SCHENECTADY — Mayor Gary McCarthy vowed on Tuesday to veto any potential 2023 city budget that resembles the City Council’s latest budget proposals.
The city, facing a Nov. 1 deadline to pass a budget, will hold a sixth budget hearing today at 6 p.m. at City Hall.
During an interview with The Daily Gazette editorial staff on Tuesday afternoon, McCarthy urged the council to pass his proposed budget.
The $103,929,258 proposed budget that McCarthy released on Sept. 30 keeps property taxes flat, although it increases fees for water and waste services, and uses $5.8 million in federal American Rescue Plan Act (ARPA) funding to balance the budget and bolster staffing.
Under a council proposal presented to McCarthy and Commissioner of Finance and Administration Anthony Ferrari on Oct. 21, the council suggests reducing the city’s use of ARPA funding in the budget by $3.4 million and instead using an additional $4.7 million in city fund balance, bringing the total to $8.3 million in fund balance used in the 2023 budget. The fund balance is made up of surplus funds the city has on hand.
“What the council has proposed is basically not using the ARPA money that I’ve proposed and charging that off from the general fund and using some of the fund balance,” McCarthy said.
The mayor noted that the city currently has a fund balance of $16 million, with $6 million of that sum deemed unrestricted.
“If you don’t use ARPA money, you basically, in the first year, chew up all of that fund balance,” he said. “So we’d get through 2023 all right, but going into 2024, we could have as much as a $10 million deficit.”
In September, the council approved the use of $11.3 million in ARPA funding to pay for 23 city projects, leaving Schenectady with approximately $10 million in remaining ARPA monies.
Under the council’s latest suggestions, the city would reduce property taxes by $316,290, representing a 1% tax cut.
City Council President Marion Porterfield on Tuesday said the council is concerned about the long-term sustainability of funding city positions with COVID-19 relief funding.
“It was a concern of multiple council members of using money for staff positions from ARPA funds,” she said. “That was a question that was raised by at least six out of the seven council members. How will we do that in the future?”
The board is also opposed to the mayor’s proposals for increasing waste collection fees by $1 per week and a proposed water rate increase of $12.97 per year for city residents and a sewer rate increase of $25.24 per year.
“That generates in excess of $1 million and the council is moving away from that,” the mayor said of the waste fees. “They don’t want to use any of the ARPA money for municipal operations because they want to put it into other programs. But that shifts the overall financial position of the city from one of stability to one of a much more precarious position.”
Porterfield said that she’s in favor of eliminating the increased waste, water and sewer fees in the mayor’s proposed budget.
Porterfield said there is still room for negotiation between the mayor’s proposed budget and the council’s proposals.
“Everything is up for debate tomorrow [Wednesday],” she said. “Initially we were intending to vote on the budget today [Tuesday], but we could not come to a consensus and there were more questions to be answered. We have until Nov. 1 to get this budget passed, so we want to make sure we take our time. I understand the mayor wants his budget exactly how he put it forth, but that’s generally not how it happens.”
The council’s proposal includes a $425,306 cut for police overtime funding, with a total reduction of $490,306 from the mayor’s proposed $23.4 million Police Department budget.
Chief of Police Eric Clifford said the cuts could affect police staffing.
“We have to look at our budget and where we’re at and make some budget moves if it’s low,” Clifford said on Tuesday. “But if we don’t have any moves to make, we do reduce staffing, yes.”
McCarthy said he was surprised by the magnitude of the funding changes that the council had requested in their proposals.
“No, I didn’t expect a request at that level,” the mayor said on Tuesday.
McCarthy said that if the council approves a budget today that matches the proposals outlined on Friday that he would have no choice but to veto the budget.
“From what’s been outlined, yes,” the mayor said of a potential veto.
Councilman John Mootooveren, who serves as the board’s Finance Committee chair, said that if the council approves the mayor’s proposed fee increases for waste, water and sewer, that the $2.1 million in added fees would be the equivalent to a 7% tax increase for residents.
“We have to look out for the taxpayers,” he said. “At this point in time with inflation going up and people are struggling, we cannot in good faith apply a 7% [increase] to our taxpayers. That’s one of the talking points people are talking about on the council.”
Mootooveren said the council does not have the votes currently to support the fee increases.
“We can’t just decide to say, ‘Well, we’re going to vote for the mayor’s budget of $103 million,’” he said. “Absolutely no. That’s not what we were elected for. We got elected to be the checks and balances.”
The mayor said he was not certain if the council would seek middle ground to compromise with his original proposal.
“I don’t think the council is solidified internally and the level of discussions are not what I’ve seen over the last 20 years,” McCarthy said. “It’s a smaller group that are making decisions.”
Councilwoman Carmel Patrick said on Tuesday that she would be more inclined to back the use of ARPA funding to balance the budget instead of fund balance.
“I would be more supportive of using the ARPA funding than certainly digging into the fund balance,” she said. “I’m sure that’s what we’re going to be discussing tomorrow [Wednesday] evening. I don’t want to see us dipping into the fund balance as much as what was proposed on Friday evening.”
Patrick said she was currently undecided on the issue of potential raises to waste, water and sewer fees.
“We’ve certainly heard from some residents who are concerned about increases in those fees,” she said. “However, there are certainly reasons in terms of costs that are associated in those three areas for why we need more revenue in that area. I guess I want to hear more tomorrow [Wednesday] evening.”
Councilman John Polimeni agreed with Patrick that he would prefer to use ARPA funding to buttress the spending plan instead of using fund balance and said he was skeptical that the city could afford a tax cut.
“I’d love to see a tax cut but unfortunately the numbers don’t add up,” Polimeni said on Tuesday. “Right now we’re looking at roughly $11.1 million that we have to account for if we don’t use ARPA money and if you were to take that out of the fund balance, you’re basically reducing that down to approximately $5 million. That would have a significant impact on our bond rating and just wouldn’t be a wise move financially.”
Mootooveren said it was not a certainty that the council will vote on a proposed budget on Wednesday evening.
“I hope that things can go well and the discussion can be fruitful,” he said. “If it doesn’t happen then we’ll meet again. We’ll continue to meet until we’re able to get a budget. If I told you that, ‘Yes we’re going to vote on it tomorrow,’ that would be an absolute lie. We’ll have to discuss it with the council and move forward.”
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