1Q Sales Tax Steady.Mayor Examines Cuts w/o Council Input.Council Indifferent?




WPCNR CITY HALL CIRCUIT. By John F. Bailey. September 30, 2008 UPDATED 12 Noon EDT, October 1, 2008. UPDATED 1:10 PM:  The city issued a news release  Tuesday declaring the sales tax collections by the city have started well and are meeting the expectations for July, August and September (WPCNR-estimated as $12.4M)  as of last week. The news release states that  Mayor Joseph Delfino is conducting meetings with city department heads to look at “creative ways to save expenses and maintain the level of service White Plains residents are accustomed”


 


WPCNR asked the senior Councilpersons Rita Malmud and Council President Benjamin Boykin last week if they felt the city should be looking at budget cuts for the present year in light of dire revenue shortfalls in the state. Neither responded.  WPCNR  repeated the questions after receiving today’s release as to whether they or any other councilpersons wanted  to be in on the meetings, had positions on spending cuts. Ms. Malmud finally responded Tuesday evening and WPCNR awaits Councilman Boykin’s response. As of noon, Councilman Boyking has not responded.


 


In today’s New York Times, a front-page article notes that muncipalities across the country are having difficulties finding financing for key projects, requiring many to cut back projects, and in New York City having to offer a higher rate of return on bonds costing the municpality more in interest payments. This raises the spectre that White Plains and the White Plains City School District will be facing higher debt service on any new issues in the future. You may read the Times report at http://www.nytimes.com/2008/10/01/business/01muni.html?_r=1&adxnnl=1&oref=slogin&ref=todayspaper&adxnnlx=1222876866-4HQ0uOmCqBKyIxM0R/80uQ


 


In the absence of city response to questions on how city obligations to the state pension fund might be affected by the market downtown, WPCNR spoke with Robert When of the State Comptroller’s Press who told WPCNR moments ago that there will not be an increase in state pension contributions for municipalities in 2009-10, however the market downturn in 2008, may be reflected in city pension fund obligations in the 2011-12 budget year — two years down the road. The lagtime, he said is that the Comptroller’s office has smoothed out contributions, establishing a floor contribution for all municipalities (4.5% of salaries) since 2003.





Ms. Malmud responded this evening  to that question by saying that the Budget and Management Committee will be meeting shortly.


 


Mr. Boykin the Chair of the Budget and Management Committee asked last week if he was going to convene his committee soon in light of the state revenue shortfalls widely lamented by Governor David Patterson, has not responded yet. We await Mr. Boykin, the Council President’s thoughts on city financial policy.


 


Malmud in a statement wrote “Budget issues will be first examined by the Budget and Management Committee.  I expect them to meet shortly. The Mayor has not sent me the press release you mentioned nor informed me of any planned review of department budget cuts.”


 


This would indicate that the Mayor had not invited key councilpersons to give input in a bipartisan fashion, or conversely, Ms. Malmud at least, nor any other councilperson had expressed concern about city spending to the Mayor.


 


WPCNR asked Ms. Malmud if she had any policy suggestions on how the city should approach the police, fire, teamster and Civil Service Employees Union contracts that expire this June.  


 


Malmud  wrote, “According to NYS law, only the Mayor can negotiate such settlements.  The Mayor has not chosen to consult with us on this matter.”


 


WPCNR asked Ms. Malmud about the possibility of the city financing the stalled LCOR affordable housing project at 55 Bank Street or borrowing for city municipal improvements now as possibly being attractive to the market, Malmud  issued this comment:


 


 “The whole national economy and lending framework is in a major state of flux now.  Although White Plains has an excellent credit history, we will be impacted by national economic and lending issues. In another week or two, we should have a better idea of what direction those national issues are heading and the likely impact on us.”


 


Project Money Issues


 


Ms. Malmud asked about  the Horton’s Mill request for the city to cover their cost overruns since the county has refused to do so said  did not indicate how the council feeling on the Horton’s Mill request, though at the time, the council acted reluctant to pay the $581,140 dollars.


