(The Center Square) —  The number of New York cities, towns and villages facing financial stress increased last year, according to a new report from the state’s top fiscal watchdog, which warns that looming federal funding cuts will add to the budgetary pressure on local governments.

The report released by state Comptroller Tom DiNapoli found that 23 local governments in New York state were designated in fiscal stress in the fiscal years ending in July, up from 14 a year ago. 

Recommended Stories

• The shale solution: Protecting national security with domestic energy supply
• Bad Bunny to perform at Super Bowl halftime despite Trump immigration policies halting US tour
• NHS England says it 'should not have published' blog warning against 'stigmatizing' cousin marriages

“The number of local governments designated in fiscal stress, while still low, rose over the prior year, as federal pandemic relief funding was winding down,” DiNapoli said in a statement. “Local governments now facing volatility in revenue sources and uncertainty from significant shifts in federal spending should remain vigilant and pragmatic when spending and planning for the future.”

DiNapoli’s report said the City of Little Falls in Herkimer County, and the villages of Cambridge, Island Park, and Saugerties were designated in the highest-ranking category of “significant stress” in the previous fiscal year.

The cities of Albany and Poughkeepsie, the towns of Massena and Yates and the villages of Coxsackie, South Blooming Grove and Washingtonville, were designated in “moderate fiscal stress” in Fiscal Year 2024, according to the report. Several other towns and hills are designated as being “susceptible” to financial stress in the previous fiscal year. 

DiNapoli’s office issues “fiscal stress” reports on the state’s municipalities, excluding New York City, twice a year using a rating system that considers their year-end fund balance, operating deficits, cash-on-hand, short-term borrowing and fixed costs. In April, DiNapoli announced that nine villages with non-calendar fiscal years were designated in stress.

Ten of the municipalities designated in fiscal stress in 2024 — including Albany, Little Falls, and Poughkeepsie — also received a fiscal stress designation in 2023, DiNapoli said. 

While the percentage of cities designated in fiscal stress increased from 6.8% in 2023 to 8.5% in 2024, it was still well below the double-digit rates seen from 2020 to 2022. But the number of towns designated as susceptible to fiscal stress more than tripled, from two to seven, DiNapoli said, while the number of towns designated in moderate stress decreased by one, while none were in the significant category.

ERIC ADAMS DROPS OUT OF NEW YORK CITY MAYORAL RACE

DiNapoli said with federal aid from Washington, D.C. dwindling, municipal officials should “closely monitor” their financial conditions to be prepared for any financial challenges that lie ahead.

He said municipalities that fail to file financial reports in time to receive a fiscal stress score may indicate a lack of proper financial management, prevent local officials from taking necessary steps to avoid a fiscal crisis, and diminish transparency and accountability, undermining public confidence.