Another "Kick the Can Down the Road" Budget

 

Here we go again. Another "kick the can down the road" budget.

 

Another irresponsible budget that hypes "a second historic tax cut in a row" but which will lead to either higher taxes and/or cuts in town services in the future.

 

The inescapable fact is that for second year in a row, town expenses have increased at a faster rate than revenues.

 

Since Supervisor Grace took office in January, 2012, expenses have increased by 8.8 % but revenue has only increased by 1.6%.

 

How, you ask, can the Supervisor propose cutting taxes when expenses are exceeding revenue?

 

The answer is simple:  inflate revenue projections, raid the town's emergency rainy day funds (aka fund balance), overcharge taxpayers in the water, refuse and Hallocks Mill Sewer special districts for phantom administrative services —and for good measure — mix apples and oranges in order to arrive at a phony tax cut number.

 

Look at the numbers. Both the 2013 budget and the Supervisor's Tentative 2014 budget are online at yorktownny.org. The numbers and budget gimmicks speak for themselves.

 

2013 Budget

The 2013 town tax rate increased by 4.64%, the largest town tax rate increase since 1995.

 

But, in a classic example of political spin, the 4.64% increase was sold to taxpayers as a tax reduction. How?

 

By creatively mixing apples and oranges.  During last year's budget debate, Supervisor Grace redefined the term "town tax." Whereas traditionally, the "town tax" applied only to the general, highway and library funds, Supervisor Grace said the town tax also included certain special district taxes.

 

By redefining terms, Supervisor Grace was able to use the decreases in the tax rates for the refuse and water districts to mask the 4.64% increase in the town tax. And by doing that, he turned a 4.64% tax rate increase liability into an "historic" 3.37% tax rate decrease.

 

2014 Budget  

Supervisor Grace has reversed himself. He's now saying that the "town tax" applies only to general, highway and library funds, probably because his 2014 Tentative Budget calls for a 0.46% reduction in the "town tax." The decrease translates to a $3.03 tax savings for the typical homeowner with a house assessed at $10,000.

 

How did he achieve the decrease?  Again, by relying on one-shot revenues, overly optimistic revenue projections, excessive charges for the water, refuse and Hallocks Mill sewer districts — and this time — an unprecedented transfer of $1.2 million from fund balance, more than double the fund balance used in the 2013 budget.

 

If only half that amount of fund balance was used, a more modest $600,000, the town tax rate would increase 2.8%.

 

(Actually, the Supervisor proposes taking a grand total of $3 million in fund balance monies from eight separate budget funds, including $1.4 million from the water district fund balance, more than double what he took from the district's fund balance for the 2013 budget.  See page 11 of the 2014 budget.)

 

Relying on a one-shot infusion of $1.2 million from fund balance to achieve a one-time 0.46% decrease in the town tax rate is especially problematic for the 2015 budget because:

  • it's unlikely there’ll be another $1.2 million excess in the fund balance that can be used to offset increased 2015 expenses
  • it's equally unlikely  that other non-tax revenue sources will increase by $1.2 million next year, and 
  •  it's equally unlikely that in one year new commercial rateables will generate an additional $1.2 million in tax revenue.

 

By 2015, taxpayers will have to pay the price for two consecutive, politically motivated, "kick the can down the road" budgets  just like the tax rate spike that followed the 1992 and 1993 tax cuts.

 

The Supervisor also contradicts himself in his own budget:  On page 11 of the budget, he gives taxpayers back $3 million in "excess" fund balance as a one-time tax rebate, while in his budget message  (see the beginning of the budget book) he says that excessive fund balance should "be allocated toward capital expenditures or to pay down liabilities (debt). "

 

P.S.   The Supervisor"s budget also includes a not so pleasant surprise — a $900,000 increase in water usage fees, something the Supervisor "forgot" to mention when he was hyping his "second historic tax reduction."  But, since the Town Board hasn't agreed to any increase in water rates, let alone discuss the subject, only time will tell if the cost of the Supervisor's surprise rate increase will exceed the $3.03 savings in town taxes.

 

For a closer look inside the Supervisor’s 2014 Tentative Budget, click here.