 


Regarding the stymied LCOR project, Malmud rejected the notion that LCOR was going to ask the Urban Renewal Agency to finance the project, a $320 Million project, which the council approved being built in stages last month


 


She explained, “LCOR – To my knowledge, LCOR has not asked the City to finance their project and have stated that they already have financing in place for 55 Bank Street.”


 


On several sensitive budget projects, Ms. Malmud wrote these comments:


 


“ Mortgage tax revenue – has already been estimated for this current fiscal year ($4.1M).  We have many months to go before we can determine whether that is an accurate estimate.”


 


“Pension fund contributions “demanded by the state” – is entirely up to the state and White Plains will respond as is “demanded.”


 


WPCNR since speaking with Ms. Malmud, has learned from the State Comptroller’s Office that the city pension fund contributon for 2009-2010 is actually down, a bit of good news, and will not be affected or reflect stock market declines of 2008 until the city’s 2011-2012 Budget year.


 


Asked to clarify whether she wanted the city to cut, had suggestions as to how to cut, or  was leaving all spending adjustments to the Mayor, and any thoughts on what  general objectives (length, benefit adjustments, increase targets)  the union contracts ($100 Million of the $161.5 City budget this year) might achieve, Ms. Malmud declined to comment.


 


WPCNR is waiting for the city to comment on the mortgage tax trend, the effects of the current credit markets on city municipal offerings,  and of course, WPCNR awaits Councilman Boykin’s take on what matters he sees the Budget and Management Committee taking up in regards to current budget cuts,  when his committee is going to meet, and of course the looming 2009-2010 Budget.


In today’s New York Times, a front-page article notes that muncipalities across the country are having difficulties finding financing for key projects, requiring many to cut back projects, and in New York City having to offer a higher rate of return on bonds costing the municpality more in interest payments. This raises the spectre that White Plains and the White Plains City School District will be facing higher debt service on any new issues in the future. You may read the Times report at http://www.nytimes.com/2008/10/01/business/01muni.html?_r=1&adxnnl=1&oref=slogin&ref=todayspaper&adxnnlx=1222876866-4HQ0uOmCqBKyIxM0R/80uQ


Decade of Growth


It pointed out that the property tax base has grown with 7,000 new residents, most of whom are condominium owners. City Hall notes the residential tax base has been increased and the commercial tax base has increased more. The office vacancy rate has declined from 34% to the point where Robert Weisz of the RGW Group is planning to build the first new office building in the city in 20 years (at 1133 Westchester Avenue.)


The release reports real value property in the city, residential and commercial has grown from an estimated $4 Billion in 1999 to $11 Billion as of July 1. The city blames “the bizarre formula” of the New York Equalization Rate for the city being “inundated” with commercial tax reductions.


Retail Growth the news release reports, brought about by the Mayor’s Economic Development Plans has created a “boom in the retail base, making it much more diverse.” The report says “vacant stores are filled with a thriving business that continues to do well. As late as last week we are being told that our sales tax numbers are still holding steady.”


Sales Tax Solid


WPCNR notes that with the ¼% increase in the sales tax enacted, that would mean the first quarter is projected to be about $13 Million, when the current 5.3% inflation rate is applied and the extra ¼% sales tax increae is figured in. (Last year the city received $10,917,000 in the first quarter with a 2 cent sales tax which was increased to 2-1/4 cents.)


 Now if the city is equaling that $10.9 Million pace of last year,  then the economy may be hurting the city sales tax handle. The rationale for this being the city should get a 5% lift from inflation, plus a 12% lift from the extra ¼% sales tax  as well as the sales tax, if sales are steady.


The city commented on the failure to get more in sales tax than Albany than it did, writing “in order to relieve property tax payers of any additional burdens the Mayor proposed a half percent sales tax increase. This was cut to a quarter percent by Assemblyman Adam Bradley and the Democratic Common Council,” the release said.


The release also noted, that the Mayor “voted against this year’s budget because of the Council’s cuts to the reserve for financing. This is the very fund the city relies on during turbulent times.”

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Sen Clinton: Senate to Pass Bailout First. Promises Hearings on Wall St Role.

