Schenectady County

Schenectady finishes year in the black

The city finished 2012 with a $3.5 million surplus, Mayor Gary McCarthy announced Thursday.

The city finished 2012 with a $3.5 million surplus, Mayor Gary McCarthy announced Thursday.

The city also didn’t spend a dime of its savings. McCarthy had budgeted $5.4 million from reserves to balance the budget, but he didn’t need to touch those accounts.

That eliminates the city’s structural deficit, created because for many years it relied on savings to balance its budget. Auditors last year urged the city to stop spending its savings and match revenues to expenditures,

Finance Commissioner Deborah DeGenova stressed the surplus was calculated over and above the amount of money needed to eliminate the deficit.

“Actual revenue exceeded expenditures by $3.5 million,” she said.

McCarthy planned to distribute the draft audit, with details of how the city spent its money last year, at Monday’s City Council committee meetings. But on Thursday, McCarthy listed some details from the audit to show how the city reined in spending and increased revenues.

The Police Department came in under budget — a rare occurrence.

“The first time in the modern history books,” McCarthy said.

The department left unspent $173,000. McCarthy said it wasn’t a lot, but every cent counted.

“Just good management,” he said.

The Fire Department came in $265,000 under budget, and the city also saw savings in worker’s compensation costs, after an extensive training program to teach employees how to do their jobs more safely.

And the city did not fill many positions when they became vacant, postponing hirings or eliminating positions altogether.

“We just managed the vacancies throughout the year,” he said.

Other little savings added up, too. Turning off lights and mowing parks less often helped, McCarthy said.

“We get calls all the time — the grass is too high, don’t you mow the parks?” he said. “We do do it; we don’t do it as aggressively.”

Concerning revenue, he said the city had finally climbed out of the hole left when it stopped selling its delinquent tax liens to American Tax Funding. ATF had begun offering pennies on the dollar for the tax liens, and in 2011 McCarthy said the city was losing too much money in the deal.

He canceled it and began collecting taxes in-house. That left a gaping hole in the budget, and the city finished 2011 with a $4.8 million deficit.

McCarthy maintained at the time he was doing what was necessary to get the city back on solid financial footing. He pointed to the 2012 surplus as proof he was right.

“This is the planned progression of the city,” he said. “Now we’re much more aggressive in our tax collection. People are paying who weren’t paying for a long time.”

The city took hundreds of properties through tax foreclosures when some owners refused to pay. The threat prompted many others to pay up just in time.

There is a downside to the city’s improved financial condition, however.

“The negative is we won’t be classified a distressed city,” McCarthy said, referring to a new program that might have sent more state aid to the city. “We’re solving our problems internally.”

But the city still has a long way to go.

“I’ve got to continue that in 2013 and 2014 to show we’re on a trajectory,” he said.

For now, he’s used the surplus to set aside money for several emergency accounts, including one for tax stabilization. That account could be used to reduce a sudden increase in taxes in a bad year.

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