4-year Johnstown finance plan sees tax rise

The city of Johnstown must either cut services or “taxes must increase substantially” to pay for the

The city of Johnstown must either cut services or “taxes must increase substantially” to pay for the rising costs of Johnstown’s police, fire and DPW workers, according to a four-year financial plan released by the city Treasurer last week.

City Treasurer Mike Gifford is required to write the multi-year financial plan by New York state’s Aid and Incentives for Municipalities program, known as AIM. The report details the importance of state aid to the city’s budget and illustrates how high property taxes would need to rise to maintain the city’s services.

To maintain the status quo of city services Gifford estimates Johnstown’s tax rate per $1,000 of assessed property value will need to rise from $16.85 to $17.01 in 2012, to $18.19 in 2013, to $21.43 in 2014 and to $22.28 in 2015. Those increases would take the city from 54.84 percent of its constitutional tax limit for 2011 to 88.65 percent of the limit by 2015.

“When you’re rising from the 50 percent range into the 70s and 80s in that short a time that’s a big jump,” Gifford said.

The report assumes only 1 percent annual growth in sales tax revenues and state aid from 2011 through 2015, which the treasurer admits is very conservative.

“Things could get better, which would change everything,” he said.

Things could also get worse. First quarter sales tax data released by the Fulton County treasurer’s office Thursday show sales tax receipts to the city are down $43,315 from the first quarter of 2010.

Gifford said the city is prepared for very low growth in sales tax this year.

“Seeing the numbers, I think we’ll be OK in terms of our budget this year, which [anticipates] $3.15 million in sales tax. We had anticipated $3.25 million for 2010 but that was too optimistic, so we reduced it,” he said.

Johnstown also took a $73,354 cut to its state aid for this year from last year. State AIM money accounted for $1.4 million in revenue to the city for 2010. Without the state funding, Johnstown’s property tax levy would have needed to rise above the constitutional tax limit to balance the city’s budget.

Gifford’s financial plan predicts that if Gov. Andrew Cuomo’s proposed 2 percent property tax cap is enacted the city will have no choice but to eliminate some of its departments. “It is my opinion that a property tax cap would result in the elimination of many services due to limited funding,” Gifford wrote in the financial report. “Under a low revenue growth scenario, spending and services must be reduced if the city wishes to remain solvent and keep real property tax increases in a low to moderate range. Otherwise real property taxes must increase substantially.”

The city’s rising costs are mostly attributed to a projected 2 percent annual growth in salaries for city employees and a 10 percent annual growth in the cost of health insurance. Other expenses are only projected to rise by 2 percent, which Gifford admits may be too optimistic given recent spikes in fuel costs.

Other risk factors facing the city include an overreliance on its two biggest property tax payers, the Wal-Mart distribution center and the Fage U.S.A yogurt plant, which together account for 21 percent of the city’s property tax roll. Gifford said the city is lucky to have those businesses, but if either or both should shut down the resulting change would be devastating to the city’s finances.

Categories: Schenectady County

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