 


WPCNR QUILL & EYESHADE.  By John F. Bailey. September 30, 2008 UPDATED WITH TRANSCRIPT OF OPENING REMARKS, 3:10 P.M. EDT: In a 30-minute conference call with reporters from across the state today, Senatory Hillary Clinton  said Senator Harry Reid is prepared to lead the U.S. Senate in passing yet a third version of the Billion Dollar Bailout bill, the process to begin when congress returns to work tomorrow. She said, “It is a necessity to stabilize our economy.”


She  said the public had to get past the need to punish those whose business practices lead to current world financial crisis, and she promised both houses of congress would hold hearings bringing principle players  involved in the recent waive of failed institutions to explain themselves and determine their roles, an the practices alleged to have  created the “Great Crash of 08.”


“If nothing is done (the bailout not being passed) small businesses may not be able to keep drawing loans to meet payroll and inventory. They are being stretched to the breaking point. Students are having trouble getting family college loans. The credit crisis cannot on its own, correct. Commerce could grind to a halt. ” She told reporters.


Clinton said if nothing was done, more people would take money out of banks which, she said, “compounds the credit problem.” She said she understood “the deep skepticisms.”


“I was against the original plan, but we have negotiated a better bill.” She said the bill makes the bailout not unlimited, taxpayer is protected, there are now checks and balances and regulatory oversight mechanisms,  and accountability included in the bill.


“There’s not one person in congress who believes this bill is perfect…There is no choice.”


Senator Clinton said a provision might be added to the bill to free more actual mortgage money to restore mortgages, as a way to save the bill.  She also called for a stimulus to housing sales as was done in the Great Depression of the 1930s, which she said she would introduce in the Senate in a separate bill but did not say when. She emphasized the tax credit concept should not be included in the “Bail Out Bill.”


 







Senator Clinton: “Good morning everybody.  Thanks for joining this call today. Obviously there’s a tremendous amount of concern and even anxiety in the country about what we need to be doing and whether we will be able to reach an agreement about the action we should take. 


 I think it’s very important to stress, first of all, that if nothing is done, we will see small businesses that cannot continue to keep their doors open because they cannot get the loans that they need for inventory and other important business expenses.  Even larger businesses I’m hearing from are stretched to near the breaking point.  A lot of our businesses depend on credit every single day, and they’re finding that credit very difficult if not impossible to find and afford.



But on the personal level, students are going to have increasing trouble finding college loans.  Families are having difficulty with the daily expenses and certainly with their housing costs as home values drop. And we know that this credit crisis that we are in the midst of cannot on its own correct.   


It sounds dire, but there is a risk that commerce could grind to a halt. Banks are already unwilling or unable to lend to each other. We’ve got investors parking money into Treasury bills that are yielding next to nothing because they think it’s the only safe investment right now. 



With the domino effect of banks failing, people are taking money out of their banks, looking for a safe place, like Treasuries, or frankly, you know, under their mattress, which then compounds the problem.   


I understand the deep skepticism surrounding the proposal, and clearly I was against the original plan sent over from the Treasury because it was a blank check giving Treasury virtually unlimited powers to do whatever they saw fit.



But we have negotiated through the Congress on a bipartisan basis a better alternative that installed taxpayer protections, asserted oversight and accountability, and came up with the checks and balances we should have had rather than the blank check. 


This bill that was voted on yesterday is a compromise among the Bush Administration, the Democratic and Republican leadership.  You’re not going to find anyone who believes that this bill is perfect.  Many of us regret deeply and very much resist having to bail out those who we believe contributed mightily to the problems we’re in.  But there is no choice.



I believe that the companies benefiting from the taxpayer dollars should be asked to repay their debts to the Treasury or give taxpayers more of a share of any future profits.  I continue to advocate for a plan to rewrite unworkable mortgages to stop the inevitable cascading of defaults and foreclosures that will come as interest rates reset.  For two years I’ve proposed steps to freeze adjustable mortgage rates and temporarily halt foreclosures and reset mortgages at risk of default and foreclosure. That’s why I continue to propose a mechanism to do that, and it is modeled on the one we used during the Great Depression.   


