The Schenectady City Council deadlocked on the 2014 budget Monday, raising questions about their ability to pass a budget on time.
But no one is sure what would happen if the council doesn’t approve a budget by Nov. 1. The council set the budget nearly a week late in 2002, without any apparent ramifications.
Then, the city was facing a sudden fiscal crisis that unfolded a day before the budget was due. This time, the issue is simple: Council members can’t agree on budget cuts.
Council members Leesa Perazzo, Margaret King and Denise Brucker are content to pass the current proposed budget, a slightly modified version of the plan submitted by Mayor Gary McCarthy early this month, which has a 1.5 percent tax increase and increases to the garbage, sewer and water fees.
And they’re not budging. Perazzo made that clear Monday night when she said further cuts were “desperate” and “grasping at straws.”
She added that she’d love to have a tax cut.
“But I also think we have to be fiscally responsible, not desperate,” she said.
Brucker sided with her, saying the budget was “pretty bare bones.”
And King, the council president, said she wanted to trust new finance Commissioner Deborah DeGenova, who argued against various cuts.
In the opposing camp are council members Carl Erikson, Marion Porterfield and Vince Riggi.
Monday’s meeting mainly turned into a debate between Erikson and Perazzo.
Erikson, the finance committee chairman, argued strongly for a cut in health insurance, where the city has routinely budgeted about $1.5 million more than it spent. That trend is projected to continue this year.
“We’ve never had an actual year anywhere close to the amount budgeted,” Erikson said.
He proposed cutting $350,000 from that line — budgeted at $15.2 million — and moving $1.3 million to a special contingency line for unexpected health costs.
“It’s never hit $14 million. We’ve got $15.2 million budgeted. And this is the implementation of a program that’s to save money, so I would expect it to be lower than $14 million,” Erikson said.
He added that other council members were “afraid” to make cuts last year but agreed to put $1.5 million into contingency. It turned out the cut was safe: the money wasn’t needed, he said.
He urged them to be less cautious this year.
“Take $350,000 out. I don’t personally see how this is a high risk,” he said.
Perazzo disagreed vehemently. The city began self-insuring for health care costs this year, in hopes of saving money. But, she said, it’s not yet clear whether that will work.
“We haven’t completed one year of being self-insured,” she said. “I’m not willing to take any more risks with that. I’d be excited to look at it next year.”
Erikson pointed to the city’s history of spending less than $14 million every year. Under a cost-saving plan, he said, the city could not possibly spend $15.2 million. The city’s costs this year are projected to be $13.6 million.
McCarthy also noted that the city has stop-loss insurance that would step in to pay a catastrophically high insurance claim.
But King said the budget line had no “cushion” for high but not catastrophic claims.
Erikson threw up his hands.
“You budget for exactly where you think you’ll hit, and then you have contingency,” he said. “You can’t build in a cushion, a worst-case scenario in every line. It defeats the point of even going through the effort of trying to figure out what you spend.”
Perazzo disagreed, saying that the council had cut most “cushions” out of the budget lines.
“I think actually this is an excellent budget,” she said. “We cut a good bit and we saved the taxpayers money. If there was a glaring error that could bring it to zero [percent tax increase], I’d take a good look at it.”
But the health costs, she said, should not be reduced because the city might need the money.
Erikson wasn’t persuaded. He said the city should instead use its contingency line if any expenses came in too high.
The council will meet again tonight at 5 to continue negotiations. The council is still planning to vote on the budget Wednesday at 5 p.m., but that could be rescheduled.