REGION – Governor David Paterson's December payment "delay" to municipalities and school districts across New York State was announced over the weekend, and it didn't take long for his words to confirm some of the fears that have been mounting in communities far and wide. The governor outlined a plan to withhold 10 percent of certain program payments in the month of December while the state deals with its cash flow problems, which have manifested in a projected budget shortfall of $3.2 billion.

Governor Paterson is quoted as saying that the funds will be restored "as sufficient revenues become available."

The effects of the payment reductions will be most-felt on cities and school districts. While the exact impact of the withheld funds isn't yet known at the Ellenville Central School District, Superintendent Lisa Wiles is bracing for a tough road ahead.

"I understand that there's a crisis, but I'm concerned about, in the long run, what the impact is going to be to our local community," said Wiles. "There's just so much you can keep accessing your reserve fund, but if there's not some kind of change in this, eventually everyone's going to have no reserve funds left, and it's going to come back to the local communities." The one bit of good news is the existence of Ellenville's undesignated fund balance, which Wiles said will be accessed to keep the district operating smoothly.

The municipal entities in this region of the mid-Hudson Valley, mostly towns and villages, don't receive much in the way of direct state funding for their general accounts. For example, the Town of Wawarsing only receives $48,946 through Aid and Incentive to Municipalities, or AIM, a relatively small portion of its total budget. The AIM program is one of two municipal programs experiencing the 10 percent withholding, the other being Human Services payments to counties.

Despite the fact that the towns themselves are coming away from the announcement relatively unscathed, those watching the municipal balances are looking towards the future with a large degree of uncertainty.

Ellenville Village Manager Mary Sheeley expressed concern over state funding that has been pledged to pay for municipal projects, such as Ellenville's forthcoming new wastewater treatment plant.

"We're required to bond for the money, and then you get reimbursed," said Sheeley. "But if they're lagging now, you're talking a lot of money, a lot of interest payments that we need to figure out how we need to budget money. It's not necessarily a matter of will you get paid, it's a matter of when… I don't know that it's going to have a huge, immediate impact, but it does have an even more far reaching impact just as they continue to struggle with their cash flow problems."

Town of Wawarsing Comptroller Pat Althouse has similar concerns regarding Department of Transportation-funded projects in progress at the Joseph Y. Resnick Airport, specifically the new terminal building and sheriff's substation, which she points out are funded by New York State.

"That's got me nervous, I'll be very honest with you," said Althouse. "Overall, I think about it to the point of how it's going to affect us directly or indirectly. You don't really know, but the state has no money. So what's going to happen to our state funding?" Althouse said she would be bringing up her concerns over the possible drying up of state funds at this week's town board meeting workshop.

Outgoing Mamakating Town Supervisor Robert Fiore said that the budget situation in Albany is unlikely to have a dramatic impact this year, but that the incoming administration may have difficulties because of state funding that has yet to be received by the town. He said that the town has already received its AIM funds for the year, and that this amounts to a fairly small sum — a little more than $25,000 out of a $2.7 million budget. He did say, however, that the town is still waiting to collect $125,000 in Consolidated Local Street and Highway Improvement Program (CHIPS) funds, and that a delay could force the town to dip into its reserves.

"If this money is postponed, we will be forced to go to our reserve accounts, accounts that have to be paid back before the end of next year," Fiore said. "It will be up to the next administration to deal with this."

Fiore emphasized that he hopes this isn't the case, that the funds are released by the state quickly, and that he would prefer not to leave this problem for the next supervisor to deal with. Town of Rochester Supervisor Carl Chipman said that Rochester has already received its AIM and CHIPS funding for 2009, but that there could be a ripple effect if county revenues decline.

"We haven't received notice about any cuts [from the state]," Chipman said. "Most of the money we get is from the county."

Chipman said that he is still waiting to collect from the county Rochester's portion of the mortgage taxes collected for this year, and that he's worried that a reduction in revenue at the county level — sales tax, in particular — could set off a domino effect.

"That's how it works; it flows downhill," Chipman said.