Waste of the Day: Is NY Program Designed To Waste Money?

Topline: The State of New York has spent $40 million on its County-Wide Shared Service Initiative, which appears to exist for the explicit purpose of eliminating taxpayer savings.

New York tells towns to share services with other towns

Key facts: The program was established in 2017 to encourage small towns and villages to combine their local services and save money.

Two neighboring counties might merge their court systems, for example, or move their human resources departments into a shared office space and split the rent.

That’s when New York State steps in with “matching funds.” Localities send a report of how much money they saved, and the state sends them a cash reward.

Long Island’s Nassau County announced last month that its villages had saved $1.6 million by combining services. As a reward, the villages will receive $960,000 of taxpayer money from the state — erasing more than half of the savings.

In some instances, towns received matching funds that exceeded their reported savings. Onondaga County and the City of Syracuse announced they had saved $2.2 million by merging their Medicare plans in 2017. The state rewarded them with $5.7 million.

New York has awarded matching funds to over 100 applicants. There are 34 more awaiting potential funds.

But everything ends of costing more

One might argue that the program saves money in the long run. The matching funds are a one-time payment, while the local savings are permanent and can reduce property taxes.

However, it’s unclear why the matching funds are necessary at all. Tiny villages should not have separate local services in the first place. If the services can be combined, saving money should be its own incentive; no matching funds needed.

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Summary: Paying local governments to spend less money is absurd both on paper and in practice.

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This article was originally published by RealClearInvestigations and made available via RealClearWire.