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WPCNR QUILL & EYESHADE. By John F. Bailey. February 23, 2009 UPDATED 4:12 P.M.: Last week, the City Finance Commissioner, (exclusively reported by WPCNR), told the Common Council the city was projecting at this time a revenue shortfall of possibly $11 Million in the current budget year. That in itself is stunning news considering the city pronounced nervously on target three months ago.
This report is not in any way an attempt to pick on the city, but even this simple calculator analysis by the WPCNR Math Lab, reveals the ghastly money pit the city and the school district are now freefalling into. An analysis of simple tax mechanics shows the dramatic significance of tonight’s School Board introduction of the Preliminary Budget.

If the school district does not deliver a budget the same as this year – the property tax burden soars on Mr. and Mrs. And Ms.
The meeting to pay attention to is tonight at the Board of Education,
The outgoing Superintendent of Schools Timothy Connors is expected to announce a Preliminary School Budget, which is currently sitting at $190.3 Million, when the other city tax guillotine will fall on city taxpayers’ collective necks. The more your home is assessed, the more you will pay –thousands more and that is just in one year. If the school budget is not at least $1.2 Million less than this year’s budget, the typical home of assessed value of $15,000 will be forced into a $2,000 and up tax increase.
WPCNR observes, (as reported on White Plains Week, our television show Friday evening, you may see it tonight at 7:00 on FIOS TV 45 or Cablevision Public Access Channel 76/, that if your home is worth from $650,000 to $700,000 – if the city deficit holds, and the School District does not get the budget down below this year’s budget of $184.4 Million – you face a $1,800 tax increase from the school district, city and county combined. If your home is assessed based on a value over $700,000 you’re paying a lot more.

If the city is not high balling the deficit to make a point with the unions, whose contracts all run out in June, the city will have to make that $11 Million up from its undesignated fund balance dropping its rainy day fund to below $20 Million. The fund balance will not be available to fill the $11 Million money hole created by the bottom dropping out of Mortgage Taxes, Building Permits, and sales tax erosion suddenly gripping the city. Slide by White Plains Week
Strategies of what to do in “crafting” the 2009-2010 budget, with that $11 Million shortfall likely — due to continued softness in sales tax collections — have to consider a whopper of a city tax rate increase if city spending continues at the same rate.
WPCNR Projects the City Property Tax Would Rise 33%.
Let’s take a look. As the legendary City Executive Officer George Gretsas, architect of the
If the city does not cut its $161.7 Million 2008-09 budget for 2009-2010, you are still going to have to allow for the no building permits and license fees, the eroding mortgage tax, and soft sales tax shortfalls going forward. The decline has no end in sight, especially with major big box retailers rumored, in addition to Fortunoff to be closing
The city is going to have to fund the current union wages somehow at the present rate – funded by revenue that the city last week is telling us is just not there.
Do not forget the Common Council refused the police and fire unions a 3.75% increase in December, perhaps politically motivated at the time, but obviously in retrospect, a thoughtful decision by the Common Council, no matter what their motive.

But, you are going to have to do something with the unions, whether the demands for wages are dictated by mediation, arbitration or fact-finding, and the only way to do that, (short of state aid of some mechanism, or another ¼% increase in the sales tax urgently requested in a letter from the Civil Service Employees Association in a letter to the Mayor, putting the pressure on Assemblypersons Adam Bradley and Amy Paulin and State Senator Suzi Oppenheimer) is to increase the city property tax. The CSEA has been without a contract since June of 2008. The Police, Fire and Teamsters unions contracts expire in June.
Because, do not forget, city hall has to pay the unions, the commissioners and the expenses at this year’s rates any way in 2009-10 – with according to the projection, $11 Million less in revenue. How is it going to do that?
City Hall will have to do that because apparently it has not cut substantially to reduce the $11 Million deficit the Commissioner of Finance expects this year.
No detailed department-by-department list of cuts was issued by the city Thursday evening. The Mayor said in December he was seeking $4 Million in cuts.
So far that list of cuts has not appeared, despite repeated requests by the media. Now, they do not have to give it to the media, but they should at least have furnished it to the Common Council Thursday, and the Council strangely has not asked for it. How much of the $4 Million has been realized and ponied up in actual city cuts?
Using that yardstick of 3% property tax for every $1 Million in spending and assuming the sales tax trend continues its sluggish pace, the sales tax collection is not going to meet the $45 Million projected revenue. WPCNR notes it should hit $43 Million at the present rate of decline in retail sales, computed by WPCNR to be 14%

The Commissioner of Finance reported Thursday, the city is down $2 Million in Mortgage Recording Tax; $600,000 in Charges for Services; $1.5 Million in Licenses and Permits; $1 Million in Fines and Forfeitures; and $2.3 Million in miscellaneous – the deferred payment for the municipal parking lot postponed indefinitely because it is payable after LCOR builds the 55 Bank Street project, not even started yet.
When you include projected sales tax shortfall of $4 million based on the current rate of retail sales being down 12% (in the holiday quarter just completed), the city could be facing an $11 Million deficit if they keep the city budget where it is ($161.7M)
If union contracts are settled at 1, 2 or 3% (by negotiation, an arbitrator, or whatever it takes, and city has no other sources of income, “one-shots,” state aid or whatever), a 33% tax increase is what the city may face.
In the following chart we take the $650,000 to $700,000

Now, that’s only possible if the city budget remains at the $161.7M spending level.
Say, the city based on union settlements by arbitration, mediation, fact-finding or election year largesses decides to lift expenditures say 4%. Then the city property tax increases proportionately.
You have to make up the $11 Million revenue shortfall in current income next year PLUS another $6 Million in budget, because the fund balance will be for all intents and purposes be too low to touch.
The city fund balance, sitting on $28 Million last April will be depleted by the $11 Million shortfall projected last week – which was supposed to come from projected revenues that are not materializing.
The city has to make up that revenue in 2009-2010 since undesignated fund balance will sink to $17 Million if the dire prediction of last Thursday comes true, and the city appears reluctant to snatch more of that.
The city notes in the 2008-2009 budget, “The City’s largest percentage increase in the tax rate (14.4%) for Fiscal Year 1992-1993 occurred after fund balance fell to a low $10.4 Million.” So it would be unlikely for the city to just run out more undesignated fund balance in 2009-2010 in the face of the economy meltdown on recently demonstrated retail sales softening.
Increase of 4% in city budget for 2009-10 hits the $650,000-$700,000 home with a $4,000 city property tax.
So say the city budget increases 4%, then the $650,000-$700,000 home city tax has to increase 51% to cover the extra $6 Million in change added to the budget. That works out to $1,377, lifting the tax from 2008-09’s $2724 to a staggering $4,101. That is stunning, but that’s the math.
Let’s look at the sobering numbers:
If as City Assessor Lloyd Tasch estimates the $288.4 Million City Tax Roll declines $500,000 to $1 Million considering the doubling of the number of assessment challenges he and the Board of Assessment Review are working through, the school board has to cut the budget starting out from this year’s $184,4 Million. If the budget is raised to only $188 Million, then the tax rate goes to $530/M up from this year’s $503/M
Why? They are already facing a revenue shortfall since their assessment roll is down from the $291.7 Million of this year.The district, like the city has to play catch up money ball due to the assessment erosion before they even begin to add money for salaries (currently in mediation), new programs ($500,000 being proposed) and the last bond sale for $16 Million for the balance of the $66.7 Million capitol project, (contract bids have been received).
School Tax, City and County Tax Pushing $15,000 on the $650,000 home












