The 2021 Saratoga Springs city budget won’t require dozens of city employee layoffs after all, but will still be raising property taxes by six percent, as city officials have revised the budget in the belief that the economy will begin to bounce back from the pandemic in 2021.
The $46.2 million budget was approved unanimously at a City Council meeting on Monday, after Finance Commissioner Michele Madigan announced revised revenue projections that will eliminate the need for layoffs, including more than a dozen people each in the police, fire and public works departments.
“I’m feeling pretty optimistic about next summer, potentially, which is a very different feeling to have,” Madigan said.
The spending and revenue plan is up from the original $41.9 million proposal that would have required deep cuts, though still down $2.5 million from this year’s budget, with unions agreeing to no raises in 2021, and cuts being made in overtime and funding for non-profits with which the city has contracts.
Monday was the last day for the 2021 budget to be adopted under the city charter.
“This has been a hard process and we’ve talked a lot of late nights, but we’ve come together and made it through,” said Mayor Meg Kelly. “Everybody is working together….Our shared goal of avoiding layoffs has been the driving factor in bringing forward this budget.”
The earlier budget draft contained cuts based on the city having suffered its worst economic year in decades because of COVID-19 — the city’s two race tracks were closed to spectators, the Saratoga Performing Arts Center had no events, and there were no conventions at the City Center. That meant fewer visitors patronizing hotels, restaurants and shops, leading to a $14 million revenue shortfall, and the prospect of revenue losses continuing in 2021.
But with at least three COVID-19 vaccines close to approve, Madigan said she is now more optimistic about renewed economic activity starting sometime in early 2021.
“Events and activities may be restore in the spring and in all of our important summer months, albeit subject to some regulation still, and the virus is still here,” she said. “Federal stimulus is a more realistic possibility.”
Madigan said a key factor in revising the budget was learning that a $5 million state retirement system payment the city would normally make in December 2021 to get a discount isn’t actually due until February 2022. After learning that, Madigan plans to postpone the payment, hoping that by February 2022 the city will have received federal pandemic aid that could cover the payment. In the meantime, she is listing $5 million in potential federal aid as a new revenue.
“Given current cash flow shortages and the uncertainties of the pandemic economy, we may choose the one-time payment reset opportunity and pay retirement on time, in February of 2022, in effort to avoid layoffs in 2021,” she said.
Madigan said the projected 2021 revenues have been increased based on new optimism about the city’s 2021 economic prospects and the possibility of federal aid to local governments dealing with pandemic-related economic fallout.
While sales tax revenue is expected to be down, Madigan said she is projecting a restoration of state aid to municipalities and $215,000 in Saratoga Race Course admissions tax, based on the prospect of the track being open next summer at half-capacity. Some city fees will also be increased, but those changes won’t be detailed until the Dec. 15 council meeting.
The budget assumes the city will receive $5 million in federal stimulus aid, based on advise from the state comptroller’s office. “The comptroller very recently advised local governments to wait for stimulus before cutting services, and we are heating that advise,” Madigan said.
If the money is received, it will be used to make the $5 million retirement system payment in February, Madigan said.
The six percent tax increase will be the first in at least nine years. It means that the inside-city tax rate will increase from $6.07 per $1,000 assessed value to $6.43, while the rate in the city’s outer district will increase from $6.01 to $6.37. The increase would be $72 per year for a home assessed at $200,000, or $144 for a home assessed at $400,000.
Madigan said the budget can be amended as soon as January as more information about expenses and revenues becomes available.
In supporting the budget, other city council members said they felt the most important thing was avoiding layoffs, with the impact that would have had on the services provided to residents and visitors.
“The effect of layoffs and service reductions would have been devastating,” said Public Works Commissioner Anthony “Skip” Scirocco. “Saratoga Springs is a community that relies on world-class services to provide a first-class experience to residents, businesses and visitors alike.”
“I’m just so pleased that we’re here and able to maintain all our essential services and the integrity of the city,” said Public Safety Commissioner Robin Dalton, who oversees the police and fire departments.
Accounts Commissioner John Franck said that after a difficult 2020 and 2021, he believes the regional and national economies will see several years of rapid growth, comparing it to the “Roaring Twenties” that followed the Spanish flu pandemic of 1918-19.