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Amsterdam Council overrides tax cap, passes budget

Amsterdam Council overrides tax cap, passes budget

Split budget vote draws ire of deputy mayor
Amsterdam Council overrides tax cap, passes budget
The Amsterdam Common Council discusses the city’s 2019-20 budget Tuesday night.
Photographer: Jason Subik/Gazette Reporter

AMSTERDAM -- The City Council unanimously voted to override the New York state property tax cap to increase the city's property tax levy by 7 percent — but then the council split 3-1 on approving the $33.1 million 2019-20 budget.

Republican Aldermen Patrick Russo, 1st Ward, Paul Ochal, 2nd Ward, and Democratic Deputy Mayor James Martuscello, 5th Ward, voted in favor of the 2019-20 budget, but Democrats David Dybas, 4th Ward, and Irene Collins, 3rd Ward, did not. Dybas voted no and Collins abstained. 

Martuscello blasted Dybas for warning the public about the need for a tax increase, warning the public about the possibility of a state control board taking over the city, participating in changes to the budget — including voting with Martuscello on union contracts that carried raises — but then voting against the budget. 

"You hypocrite! You sat right here and you said 'We've got to raise the tax cap' to these people, 'We've got to raise taxes or we'll be like Troy,' and the best one was [the] state will come in and it's going to kill us. You know how I vote? Yes! Now you've got a budget, no thanks to you," Martuscello yelled at Dybas. 

Dybas gave a short statement prior to his no vote indicating one of his reasons for voting no was that Mayor Michael Villa's administration had approved $6.4 million in debt during the 2017-18 fiscal year, raising the city's overall debt to $25.9 million. 
Dybas said he's also not certain how much debt the city borrowed during the 2018-19 fiscal year. 

"As the city's current fiscal year 2018-19 is about to end on June 30, 2019, it also becomes very interesting to see how much these debt challenges either increased or decreased," Dybas said.

Villa defended the $6.4 million in borrowings, stating the city was under a court order to conduct millions of dollars in infrastructure payments to stop sewage spills into the Mohawk River. He said two other factors contributed to rising city deficits under his administration: the city's independent auditing firm EFPR Group counts transfers out of the city's water fund for general fund expenses [which is legal] as technically adding to the city's deficit. Villa said the city also borrowed $2 million in the form of a Tax Anticipation Note in 2018 and renewed the bond again for 2019 in order to ensure the city had enough cash to make payroll.

Villa asked Dybas how he would prefer the city handle its capital project costs if not borrowing the money. 

"Raise taxes!" Dybas said, arguing the interest payments on nonrefundable city borrowings will cost taxpayers more than just the principle in the long run.

The 2019-20 budget of $33.1 million raises year-over-year spending by 7.6 percent, $2.3 million, and hikes the city's total property tax levy about $1 million from $4.7 million to $5.7 million.

The budget increases the city's tax rate by 8 percent to about $17.37 per $1,000 of assessed value.

The budget also increases user fees overall by about $88.93, more than double Villa's original proposal. The water rate is not increasing, staying at $423.89, but the sewer rate increased 28 percent to $303.27 and the sanitation fee increased 9 percent to $269.73. 

Dybas calculated the increase in taxes plus user fees will increase total costs for a homeowner assessed at $60,000 by about $167.

Russo pointed out taxpayers in the city have gotten a recent break in county and school taxes, giving them an overall tax decrease between all three bills since 2012, even though the city's rate has gone up.

Villa's original budget proposal included a 9.3 percent tax levy increase, which was meant to reduce the city's approximately $9 million budget deficit, built up over a period of years, by about $510,254. Villa's plan was in accordance with the advice of the city's budget consulting firm Municipal Solutions, which has advised Amsterdam to raise property taxes in order to convince the state Legislature to approve a deficit finance package to allow the city to borrow about $9 million to clear off its deficit.

The property tax increase is also aimed at convincing the bond market to lend money to the city. Amsterdam's credit rating has dropped to junk bond status following years of deficit spending and poor bookkeeping practices.

Villa had threatened to veto the 2019-20 budget if the council did not lower the city's deficit. 

After the council vote Villa said the council's budget lowers the deficit by about $300,000, and he will sign it.

Major council changes to Villa's original proposed budget include: 

• A 3-percent raise for all police officers due to a new contract agreement, increasing costs $79,470.

• A decrease in food revenue from the golf course by $150,000. The city's municipal golf course restaurant plan stalled after a pipe leak did over $1 million in damage to the municipal clubhouse, for which the city has received an insurance claim approval.

• A $70,000 decrease in golf clubhouse staff costs, due to a one-year delay in implementation of the golf course restaurant plan while repairs and upgrades are made to the facility.

• A $300,000 increase to the city's sewer contingency fund. The city was forced to request a $200,000 zero-interest loan from the state’s Environmental Facility Corp. to repair a sewer main leak that has resulted in more than 80,000 gallons of raw sewage flowing into the Chuctanunda Creek

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