalities are required to submit a comprehensive fiscal performance plan (PDF) to the Director of the Budget and the Office of the State Comptroller within 60 days of their adopted budget. The plans would include:
- A multi-year financial plan, consistent with 2006-07 AIM requirements.
- A new fiscal improvement plan that includes key fiscal performance goals and action plans necessary to achieve long term fiscal stability.
- A new fiscal accountability report that describes accomplishments toward achieving efficiency and improvements and, starting in 2008-09, details how AIM funding has been spent.

The Office of the State Comptroller is authorized to perform compliance reviews of the accountability requirements, and may recommend withholding of AIM funding to municipalities that do not comply.

Cities with additional aid under $100,000, cities that receive inflationary increases and large villages that meet all four fiscal distress indicators are required to prepare multi-year financial plans consistent with 2006-07 AIM criteria.

Local Shared Services and Consolidation Incentives: The 2007-08 Enacted Budget includes $25 million for the Shared Municipal Services Incentive (SMSI) program. While continuing to support $15 million in grants for a range of local shared services activities, the SMSI program is modified to assign priority to grant applications. Municipalities will be able to apply to Department of State for grants of up to $200,000 per municipality with priority given to initiatives that include: distressed municipalities; consolidations or mergers; school districts with other municipalities; highway services; shared health insurance; and countywide shared services programs. In addition, a new $10 million consolidation incentive aid is created under SMSI that provides a recurring 25 percent AIM increase to municipalities that merge or consolidate beginning in 2007-08.

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