Town Board Budget Hearing

December 9, 2012

The public hearing on the 2015 budget consisted mostly of an informative, provocative, and to some extent philosophical, discussion of the tax levy and the town’s fund balance, including how  the fund balance was generated, the size of the fund balance and how it should be used. Supervisor Grace started the meeting with an explanation of the components of the budget, supplemented by a power point presentation. In part, his comments were a response to the two articles I had written on the same subject which were critical of what I considered was an excessive reliance on fund balance.

Both points of view are available online and I highly recommend taxpayers looking at both. It’s YOUR money and your town that we’re talking about. The supervisor’s point of view  is available on the town web site,   http://www.yorktownny.org/townboard/meeting-videos and mine at www.yorktownbettergovernment.org.

Next steps:  Although the hearing was closed, because Councilman Murphy was not able to attend the meeting (he was in Albany for an orientation session), Supervisor Grace explained that the board will  vote to adopt the  budget on December 16. At that time, the board will consider changes to the Preliminary Budget adopted by the board in November.  If the November Preliminary Budget is not supported by three members, by default, the November budget will become the official 2015 budget.

The contrasting positions boil down to the following issues:

1. Why and how does the fund balance grow and can we assume it will continue to grow?

Does fund balance grow because taxpayers were overtaxed or because, by the end of the fiscal year, the town ends up spending less than it anticipated and/or receiving more revenue than it anticipated from non-tax sources, like sales tax and mortgage tax. (I pointed out that the town is still waiting for the JV Mall to give the town a $100,000 check for its building permit, an amount that will likely mean 2014 building permit revenue  will be higher than originally forecast back in December, 2013.)     

What also needs to be considered is that the factors that can lead to an increase (or decrease)  in the fund balance are different for each of the town’s 27 separate and distinct budget funds.

Whereas Supervisor Grace pointed to the growth in the total fund balance for all funds over the last two years and was generally optimistic that the fund balance would increase in 2014 once the books were closed sometime in 2015 (he didn’t specify if he was referring to a specific fund or all funds),  I was generally more cautious saying that the town can’t always anticipate  an increase,  noting that the town has no control over the major non-tax revenue sources in the General Fund (the town’s largest fund) such as sales and mortgage tax and development rated fees which are subject to fluctuations in the economy.

2. How should the fund balance be spent, especially when the fund balance continues to grow?

This boils down to a difference in spending philosophy:  Should excess fund balance be given back to the taxpayers in order to lower the following year’s tax rate, a position taken by Supervisor Grace, or, as I am suggested, be used to pay cash for some long delayed capital improvements in order to avoid borrowing and having to increase debt service costs for future budgets

In support of the bonding option, the supervisor’s position is that the people who will be living in Yorktown in the future and who will benefit from the improvement should pay for it. Therefore any excess funds in the fund balance, which he says resulted from overtaxing current residents, should be given back to today’s residents who may not be living in Yorktown tomorrow.

My position is that there’s always an overlap between who paid for and who benefits from infrastructure improvements and we can’t start trying to figure out how long someone plans to live here.  For example, when I moved into Yorktown in 1970, town hall had already been built and an expansion paid for. But I certainly benefited from its existence. (Here’s an interesting statistic I recently came across:  79% of the home sales in Yorktown are to residents who already live here.  So yes, people are moving, but they’re moving within Yorktown. So today’s taxpayer will remain tomorrow’s taxpayer.)

At the risk of mixing apples and oranges, it’s sort of like the argument one often hears about school taxes and why seniors should be paying school taxes when they have no children in school. Years ago, senior citizens helped pay for my childrens’ education. Today, as a senior, my taxes are paying for someone else’s children.  In the end the system works to everyone’s advantage.

Supervisor Grace was especially critical of the large fund balances in the water and Yorktown Sewer districts, calling them “criminal” and said the money shouldn’t be kept in fund balance unless there was a special purpose for holding the money in reserve. In response, I called attention to approximately $7 million of needed capital projects in the water district and $4-$5 million in the Yorktown sewer fund and that a portion of that money could be used for those projects to minimize the need for borrowing.

The following comments were made by the public

On fund balance, Tom Diana and Don Roberts of the UTY asked the board to use more fund balance to lower taxes. Stewart Glass and Brian Carroll had the opposite point of view, with Mr. Glass saying the town should keep more in fund balance as a safety net and Mr. Carroll saying the town should use some of the fund balance to finance long delayed capital projects. When Don Roberts repeated the UTY’s position that there should be a written fund balance policy, Supervisor Grace explained that there is a policy (although not written down) that says the fund balance should be 15%-17% of the fund’s operating budget.  In response, Mr. Roberts said that the policy should distinguish between funds.  Mr. Roberts also called the use of fund balance as “shell game” as it was shown in the budget as a revenue but that in practice it wasn’t ever appropriated or used.

Mr. Roberts also asked about the status budget advisory committee that he said was supposed to be set up three years ago but which still  hasn’t been formed. 

Line items. Mr. Roberts also had questions or comments about several specific line lines, noting that he had made the same comments at previous hearings and that no action had been taken to address the UTY’s concerns. These included: whether the athletic clubs needed the town subsidy they were given, the need for a $100,000 contingency line item, the subsidy for senior trips, cell phone usage,  the increase in the cable services for broadcasting meetings, and why we didn’t use the fountains at the YCCC instead of purchasing water. Noting that there will only be two board members as of January 1, he also wondered if the $75,000 salary line could be reduced.

While my comments during the hearing were mostly general in nature and dealt with the tax levy and fund balance, I did note that at the December 16 meeting I would be proposing some changes to the Preliminary Budget.