Painful Budget Choices Ahead

By Yorktown Supervisor Susan Siegel

I’m not looking forward to next month.

Throughout October, I’ll be meeting with department heads and the town comptroller to try to figure out how the Town can live within the 2% tax cap enacted by the State Legislature. While it’s too early to share any specifics with you, what’s painfully clear, even at this beginning stage in the budget process, is that the numbers simply don’t work.

There’s no fiscally responsible way the Town can live within the 2% cap AND maintain its current level of services.

It’s important to note that the 2% cap is on the tax levy, not the tax rate. And there’s a big difference between the two terms.

The tax levy is the amount of money the Town needs to raise in taxes in order to balance its budget after all other sources of revenue, such as the mortgage tax, sales tax, building fees, interest earnings etc. are taken into consideration. The Town has 82 different sources of revenue.

The tax rate is what property owners pay per $1,000 of assessed value. The tax rate is determined by dividing the tax levy by the total taxable assessed value of the Town.

If the tax levy stays the same but the the total assessed value increases because of new development, the tax rate for all property owners drops. Conversely, if the total assessed value decreases because properties are removed from the tax roll, (like Granite Knolls), or property owners successfully challenge and lower their assessments (tax certioraris), then the tax levy is divided by a smaller number and the tax rate increases for all property owners.

So even though Yorktown has several new commercial development projects in the approval pipeline, more commercial development isn’t the “solution” to the revenue problem. New development, whether residential or commercial, affects the tax rate, not the tax levy, and it’s the tax levy that is creating the problem for the 2012 budget.

The Town comptroller has already calculated that our expenditures for 2012 will increase, at a minimum, by at least $1.4 million due to increases in health benefits, pension payments, mandated step increases for Town employees, and a $1 million increase in the competitively bid contract price we will be paying for garbage collection beginning next year.

But the 2% cap on the tax levy means that Yorktown can only raise $582,000 more in taxes than it did in 2011, leaving a whopping gap of $818,000. And that’s even before we look at other rising costs such as fuel and salary increases for our employees, some of whom have been without a new contract for three years.

So, as I begin to put together the Tentative Budget, I have two equally painful choices:

Cut services in order to keep within the 2% tax levy cap, or

Leave some or all services in the budget, and recommend to the Town Board that it vote to exceed the cap, something the state law permits.

Don’t be surprised if the next time you see me in the supermarket, or on line in the post office, I ask you the two questions that are very much on my mind these days:

If cuts have to be made, what services are the most important and/or least important to you?

Would you support an increase in user fees, such as the fee for special bulk trash collections or alarm permits? Would you support charging commercial establishments a modest fee to cover a portion of the cost of inspecting their premises for compliance with the State Fire Code? (Last year, the Town Board rejected my recommendation to impose such a fee.)

As you reflect on these questions, keep this calculation in mind: for the typical Yorktown homeowner with a house assessed at $10,000, a 1% increase in the tax rate translates into a $13.56 increase in town taxes, the cost of a pizza or a movie. Would you be willing to pay $25 to $50 more a year in town taxes in order to maintain the current level of services?

When our state legislators were debating a tax cap this past summer, I joined other municipal officials in saying that we could live with a tax cap IF the Legislature also gave us mandate relief. Well, they gave us the former without the latter. So now, while our state legislators continue to take the credit for doing something about high taxes, they’ve conveniently passed the buck to town and school district officials and left us with the unenviable job of either cutting back services or taking a political hit for exceeding the 2% cap. They took the glory while we get the pain.

As the 2012 budget takes shape, I’ll be sharing more with you in the coming weeks.