Schenectady mayoral hopeful Hull blasts McCarthy’s budget

PHOTOGRAPHER: Kathleen Moore

Share on Facebook

Save

Mayoral candidate Roger Hull blasted his opponent’s proposed 2012 city budget, calling it “dishonest” and unrealistic.

Schenectady city budget proposal

To read acting Schenectady Mayor Gary McCarthy’s proposed 2012 city budget, click HERE.

Acting Mayor Gary McCarthy’s new revenues are just hopes and dreams, Hull said.

Hull, who founded the new Alliance Party and has been endorsed by the Republicans, is facing off against McCarthy, a Democrat, in this year’s mayoral election.

McCarthy gave his proposed budget to the City Council on Friday. As of Monday, Hull had not yet read the budget, but based his analysis on McCarthy’s executive summary, which was released to the public Friday.

“I think it’s a dishonest budget,” Hull said, citing the 1.89 percent tax increase that is nearly tripled by increases for three of the city’s fees — water, sewer and garbage — that virtually every property owner must also pay.

“For the average person, it’s a 7 percent increase,” Hull said, adding that seniors will see an even larger increase because their senior STAR reduction only applies to taxes, not fees.

McCarthy argued that he did not attempt to hide the fees, announcing them at the end of his executive summary.

“People will calculate things in different manners,” he said. “We broke them down to what the monthly increase is in the average house.”

Hull was most concerned by McCarthy’s estimate that the city would get $400,000 next year by foreclosing on houses and selling them. This year, the city sold five such buildings and received $34,300.

McCarthy also estimated that the city would get $300,000 next year in taxes from new residents buying houses that are vacant but not yet foreclosed upon and paying off the old tax bills. The city is partnering with Key Bank to offer residents better mortgage options with a $50,000 repair loan to encourage them to buy vacant houses and fix them up.

But Hull noted that he’s tried to get two city residents into that program. Both were denied because of poor credit, and one was told that it would take him at least a year to repair his credit. Hull said such issues indicate the Key Bank program will grow slowly, rather than leading to dozens of houses purchased next year.

“The things that are just plugged in that are just hopes and not based on reality,” he said.

McCarthy said many vacant houses have unpaid tax bills of more than $6,000, which the new owner would have to pay.

“If you look at it, it becomes a reasonable assumption that over a 12-month period, you should be able to move those,” he said.

When asked whether large tax bills would discourage potential owners from buying a house, McCarthy said the city has no choice — it cannot legally forgive tax bills, although it can negotiate on interest and late-payment penalties. The only way to wipe clean the tax bill would be to foreclose on them.

There is a long list of properties that the city may foreclose on next year, and each has been assigned an estimated market value. McCarthy is confident that selling about 40 properties will earn the city the $400,000 budgeted.

“Some of those we’re assuming we’ll [make] 25 cents on,” he said. “Others we’ll sell for $20,000.”

He wants to focus on the more valuable ones. Starting with a goal of 40 houses will push the city staff, he said.

“Setting those numbers out there creates a challenge for them,” he said. “I believe they will rise to the challenge.”

Hull also questioned McCarthy’s decision to use $2.7 million from the sewer and water funds, paying back a loan the city made to those funds in 2004. The city does not have enough money in savings to match that money next year, meaning that the 2013 budget must either increase revenues by $2.7 million or cut the budget by that amount.

The city has been spending down its savings for years to keep taxes low, and now does not have enough left to continue that practice. Hull wants to know what McCarthy intends to do in 2013.

“What the hell is the plan?” Hull said. “It’s just kicking the proverbial can past election day.”

McCarthy said the $2.7 million is the last step of a 24-month effort to “wean” Schenectady off its previous dependence on American Tax Funding. ATF used to buy the city’s delinquent tax liens — the unpaid taxes — for their exact dollar amount, giving the city millions of dollars each year. Now, the company pays only cents on the dollar.

But Schenectady couldn’t afford to say no this year — it sold some liens to ATF, even though the price was low, because the alternative was to leave a multimillion-dollar hole in the budget.

The city also hired a tax collection agency, which has thus far exceeded budget expectations, Finance Commissioner Ismat Alam said.

In 2012, the city isn’t assuming a lien sale, and the goal is to collect far more of the unpaid taxes than before, McCarthy said.

“We used to budget uncollectability of 2 percent. Now we’re up to 12.6 percent,” he said.

“We’ve got to turn that around. That’s the 24-month plan. We’re weaning ourselves off ATF.”