WPCNR CITY LIMITS. By John F. Bailey May 5, 2004: The $110.4 Million 2004-2005 City Budget ballooned yesterday as predicted by the CitizeNetReporter weeks ago, when the city Budget and Advisory Committee announced New York State was calling in the full $7.8 Million of pensions the city owes the state for 04-05, instead of the $3.9 Million (or 6.5% of salaries) the city had been banking on if Governor George Pataki’s pension relief plan was accepted. According to Councilman Robert Greer, the city plans to bond for $2.3 Million of the reported $4.1M increase, and tax for the balance.
The state’s calling in the city’s pension chips, means a straightaway 12.7% tax increase if the city bonds for part of the balance of pension money they have to pay. If they budget or bond for the whole amount, city taxpayers face a 21% increase. unless the city cuts the budget or bonds for the difference.
This means if you own a $600,000 home in White Plains, you paid $1,927.13 in city property taxes in 2003. In 2004, facing a 12.7% tax increase, your city property tax bill will go up $244.75.
Sales Tax Receipts: Cross Your Fingers
Should the city actual sales tax receipts hit $10 Million for April and May, which is what is needed by the end of May to keep the tax increase at only 12.7%, the city will be o.k. For every million dollars needed, the tax rate goes up 3%.
Greer, speaking to WPCNR Thursday morning, said the Budget Director, Anne Reasoner, felt based on the March figures, “there was comfortably enough to stay with her predicted figure ($37.9 Million) for the sales tax receipts for ther 2004-05 budget, though Greer did not remember what that figure was, and said he did not have time to look for it. Greer also said the city was bound by charter to approve the 04-05 budget in the next 3 weeks, and could not legally delay approving the budget until the end of June to include June sales tax figures.
Asked what would happen if the city banked on $37.8 Million in sales tax for 04-05 and did not get it, Greer said the city would use the fund balance to pay it off, expressing confidence that any shortfall would not be much. How much fund balance would be legally available to do that, he did not know.
$4 Million in Phantom Money.
Greer said Ms. Reasoner reports the March figures were 10.4% above last year’s figures of $2,464,375, which would mean March came in at $2,720,670 in sales tax receipts. Assuming that figure increases say another $100,000 for April and May, reflecting the Legal Seafoods opening that would bring April and May sales receipts to $2.81 Million each month, this gives the city a WPCNR projection of $5.64 Million in sales tax total for April and May.
Through the first three quarters, the city raised $27,132,937 by Ms. Reasoner’s figures released previously to WPCNR. Add this to the WPCNR projection of $5.64 Million in sales tax receipts total for April and May and you come up with a total projected sales tax receipts of $32,772, 937 through May. Subtract that from the $37.8 Million projected and the city appears to be a phantom $4 Million short in sales tax projection by their own figure expansion rate of 10%.
If you project 20% increases over April and May sales tax receipts of last April ($2,513,972)and May ($2,621,482) to bring this year’s receipts to`$6.1 Million, the city can still expect just $33,132,000 in sales tax through May.
June might save them, with $3 Million in receipts, if they waited and adjusted the charter and approved the budget in June, but if they do this, that still projects a $1. Million gap. Add $3.3 Million to the $33,132,000 figure through June and you get $36.4 Million, leaving the city $1.4 Million short of $37.8 Million.
But given the expected hope that Barnes & Noble, Zaneros, Atlanta Bread Factory and Filene’s Basement will help the sales tax situation over 040-05, the city may easily bridge that little 1.8 Million gap.
If the budget committee expects to keep the sales tax projection at $37.8 million and approve a deficit budget if the May figures do break all records, is a policy decision. Though, WPCNR does not know at this time, whether the city can legally project a deficit budget.
Should the city have a glorious April and May in sales tax receipts, picking up $5 Million each month, which they have never done, there will not be a need for a further tax increase. If they are required to do so, budget cutting, department consolidation would be considered, Greer told The Journal News
The 12.7% Pension Solution.
Greer, as reported in The Journal News, said the city could bond for the entire $4.1 Million, and keep the city tax increase at 7.9%, but indicated that would add $900,000 a year in debt service and possibly impact the city credit rating. Instead, Greer announced the Budget and Advisory Committee recommends bonding for $2.3 Million, presumably cutting the extra debt service to an estimated $500,000 a year. This would hike the City Tax Increase from 7.9% to 12.7%, instead of 21.1%.
The city plans to go ahead with bonding for $1.7 Million (another $500,000 in debt service) to purchase city rolling stock, and sell land to bring in a predicted $750,000 in revenues, Greer reports.
