AIM aid needs an overhaul

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Gov. Andrew Cuomo’s 2020 Executive Budget included a surprise for the state’s villages. Long accustomed to receiving unrestricted aid from the state, the governor announced that Aid and Incentives for Municipalities would be eliminated for villages for whom the AIM funds were less than 2 percent of total spending.

The state’s 2018-19 approved budget sent about $20 million to villages. The change proposed in the 2019-2020 state budget cuts $16.4 million from the state’s $102 billion state operating funds budget. As the Legislature hears from residents and leaders of the 482 villages losing funding, the funds are likely to be restored. I will leave the motivation of the Executive Chamber’s decision to others.

A more important question is this: How do the Division of the Budget and the Legislature decide how much money will be given to individual municipalities? AIM aid is a small share of total spending for most municipalities. Only 51 villages received at least 2 percent of total spending from this source.

It is significant for some, however. The highest rate of dependence is 22 percent in Brushton, a village in Franklin County. Within Monroe County, only Hilton retains its funding in the governor’s budget. Hilton receives $122,235, 3.7 percent of 2017 spending.

The sums awarded are hard to explain. Among villages with at least 100 residents, the range is from $1 to $47 per capita. Among the state’s cities, totals range from $60 per capita for Saratoga Springs to $621 for Buffalo.

We would think that AIM aid would be driven by a formula based on community need. If that’s the case, the formula seems to work poorly. Using median household income as an example, I plotted median household income against AIM aid per capita for the state’s cities. The plot shows little “shape.” If community need were the criterion, we would expect high aid to be associated with low household income. The plot would have a nice negative slope.

The chart demonstrates that AIM aid supports Buffalo, Rochester, Syracuse and Yonkers to a much higher degree than the state’s smaller cities. If you live in Rochester, you might focus attention on Buffalo and Yonkers (rather than Albany!). Buffalo’s population is 24 percent larger than Rochester but received 83 percent more AIM aid, a difference of $73 million. Adjusted for population, Rochester would receive $42 million more from the state every year if it received AIM at the same rate as Buffalo.

Not only did Yonkers receive more aid on a per-capita basis, but it is less needy than Rochester by any measure. The table below lists the cities receiving the highest AIM per capita along with various indicators of relative poverty.

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