WPCNR COMMON COUNCIL-CHRONICLE EXAMINER. By John F. Bailey. November 23, 2009: The Common Council and Mayor-Elect Adam Bradley learned Monday evening from the City Chief Financial Officer, Gina Cuneo-Harwood that the city is running a worst case scenario budget deficit of $13.9 Million. Harwood said she expected
Common Council Hears a Bit of Bad News. Common Council hears Chief Financial Officer Gina Cuneo-Harwood, head of table, give the numbers on the budget after four months Monday evening at City Hall. Attending were Adam Bradley, the Mayor-Elect, Beth Smayda and David Buchwald, new councilpersons-elect.
After the meeting, Mayor-Elect Adam Bradley, right,observed to reporters, after Ms. Harwood’s report, the deficit is finally being reported by the city in line with the deficits he had expected, and told reporters in the rotunda of city hall afterwards he expected it would rise up to $20 Million, not $13.9 Million.
Harwood said declines of $1.2 Million in mortgage recording tax (given the “dead” state of home sales in the city), $400,000 in parking and permit fees, $500,000 in fines and forfeitures, and $6.9 in fund balance, the revenue deficit at this time she forecasts will be $10.4 Million.
If sales tax were to decline farther, as Councilman Benjamin Boykin pointed out, the projected budget deficit of 2009-10 (current year)would be worse. Boykin this would mean there would be no fund balance reserve to help balance the 2010-2011 budget the council has to begin work on.
Harwood drew a bleak picture in 9 of 13 revenue categories. Only one source was up and that was Hotel Occupancy Tax that is expected to bring in $400,000, based on preliminary reports of the first two months of hotel tax from the county, Harwood said. Even with that cash injection new this year the total revenue shortfall is $12.9 million.
Harwood reported that $12.9 million revenue decline was offset by a $2.5 Million decrease in expenditures due to cost-saving measures, for a forecasted variance of $10.4 Million.
Looming Labor Settlement Spikes Deficit
However, Harwood laid out the grim reality that if the labor settlement expected perhaps early next month on the police and fire binding arbitration matter with the city (the decision is now being formulated by the arbitrator), is 3.75% to 4% this would add $3 million to this year’s budget. (The administration had only budgeted a 2% increase in the reserve for financing. This would increase the $10.4 Million forecast budget gap to $13.9 Million.
Harwood painted the prospect that the fund balance appropriation of $6.9 Million would have to be increased by taking another $7 Million from the $19.8 Million fund balance available June 30 of this year. She said that only $8.9 Million is undesignated and available for making up the deficit, meaning a $7 Million transfer from the fund balance would leave the city with just $1.9 Million going into the 2010-11 budget.
What a difference two months makes.
Council President Benjamin Boykin observed grimly that two months ago Ms. Harwood had said the city was running $3.8 Million in deficit, and that two months later it was up to $10.4 Million.
No member of the council raised any voice as to whether the city was planning to cut more operating expenses to turn back the rising tide of red ink. Tom Roach queried Harwood and Mayor Joseph Delfino as to whether the city departments were operating close to the bone. Delfino said they were. There was no call for new direct spending cutbacks by any council member.
Adam Bradley announced to reporters after the meeting he would announce some appointments to his new administration next Monday.
Mayor Joseph Delfino had no comments on the state of the budget after Harwood finished her presentation.
What Might Be Done to Cut the Deficit.
WPCNR notes that a $14 Million deficit could be made up and present city services and work force preserved by a one-time 42% increase in the city property tax, or a budget cut of 21% with a 21% property tax increase. As a general rule to generate one million in revenue, the city property tax has to increase 3%. The present city expense budget would have to be cut $6 Million to achieve a 20% decrease.
The city tax rate would have to raise from $157.06 per $1,000 of assessed valuation to $188.48 per $1,000 of assessed valuation, (providing the assessment roll does not decline. That would mean the city tax on a $650,000 to $700,000 home would go from $2,901 in 2009 to 2010 to $3,473 in 2010-11 if a tax increase was used to make up the other $6 Million and change in the projected deficit, not covered by budget cuts.
To eliminate the deficit next year, without raising city property taxes it would have to be cut $15 Million or more, other revenue to cut into that $15 Million hole. After all if the assessment roll continues its death spiral, the deficit will project even higher into 2010-11 and that has to be made up in more property taxes, too.
The city tax rate would have to go up 42% to clear out the present worse case deficit, the optimistic Ms. Harwood projects assuming the sales tax holds steady to last year’s numbers.
A 42% increase in city property taxes would increase the tax rate from $157.06 per $1,000 of assessed valuation, $66 to $223 per $1,000 of assessed valuation.
You’re wondering what a 42% increase would do to your city taxes? It would mean that the $650,000 to $700,000 home in White Plains would increase from $2,901 in city taxes this year to $4,120 next year — a $1,219 tax increase.
Of course, any tax increase would be subject to additional pressure for expansion if the city assessment role currently at $285.2 Million were to decline further.