Obviously people are deeply concerned about how we’re going to take action that will be effective.  I think it’s important that we go at the root of the problem, which is the continuing loss of home values and mortgages that are unaffordable for homeowners. Now there are other steps we should take.  The housing market is caught in a vicious cycle of too much supply, too little demand, sinking housing prices, rising defaults and foreclosures.  There are other steps we can and should take to try to get demand up again in an affordable way.



But the American people need to understand the benefits of this unprecedented market intervention versus the cost of inaction. There are ways we can continue to try to improve the tools available to the government so that Americans are reassured that this is not either a blank check to the Bush Administration or a blank check to Wall Street, but in fact it is not only necessary for us to do but that the economy will benefit and taxpayers will be protected. 


But we cannot let the perfect be the enemy of the good, or in this case the enemy of what’s necessary.  We certainly won’t be able to spur the housing market if our financial institutions are unwilling to lend to homeowners, and if banks stop lending to businesses, and banks refuse to lend even to each other, which we are seeing. 



So we have to go back and in a bipartisan fashion, face up to the difficult decisions ahead of us.



We have to take action and I know that New York is particularly affected by our failure to act, which is why I told the Long Island association yesterday morning that although I despise the position that we find ourselves in as a country, I would have voted for the package.



We have tens of thousands of people in New York dependent on the financial services industry.  We have thousands of people I’m hearing from around our state who cannot get the credit they need to stay in business. We’ve got tens of thousands more who are in businesses that are dependent directly and indirectly on financial services.  Our city and state revenues will be adversely affected, which will have a ripple effect in terms of the services that people need.  We’ll see the unemployment rate go up and I am deeply concerned that this package be passed this week in order to put the brakes on what is not just a market and a credit crisis, but a mounting economic crisis. 



I believe, too, that the Senate would be ready to act.  I know Senator Reid has said on numerous occasions that he believes the Senate has the votes to pass the bill and is prepared for the Senate to go first, and I certainly am prepared to stand up and be counted if we do.  But I hope that everyone will take a deep breath.  The Congress is not in session because of the Jewish New Year, so everyone has a chance to think hard and maybe cool off a little from the emotion and the pressure of the last two weeks.  And we get back to Washington starting tomorrow and do what we have to do to try to stabilize not only our nation, but the entire world for the benefit of everyone.”


 

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City Investments Holding Steady as Forecast in Face of Long Market Decline:City


WPCNR CITY HALL CIRCUIT. By John F. Bailey. September 28, 2008 UPDATED  11:59 A.M.: On a day when the Dow Jones Industrial Average declined 777 points, the  largest decline in the market since 1987, and when inflation is taken into account, almost equaling the dollar value lost  in one day  that was lost by investors in the five days of the 1929 Stock Market Crash, (October 24 through October 29),  the City of White Plains which has budgeted about $1.5 Million in interest income into the 2008-2009 budget of $161 Million, said the city funds investments appear in good shape at this time.


 


Monday,  White Plains Chief Financial Officer, Gina Cuneo-Harwood issued this statement: “There has been no changes in the Federal Fund Rates since May and the money is coming in as expected.  It is too early to tell what might happen.”


 


“Bailout Monday,” the day when congress was supposed to “bail out” the financial crisis of the last two months,  but did not,  is being called the largest one session decline in the history of the Index,  but it is equal only in decline when dollar value is considered. 


 


WPCNR notes that Monday’s  stock market decline  almost equals the 1929 Black Tuesday crash when inflation is taken into context.  The stock market lost $1.1 Trillion in stock value on Bailout Monday, roughly the outer limits of what the bailout was predicted to require.


 


The $1.1 Trillion loss in vallue is 10 times the  5-day beating  started by the  October 24 through October 29, 1929  Black Tuesday, 79 years ago,  when the stock market, declined  69 points  from 299.6 to 230.7. That precipitated a decline in value by November of 1929 of $100 Billion 1929 Dollars.


