SARATOGA SPRINGS — The city will be borrowing $6.3 million against future tax payments as it struggles to manage its 2020 budget, which has seen precipitous revenue losses due to the COVID-19 pandemic.
The City Council unanimously agreed to Finance Commissioner Michele Madigan’s request to borrow the money. The city will need to pay back the funds within 12 months. She said it is needed to meet the city’s immediate cash flow needs, given the plummeting of city revenue.
“Our cash balances are declining daily,” Madigan said. “If we do not take action, we will not be able to make payroll in July.”
Madigan said the borrowing against anticipated future revenue is a critical part of closing a budget gap she now estimates at $15 million to $17 million. Revenue from city sales tax and other sources is off dramatically due to the forced closing of many businesses and restaurants. The city budget totals $48 million.
Madigan’s plan to cover the deficit includes the tax anticipation borrowing and drawing $6.5 million from the city’s fund balance — about $2 million more than she had anticipated last week. But the voluntary furlough of 43 workers through July is saving the city only $277,000, by Madigan’s estimate — $2.7 million less than she had hoped.
When Madigan first proposed furloughs nearly two weeks ago, they would have been mandatory for all city departments. But negotiations with the city’s labor unions resulted in the voluntary program.
Another $3.7 million in savings is anticipated from city departments making non-personnel cuts to their budgets.
The council also passed a resolution urging Congress to approve emergency aid to state and local governments, echoing the calls from Gov. Andrew M. Cuomo and others for federal assistance to hard-pressed local governments across the country.
The HEROES Act, which narrowly passed the Democrat-controlled U.S. House of Representatives last week but appears to be dead-on-arrival in the Senate, would include $500 billion for states and $375 billion for local governments. Madigan said that bill would probably provide Saratoga Springs with $14 million — basically enough to cover the estimated pandemic revenue losses.
Whether Republicans in Washington, D.C., will approve federal aid to local governments is unclear, but U.S. Rep. Elise Stefanik, R-Saratoga — who has close ties to the House GOP leadership — on Monday co-sponsored a bill that would authorize $500 billion in total federal funding for states and local governments, but with provisions allowing even small communities to apply for help.
Stefanik voted against the HEROES Act, saying the House Democratic majority made no effort to negotiate with the minority party. Her legislation is called the State and Municipal Assistance for Recovery and Transition (SMART) Fund.
“The SMART Fund will provide direct, flexible assistance to our local governments and municipalities to help them get back on their feet,” Stefanik said in announcing the bill. “I will continue to work with my colleagues in a bipartisan fashion in order to ensure that our communities continue to receive critical support throughout this crisis and beyond.”
Whether the Democrats will consider Stefanik’s proposal remains to be seen.