Good News, Bad News

UNIFY PIERMONT (unifypiermont@live.com)

Good News, Bad News
(A report on the Village Budget and some suggestions)

The Village Board held their public hearing on the proposed budget for 2009-2010 on April 7th. The final budget is scheduled to be adopted at the Village Board Meeting on April 28, 2009. A second budget hearing will be held on Monday, April 20 at 7 PM in Village Hall thanks to the timely arrival of our first mailing, resident concerns expressed at the previous meeting and the Mayor’s newly found fiscal rectitude.

The Good News is that the proposed budget has held the tax increase for next year to 2.6% (2.3% for most of us) with a spending increase of 3.6%. This seems like a large spending increase in these recessionary times. Please note that the schools are talking about spending increases of .54% (Nyack) and 1.34% (SOCSD). However, the tax increase is substantially below the 8% we have been averaging for the past nine years. It brings the ten year average down to 7.4%, still well in excess of double the inflation rate.

How was this accomplished? As the Village has noted, 66% of the Village costs are personnel related. The Village has put in a wage and benefit freeze for next year.

Is it realistic? The Bad News is that more than half the personnel costs are in the Police budget and they have not agreed to the wage freeze. The PBA contract expired May 31st last year and to quote from the Mayor’s memo which is posted on the Village website “the Village has offered a three-year contract proposal that includes a modest increase in base salary for each of the three years through 2010.”

And “The PBA has rejected the offer that the Village presented and has elected to exercise its right to enter into Interest Arbitration to resolve this dispute.” To start with, the Village has already offered a modest increase so an expectation of no increase at all on arbitration is unrealistic.

To quote from the Deputy Mayor’s presentation given earlier this year:
“Binding Arbitration – NYS Civil Service Law 209
-Final decision regarding unionized employee salaries is determined by an unelected, unaccountable arbitrator.
- Decision making latitude of arbitrator is unconstrained by the municipality’s fiscal condition or ability to pay, and as a result, awards frequently do exceed the ability to pay.”
Please note that the emphasis was added by the Deputy Mayor, not Unify Piermont.

Given the past results of arbitration and that the award will be retroactive to May of last year, can we realistically expect no increase in these costs next year? Of course not and Unify Piermont sees more debt ahead. Why would they do this if it is unrealistic? Well, it is an election year.

Unify Piermont also notes that hospitalization costs have been reduced 9% while the Deputy Mayor’s presentation noted such costs have “increased by 75% in villages statewide” between 1999 and 2005. Our congratulations to the Village in achieving this, something no other municipality has been able to do. A few other expense categories also seem unrealistically low given current economic conditions.

Then, you might ask, if wages and benefits have been frozen, hospitalization reduced 9% and personnel costs make up 66% of the budget, what accounts for the spending increase of 3.6%? While there are minor ups and downs elsewhere, the most obvious cause is debt. The proposed budget has scheduled debt payments (principal and interest) over $200,000 higher than last year. If everything else was flat, the Village debt obligations alone would have increased spending 4.6%.

On the revenue side, a number of items also appear suspect to Unify Piermont, but let us focus on just two. The proposed budget includes $130,000 of funds appropriated from the $2 million bond issued last year. Apparently, we borrowed too much and the excess is being used to reduce next year’s taxes. Is it fair to burden the taxpayer with excess debt so the Village can make the following year’s tax increase look better? Remind yourself it is an election year.

The second item is both Good News and Bad News. The Mayor announced he would like to reduce the tax increase to 1% by utilizing some of the Fund Balance (accumulated surplus). This is the good news.

Question: Was the arrival of Unify Piermont’s first mailing calling attention to the tax and debt problem in Piermont on the Monday before the public hearing on next year’s budget a coincidence? Answer: No.

Question: Was the Village Board’s new-found interest in minimizing the tax increase for next year a coincidence and completely unrelated to the arrival of our first mailing? Answer: You decide, but don’t forget it is an election year.

Now for the bad news. The fund balance stands at $283,000 at the end of fiscal 2008-2009. This means that we have been cumulatively overtaxed (or over indebted) in prior years by that much. The balance is a year old since it apparently is not possible to project the fund balance for the current year, which ends in less than two months, until September.

The previous Deputy Mayor has stated (quote from the Village Board Minutes of April 29, 2008) “the Village has an excellent accounting system that allows the numbers and balances to be checked daily.” Apparently, it is not as excellent as he thought. Can you imagine working in private industry where 90% of your revenues and expenses are known to a certainty, where your fiscal year ends in less than 60 days and telling your boss we won’t know the results for another six months? You would soon be looking for another job.

Given that the accounting system is not as excellent as it might be, Unify Piermont agrees that a small reserve is prudent. We also note that the proposed budget includes a contingency of $100,000. This year’s budget (the year ends on May 31st) includes a contingency of $85,000 (of which less than $3,000 has been appropriated as of April 3, 2009).

To achieve the newly proposed 1% tax increase requires taking $60,000 from the fund balance leaving $223,000. Why not decrease taxes 1%, taking $137,000 from the fund balance? This still leaves $146,000, plus whatever the Village adds this year, to cover the inevitable PBA settlement costs. And the money belongs in the taxpayers hands, not the Village Board’s hands where, as one resident noted, it is more likely to be spent than not.

On a related issue, Village Debt and the Capital Budget, there is also Good News and Bad News. The good news is that, for the first time ever, we have a Capital Budget.

The bad news is that we are anticipating adding more debt, further burdening our future taxes. In fact, the same Village Board meeting dealing with the proposed budget had another agenda item to authorize $360,000 in Bond Anticipation Notes. After resident complaints and a very timely suggestion that most of what we need right now, approximately $50,000, could be handled by the accumulated surplus, this was put off. What we need right now is money to pay the engineering fees on a project that it now appears will not go forward. That is another subject for another day.

This message was prepared by Unify Piermont which is dedicated to returning responsible, representative government to Piermont.
Unify Piermont is a group made up of village residents from all areas of the village, and from all political parties. We need to elect a local village government that will address the problems created by the current and previous administrations. A Village Board which communicates with its residents, providing useful information on a timely basis.

We need your help, your input and your involvement. If you share our concerns about Village taxes, Village debt and the lack of any meaningful communication from our Village Board; than e-mail us at unifypiermont@live.com with your name and address or leave a message at 845-613-7675. We will notify you when a new posting goes up on our website at http://www.unifypiermont.blogspot.com/.