Using surplus unwise, Gloversville official says

Councilman John Castiglione, R-2nd Ward, said Friday he is concerned that the small tax cut offered

Categories: Schenectady County

Councilman John Castiglione, R-2nd Ward, said Friday he is concerned that the small tax cut offered in Mayor Tim Hughes’ 2009 budget proposal is based on taking $828,000 from the city’s projected $1.4 million surplus.

Castiglione said he certainly supports another tax cut for residents but said draining the surplus will force city officials to find a new source of revenue of that magnitude next year at budget time.

If that new source of revenue cannot be found next year, he said, the 2010 budget might deliver residents a major tax increase.

At the Common Council’s initial budget review session on Thursday, he asked colleagues to consider whether it may be wiser to avoid the possible calamity by suffering a small tax increase this year and another small increase next year. He was the only member of the council to publicly take a position on the budget.

Castiglione said Friday he raised the issue for discussion and will not draw any firm conclusions about the city’s financial future until this fall’s budget deliberations conclude.

Castiglione said he is not worried just about taking such a large chunk of the surplus to use as budget revenue, but that Hughes’ proposal would also use the remaining balance of the surplus — an estimated $600,000 — as the 2009 contingency account. There is no line-item contingency account in the budget proposal, he said.

Castiglione said there may be unexpected expenses to be paid to demolish First Baptist Church and the city’s contribution to the state retirement fund — dependent in part on the stock market — could be significantly increased mid-year.

Rather than resorting again to the budget surplus, city officials are hopeful they can raise $828,000 in revenue for the 2010 budget from sales and property taxes paid by Wal-Mart.

“Everything seems to be dependent on Wal-Mart,” Castiglione said. “… We’ve been waiting for Wal-Mart for six years. I don’t prepare my family budget on the basis of if I get a raise,” he said.

“I don’t think it’s a good idea to deplete our assets — which is our surplus. How do you make up $800,000 [for 2010]?” he said.

“I’ll be examining things very carefully,” Castiglione said, reiterating he is just sharing his thoughts and is not yet ready to take a position on Hughes’ proposal.

Hughes said his $14.2 million proposal was carefully considered. “I think that’s totally ludicrous,” he said of the idea that a tax increase may be necessary. “That’s what a fund balance is for — to get through hard times. People can’t afford [a tax increase], they just can’t afford it,” Hughes said.

The council must adopt a budget by Dec. 10. Hughes’ proposal would cut the tax levy — now $6.44 million — by $3,000.

The tax rate in Hughes’ proposed budget is $18.46 per $1,000 of assessed value.

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