 


Today, that $100 Billion in losses experienced in five days 79 years ago is equivalent when 79 years of inflation is taken into account  to $1.2 Trillion in 2008 dollars. That is just just 100 Million more than the trillion-one lost yesterday in the stock market.


 



WPCNR has also posed the same question through Westchester County Department of Communication to County Executive Andrew Spano, as to whether the Westchester County projection of $7.5 Million in investment income in their revenue budget was holding up, up, or down and by how much.


 


Mortgage tax, the county has previously disclosed and reported by WPCNR first two months ago, is down 30%.  The County budgeted $28 Million in mortgage tax in 2008. The City of White Plains budgeted  approximately $4 Million in mortgage tax.


 


Decline in projected figures affect the city in this way, according to the city’s previous Executive Officer, George Gretsas: for every million dollars of revenue decrease, the property tax would have to be increased 3% to make up the difference.


 


Sales tax figures for the first quarter are not in yet and are expected within the first 10 days of October. The City has budgeted $45 Million in sales tax, and expects to easily clear that in 2008-2009 due to the 1/4% increase in the city sales tax to 8-1/8 per cent, expected to add $5.6 Million to the city sales tax revenues. However, most of that $5.6 million surplus from the 1/4%  would be spent in the expected settlements to police, fire, teamsters and Civil Service Employees, if as expected wage increases of  4-1/2 to 5% are demanded and granted by the city.


 


The City, anticipating possible sales tax shortfalls due to a sluggish economy last fall had pushed the Democrat-controlled council and Assemblyman Adam Bradley for a 1/2% increase in the sales tax giving the city a base. That was denied by the Democratic Council, and Mr. Bradley was sent to Albany to request only a 1/4% increase.


 


The two senior members of the Common Council, Rita Malmud and Council President Benjamin Boykin have so far not replied to WPCNR’s question of whether the Common Council will convene and call for a look at current expenses with the Mayor to save more money out of the current 2008-2009 budget over the next three quarters of this fiscal year.


 


The School District is closed Tuesday, and WPCNR will be asking them Wednesday if they are contemplating going out early for municipal bond offerings, now gaining in attraction. (The School District needs to bond $16 Million to complete its construction projects and approximately  $10 Million for possible certioraris.) The question has already been posed to the city.


 

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Here Come the STAR Rebate Checks!


WPCNR QUILL & EYESHADE. From Don Hughes. September 28, 2008: New York State Department of Taxation and Finance Commissioner Robert Megna announced today that the Department will begin to mail Middle Class STAR rebate checks the week of October 20th  to New York homeowners in White Plains who qualify for the 2008 Middle Class STAR Rebate Program, and you don’t have to apply for the checks this year if you received them last year.

 



Unlike 2007, most homeowners will not have to apply for this year’s rebate. If a household’s 2008 property information remains unchanged from 2007, no reapplication is necessary. These homeowners will get their checks automatically.

Property owners who did not apply in 2007, and homeowners whose property information changed during the past year, will have to apply. Applications to these households will also be mailed automatically beginning September 29.

Residents can access the Tax Department’s website at www.nystax.gov to find out when their checks will be mailed and the amount of the rebate they will receive. Information for senior citizens getting the Enhanced STAR rebate, and information for homeowners who need to apply for the 2008 program, can also be found on the website.

The maximum benefit for those receiving the Basic STAR rebate goes to upstate homeowners earning $90,000 or less, and New York City metropolitan region homeowners earning $120,000 or less. The benefit diminishes until a homeowner’s income reaches $250,000. Taxpayers earning over $250,000
are not eligible for the rebate, but continue to receive the STAR exemption on their school tax bills.

This year, rebates for Basic STAR recipients are subject to offset for debts owed to New York State agencies, the Internal Revenue Services, and certain other states.


Mailing date the week of: October 20

Combined incomes and cooresponding rebate amounts:
 
Up to $120,000 ==  $1,035.76 
Over $120,000  – $175,000 == $776.82
Over $175,000  – $250,000 == $517.88
Over $250,000 == $0
Enhanced == $1,180.43

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