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Fulton Montgomery Schoharie

Amsterdam Council sets special meeting to break tax cap

Amsterdam Council sets special meeting to break tax cap

Amsterdam Council sets special meeting to break tax cap
Members of the Amsterdam Common Council and City Controller Matt Agresta discuss the city’s 2018-19 budget Tuesday night.
Photographer: Jason Subik/Gazette Reporter

AMSTERDAM -- The Common Council voted to set a special meeting for 8:30 a.m. May 28 to vote on a resolution to override the state property tax cap for the city's 2019-20 budget. 

Although the city's 2019-20 budget is not finalized, aldermen Tuesday night said the Common Council's budget is currently projecting a tax rate hike of $1.25 per thousand dollars of assessed value, bringing the rate to about $17.33. 

City officials did not have exact total property tax levy increase numbers Tuesday night, either in dollars or percentage increase, and declined to provide an estimate.

Mayor Michael Villa's budget proposal in April called for a $32.4 million 2019-20 budget, which would increase year-over-year spending by 5 percent, and increase the city's total property tax levy by $925,605, a 9.3 percent increase. Villa's proposed tax rate increase was about 90 cents.

First Ward Alderman Patrick Russo said since Villa's original proposal the city has settled several of its union contracts, including the police union contract, all of which has added expense to the budget. 

"Ours is bigger," Russo said of the council's budget and the likely property tax levy increase. 

During the public comment period of Tuesday night's meeting, a woman who lives in the city asked why the tax increase had to be so high and why the council is breaking the state tax cap. 

"I'm here to speak on behalf of the people who are on fixed incomes, or disability, people who have trouble paying their taxes now. I'm talking about the city taxes, not even the county or the school. If you would just consider those people, people who need to make prescription payments, need to put food on the table," she said. 

Deputy Mayor James Martuscello, who represents the 5th Ward, said he sympathizes with people who live on fixed incomes, but the tax increase cannot be avoided if the city is to maintain its services. 

"Part of the increase is to pay back the debt [for the budget deficit] and the other percentage is to pay for the city's expenses, so you can have a Police Department, a Fire Department, have public safety and the garbage picked up," Martuscello said. "We're looking for a safe city, a clean city, a city to be proud of -- in order to maintain that it's going to cost you money."

To override the property tax cap, which allows for an approximately 2 percent tax levy increase, at least 60 percent of the Common Council will need to approve the increase, which appears likely.

Villa's budget attempts to pay down $510,254 of the city's estimated $9 million accumulated budget deficit. Villa's administration has been seeking deficit financing legislation from the state so it can borrow approximately $9 million to clear off the city's accumulated budget deficit.

In January, the city's consulting firm, Canandaigua-based Municipal Solutions Inc., advised the city to raise property taxes at least 10 to 12 percent in order to convince the state and the bond investing community that the city was serious about fixing its long-standing budget problems. 

Amsterdam's credit rating has fallen to junk bond status because of inadequate accounting practices going back to 2008.

Between 2010 and 2016 the city also failed to conduct any property foreclosures, which helped widen the budget deficit because the city had continued to budget for tax revenues from properties that weren't paying taxes.

City officials have attributed this series of events to chaos in the elected City Controller's Office due to deaths and resignations.
Prior to the vote, the council listened to a report from the city's independent audit firm EFPR Group. Joseph Klimek, a partner in the firm, told the council the city's budget deficit grew by $498,063 for the city's 2017-18 budget. He said the city's revenues also increased by $637,616, largely due to income from the city's Fire Department ambulance service.

The city's budget deficit for 2017-18 increased despite some savings from budget cuts, and other cost reductions. 

The city's expenses also decreased by $468,606 over the prior year as "increased spending for general governmental support and public safety was offset by savings in transportation, benefits and debt service."  

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