SARATOGA SPRINGS — With the city facing a potential $7 million deficit next year, the Saratoga Springs City Council on Tuesday unanimously passed a local law that would allow the city to override the 2 percent state property tax cap in the 2021 city budget.
The law doesn’t required the city to override the tax cap, or say how much any override would be, but at the Sept. 1 council meeting Finance Commissioner Michele Madigan discussed the possibility of a 5 percent tax increase — which would raise about $800,000 in additional revenue. She said it would be the first tax increase of her nine-year tenure.
But Madigan is projecting that city could still face a revenue deficit of $7 million next year, due to the economic disruptions caused by the COVID-19 pandemic. The city’s overall revenue is projected to be about $41.9 million next year; the city budget for 2020, which was set prior to the pandemic, was $48.7 million.
“According to our city charter we must put forward a balanced budget, which means we will need to reduce expenses by approximately that $7 million in 2021,” Madigan said. “This has been one of the most challenging budgets I have faced during my nine-year tenure. It is requiring many difficult decisions and a hard look at how to use our limited resources for what we believe are our most immediate priorities and essential services.”
The city is expected to run a $12 million to $14 million deficit for 2020 due to revenue shortfalls. Madigan acknowledged that has pretty much depleted the city’s available fund balance, since hoped-for federal financial assistance hasn’t made it through Congress.
“Without assistance from the state and federal government to local government and in particular to Saratoga Springs, we are looking at large, across-the-board expense reductions with a focus on keeping our city government intact and by providing essential city services throughout 2021,” she said. But she said she wants to avoid employees layoffs, which would further harm the economy.
Having the ability to raise local taxes, she said, is “so we can maximize all reasonable options and do our best to deliver the services that all departments have requested.”
But even if taxes are raised, deep cuts look unavoidable. “There will be a fairly significant budget gap, and there’s no way to close that without significant reduction in expenses,” Madigan said.
The pandemic forced many businesses to shut down in the spring, and had a devastating impact on this summer’s tourist season economy, with no fans allowed at Saratoga Race Course. Pleas from Saratoga Springs and cities and towns across the country for federal aid have so far resulted in no agreement out of Washington, where the majority of Republicans oppose aid to local governments based on the pandemic.
The current city budget totals $48.7 million. The tentative 2021 budget will be presented to the City Council at its Oct. 6 meeting, as required by the city charter, and from all indications will have been slashed by millions of dollars.
“We are working now with approximately $41.9 million in revenue,” Madigan said at Tuesday’s meeting. At the previous council meeting, she said much will also depend on the future course of the pandemic — whether a new outbreak caused businesses to shutter again, whether a effective vaccine becomes widely available, and whether people again feel comfortable traveling
Madigan said a five-percent increase would be a tax increase of about $95 on a home valued at $200,000. The average tax rate in the city’s inside district rate is $6.07 per $1,000 assessed value and the outside-district rate at $6.01 per $1,000.