Categories: Schenectady County
Schenectady County managers say they are preparing for coming hard times by dramatically slashing the amount of surplus used in the tentative $279.9 million budget for 2009.
The proposed budget calls for using $279,962 from the surplus, toward the tax levy in 2009.
The amount is far lower than normal practice. This year the allocation was $6.6 million. The county used $7.4 million in surplus in 2007. The allocated amount is not always totally spent, however, officials said.
The fund balance is one way to control the amount of tax levy passed to residents, as every $600,000 equals a 1 percent change to the tax levy.
The proposed tax levy for 2009 is $68.4 million, an increase of 12.9 percent. The average homeowner would pay an extra $125 in county taxes under the tentative budget. The tax figure is based on a home valued at $150,000 and uses an average of all tax rates in the county .
“We want to be conservative because of the economy and the uncertainties of the state budget,” said Finance Commissioner George Davidson.
Davidson said the state’s problems trickle down to the local level. “Will they reduce reimbursements and increase county costs? It could impact our cash flow,” he said.
The state shifted some costs to counties in 2007 and this year and may do so in coming years as its fiscal problems worsen, according to the state Association of Counties. Gov. David Paterson has called the state Legislature back Nov. 18 to make $2 billion in new spending cuts to close a rapidly growing budget gap.
Davidson said the county needs the surplus to pay bills, make payroll and cover up-front costs of state and federal programs. The county receives more than $70 million in reimbursement through state and federal sources, Davidson said. Sometimes the county has to wait six months to a year to get repaid, meaning the county bears the costs during until then.
The county also is trying to fix an imbalance in the budget created by relying on the surplus for years to balance the budget, Davidson said. With county sales and mortgage tax projections basically flat for 2009 and interest revenue expected to decline, the county could rapidly tap out its fund balance in coming years.
The county ended 2007 with $29 million in surplus, Davidson said. County Attorney Chris Gardner estimates the county will end 2008 with a surplus of approximately $25 million.
County Legislator Vincent DiCerbo, D-Schenectady, said he agrees with the strategy of weaning away from the surplus. “I have always argued that overuse of the fund balance represents a structural deficit that has to be eliminated,” he said.
Davidson said the county’s fiscal condition remains good; Its bond rating stands at AA2. And the county this year also got a $10.2 million shot in the arm from the federal government, a one-time payment for the Glendale Home.
The county will spread this money over several years to reduce its annual subsidy to the nursing home. In 2009, the federal money will reduce the county’s Glendale subsidy by nearly $2 million, to $4.8 million. In 2007, the county subsidy was $7.4 million.
Davidson said because of the federal money, the county Legislature has some leeway with surplus funds. County legislators will meet in their respective caucuses to discuss their options to reduce the proposed 13 percent increase in the property tax levy. Legislators plan to vote on a final budget Oct. 30.
Republicans suspect majority Democrats are saving the surplus to help them in next year’s county Legislature races. Six seats on the 15-seat Legislature will be in play. Five are held by Democrats, including Chairwoman Susan Savage, and one is held by a Republican, Joe Suhrada of Rotterdam. Democrats control the Legislature 11-4.
Suhrada said majority Democrats will likely use the surplus to produce an election-year budget that offers little or no tax increase. “We will see how conservative they are next year in their budget,” he said. Minority Leader Robert Farley, R-Glenville, also suspects Democrats have something up their sleeve regarding use of the surplus. “They want to artificially inflate the tax increase this year so they can give a better budget next year when they are running for reelection. What they are not counting on is the way the economy is going. It will hurt them,” he said.
Gardner said Democrats stand for responsible government and have used the fund balance to control taxes in election and non-election years. “Last year, we had a 4.8 percent tax increase. In the prior two years we had tax cuts in each of those years.”
The proposed budget cuts 50 positions from the work force of approximately 1,200, reduces programs and services and consolidates county departments.
The 2009 budget is less than the 2008 budget of $283.4 million because the county does not have to log $4.5 million in Low-Income Home Energy Assistance Program grant money on its books. The state is paying that amount directly.