WPCNR QUILL & EYESHADE. News & Comment By John F. Bailey. May 26,2009: On Thursday morning, the Common Council will meet at 9 A.M. to pass a $158.2 Million city budget, after quietly administering about $10 Million in spending cuts, job cuts, fee increases, and fund shifting to cut Mayor Joseph Delfino’s submitted budget of $160.2 Million by $2 Million.
The council held the city property tax to a 6.5% increase moving the tax per $1,000 of assessed value from $147.47 this year to$157.06 in the fiscal year beginning in July. Their “cutting and feeing” saves the city from using up their undesignated fund balance for another year, by creating $10 Million of “savings” while funding a to-be-decreed increase for the city firefighters, which most likely will be handed down by an arbitrator next January.
The council deliberations were “monitored” by Assemblyman Adam Bradley, the Democratic nominee for Mayor, who presently has no opposition from the Republican side. WPCNR telephoned Brian Maloney the standard bearer of the Republican City Committee posing the question of whether the Republicans would not run any candidates for Mayor or Common Council. So far Mr. Maloney has not informed WPCNR of Republican contention policy.
Bradley, speaking to WPCNR last week, praised the Common Council refusal to increase the sales tax another ¼%. He said he stood by the savings of fund balance, and said he felt confident that the hotel tax of 2% would pass the state legislature that would add to city revenue. He expressed optimism that a separate property tax rate for commercial properties and a separate property tax rate for residential properties would pass the senate in time for next year, which if enacted could dramatically slow the tax refunds (certioraris) that dropped the city assessed value $5 Million this year, and threatens to drop the assessment roll considerably more in 2010-11 if not addressed.
Next year, if city sales tax continues flat and development remains at its present standstill, the city faces another revenue-challenged year. In order to fund the expected labor settlements, the city will be forced into another year of painful cuts in the city workforce. Mr. Bradley faces daunting decisions in creating the 2010-11 budget.
To continue services as they are, more fees and more revenue must be found by either slicing costs, cutting back on capital projects, or increasing taxes substantially. If the shortfall between revenue and expenses matches the $10 Million the city faced this year, a one-time tax increase of 30% would be needed for the residents to keep paying for the services they are accustomed.
What would that mean?
To generate the $11 Million the city needs in 2010-11, a 30% tax increase would be needed, raising the per $1,000 of assessed value tax rate to $188/$1,000 as opposed to the $157 per $1,000 Mr. and Mrs. White Plains will start paying next year.
In July, Mr. and Mrs. And Ms. White Plains who own median priced homes in the $650,000 to$700,000 range, will pay $2,900 in city taxes, up $176.
In July 2010, they will, if the city has to enact a tax increase of 30%, the owners of that same house will pay $3,473 to the city in property taxes,or $573 more.
That of course may not happen if sales tax shoots up, development resumes promptly, and housing inventory is cleared out, and home prices rise, like this year.
Now that is the bright side. If that separate Commercial Tax Rate is not passed by the legislature, assessments are going fall like a rock next January, making this year’s surprise $5Million drop look good. Any further erosion in assessment will mean an automatic tax increase just so the city can keep pace with their loss – then they have to fund the labor settlements.
To their shame, the Common Council (unless they asked this behind closed doors), never asked for projections of what further tax roll declines would mean next year.
That is unintelligent. It’s crossing-your-fingers on the budget.
The City School District whistled past the taxpayer’s graveyard by not cutting their budget at all. They slowed the rate of increase, yes, but that is not what they needed to do.
Everybody’s favorite Board of Education – the optimists who had a “free cut” year when they could have slashed their budget deeper – but they did not cut. They increased their budget $1.4 Million. (At least the Mayor and the Common Council cut their budget year to year.) To be fair, they slowed the rate of increase, finally looking at WPCNR projections which showed the budget hitting $200 Million if they kept up their steady 7% growth-in-the-budget pace.
This was the year the school district could have slashed the budget down into at least the high $170 Million range, and should have, with an outgoing superintendent, allowing their new Superintendent the ability to increase the budget, mend fences with its irritated teaching force, rather than facing the unpopular task of pushing out highly-paid school administrators. But, alas they did not.
A $10 Million drop in assessments is likely next year, if you look at equalization rate history. (This is not the first time WPCNR has pointed this out, people.)
In 2002-2003, when the state equalization rate nose-dived from 6.35 to 4.71, two years later, this lead to a decline of $13 Million in city assessed value. In 2007-2008, the equalization rate fell from 3.34 to 2.75. We should be seeing the fall out from this next January, when companies which filed certiorari claims like crazy and received massive refunds and assessment reductions three years ago, come back for another round, in addition to new filers.
This would mean the school district and the city face mutual tax increases of proportions never before seen. If taxpayers feel squeezed now, just wait.
Say the city loses $10 Million off next year’s tax roll. This drops the roll to $275 Million. That means that the city loses $1.6 Million in property taxes. To make that up alone, the city has to increase the tax rate from $157.06 to $162, a 3% increase. Plus maintain services. Plus pay for water tanks. Rolling stock. Where will that come from if the White Plains economy does not turn up sharply?
The School District faces Financial Armageddon.
Right now the just-passed 2009-10 School Budget demands $515.15 per $1,000 of assessed value. If assessed value declines $10 Million to 276.8 Million, the school district loses automatically $5 Million in revenue – before inflation, salary increases, benefits increases, retirement fund increases—the rest of “the works” take effect. They have to hike your tax rate $20 to catch up with that lost assessment revenue! The new tax rate next year, if assessments decline $10 Million (perish the thought), will be $535/ $1,000 of assessed value.
That means that median priced home of $650,000 to $700,000 would pay $8,300 in school taxes, up $315 if the school budget stays at $185.8 Million (the 2009-10 figure) and it will be more when you add in all the add-ons. That is why the school district should have cut more expenses this budget year.
The School Board President said the new Finance Committee will be taking a closer look at the school budget earlier. They better start July 1.
The Common Council may want to think about jacking that tax increase to at least 15% to ease the pain next year.
Or, maybe all will work out right.
Maybe, baby.
