AMSTERDAM — The Common Council approved amendments to the city's draft $30.79 million 2018-19 budget Tuesday night, knocking down the mayor's proposed 8 percent tax levy hike to a 1.97 percent increase.
Although many small changes were made to expenses in Mayor Michael Villa's proposed budget, the council was able to pare down the tax increase requested by Villa primarily by increasing the amount of money taken from the city's water fund balance, or surplus. Villa had requested $1.2 million in water fund money, and the council increased that to $1.65 million.
"The $450,000 that was added to it actually made it so there was a decrease in taxes, but the council actually re-evaluated from that," City Controller Matthew Agresta said, adding that the council dropped the increase to $400,000 when it added back in a 1.97 tax levy increase.
The budget amended Tuesday night, if approved by the mayor and the council, would bring the city's total property tax levy to $5.342 million and would raise the city's tax rate to $15.89 per $1,000 assessed value, an increase of 12 cents per thousand.
Villa's original budget before the amendments requested a $5,689,556 total tax levy, increasing the tax rate by $1.16 per thousand dollars of assessed value to $17.05.
Villa said Tuesday night he isn't sure if he will agree to the council's budget.
"I'll reconnect when they resubmit the budget, and I'll sit with [Agresta], and if we feel like there is something that we totally disagree with, I'll issue a veto message, but we haven't had those discussions yet," Villa said.
Third Ward Alderman Chad Majewski said the public hearing for the city's final budget will be set for 5:15 p.m. Tuesday night. Another issue dealt with Tuesday night were amendments affecting proposed changes to the city's water, sewer and sanitation fees. The amended 2018-19 budget leaves water rates flat, but uses $150,000 in sewer fund balance money to decrease the city's annual sewer fees by $5 and $130,000 from the sanitation fund balance to help reduce a proposed increase in the sanitation fee down to about a $3 increase.
Agresta said that although the audited 2017-18 figures for the city's water, sewer and sanitation funds are not yet available, he is confident there will be enough money in all three funds to pay for the council's spending from those funds to reduce the tax levy hike and reduce fees. "I couldn't see those three changing so dramatically that they wouldn't be able to support the amounts the council had put in there, in terms of what they want to use. I still think we are using a little more than we should be, but ultimately it's the council's decision," Agresta said.
Amsterdam's city budget is being crafted this year under the shadow of a accumulated $7.1 million deficit revealed by a multi-year independent audit of the city's finances conducted by independent auditor EFPR Group.
Agresta said the two biggest factors that resulted in the city's accumulated deficit were the failure of the city to foreclose on any properties for seven years and because the city wasn't transferring money from its water fund into its general fund correctly.
"They weren't being budgeted correctly, so, I didn't know if legally we would get into trouble the way they were. We have since corrected that, so in the 2018-19 budget we will be able to make that transfer," he said.
Agresta said Amsterdam officials essentially overestimated the amount of revenue the city would collect in property taxes for multiple years because none of the non-tax paying properties were properly foreclosed on.
Unlike nearby neighboring cities Johnstown and Gloversville, which have independently elected and controlled water departments, the city of Amsterdam controls its water revenues. New York state law allows city's to take the "profits" from revenue collected for water, which is the money left over after maintenance costs, and use that money for the city's general expenses.
Agresta said during the period the city accumulated the $7.1 million deficit, the city's expenses never exceeded the city's ability to pay for them, although water fund balance revenue was used annually to pay the bills. He said the city expensed bills to the water fund and put the revenues into the city's general fund.
During the time period of the city's deficit, Agresta said the city never borrowed any money to help pay expenses.
The city in February borrowed $2 million in the form of a tax anticipation note to ensure the city would not run out of money to make payroll and other expenses. "We just didn't want to get to a point where we were worried week to week that we would be able to do so," Agresta said.
Agresta said the city does not owe any portion of the $7.1 million deficit to any entity, although the city may have to pay some taxes owed on properties the city had failed to foreclose on. The city is preparing to hold an auction for approximately 300 foreclosed properties soon, and will have a better idea of tax money owed on them after that.
"The city has never bounced a check to my knowledge," he said. Agresta said the practical consequences of the city's $7.1 million defecit include: potential damage to the city's credit rating and the potential for the New York state Comptroller's Office to either audit or take control of the city's finances. In the future, the city now will look to decrease its annual spending deficit to curtail its use of the city's water fund.