The following comments represent my personal view and are separate and distinct from my unbiased Patch blog postings of meeting summaries for Citizens for an Informed Yorktown, ciyinfo.org.
Welcome to Yorktown spin city – or how a 7.72% tax rate increase is being “sold” to you as either a half a percentage point tax rate decrease or only a 2.58% increase.
At least, that’s the message coming out of Supervisor Michael Grace’s office.
How can a 7.72% tax rate increase morph into a decrease, or, at best, a modest increase? Here’s how.
Yorktown has 28 different taxing districts or funds, not counting the two fire districts. Each district has its own budget and its own tax rate.
That means that your total town tax bill depends on how many districts you’re in, and that in turn depends on whether you’re a residential or commercial property owner, whether you have town water, and, if you’re in a sewer district, which district.
What Supervisor Grace is doing is combining the tax rates of multiple taxing districts so that tax decreases in some districts offset the increases in others. In other words, he’s mixing apples and oranges to mask an uncomfortable 7.72% tax rate increase in the basic tax rate.
Every taxpayer, residential and commercial, pays into three budget funds: the General, or “A” Fund, the Highway, or “D” Fund, and the Library, or “L” Fund. The total appropriations for these funds are combined into a single tax rate, referred to as the “ADL tax rate.” Historically, it’s the ADL rate increase that is used when referring to the Town budget. The ADL rate is also the tax rate that the media uses to compare rates from one year to another or from one town to another.
In Supervisor’s 2013 budget, the ADL tax rate increase is 7.72%.
To put the 7.72% number in perspective, it’s the largest tax rate increase since 1995; since 1998, the tax rate increases have been between 2.10% and 3.95%. In 2012, the increase was 2.55%.
A note about the confusing and misunderstood 2% tax levy cap
The 2% cap applies only to how much the Town can levy in taxes and has nothing to do with the tax rate. 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 are taken into consideration. The tax rate is what property owners pay per $1,000 of assessed value. The tax rate is determined by dividing the total tax levy by the total taxable assessed value of the Town. According to this year’s tax levy calculation, the Town could spend $1.4 million more and still be within the 2% levy cap; that’s because less money needs to be raised in taxes in the Refuse and Water districts (see below).
Now for the spin
By combining the 7.72% ADL rate with a decrease in the Refuse District tax (a result of the new garbage contract) and reducing the Water District tax rate (by using $750,000 from the district’s fund balance) with smaller shifts in the Sewer and the Advanced Life Support districts, the TOTAL combined tax rate changes. For the typical homeowner with a $10,000 assessed value and with sewer and water, the combined rate results in an overall tax rate decrease of half of a percentage point while homeowners without sewer and water would see a combined tax rate increase of 2.58%.
On the surface, the minus half of a percentage point or 2.58% increase looks good. And it is good news – for 2013. The problem is: what happens in 2014?
In addition to mixing apples and oranges to wipe out a 7.72% increase in the ADL funds and to mask long term fiscal problems in the $30 million General Fund, by far the Town’s largest fund, the Supervisor’s 2013 budget relies too heavily on a series of one shot fixes -- and it recklessly kicks too many cans down the road. For example:
One shot revenues: The General Fund budget assumes an additional $422,000 in revenue in planning and building fees, mainly from Costco, the Fieldhome expansion, Crompond Crossing and Croton Overlook. Assuming all these projects come to fruition in 2013 and the fees are collected, are there a sufficient number of “new” projects in the pipeline that will generate an equivalent amount of revenue in 2014? As a rule of thumb, keep in mind that every $180,000 in lost revenue means a 1% increase in the tax rate.
Staff costs: Although the 2013 budget represents a $1.2 million increase in total expenditures, salaries and benefits increase by a whopping $1.4 million -- and will increase again in 2014 based on existing labor contracts and likely increases in medical benefits and pension payments, two expenses over which the Town has no control -- except to the extent that these costs are determined by the number of employees.
But, despite the fact that staff costs make up more than 78% of the General Fund budget, the Supervisor appears not to have made any effort in his 2013 to control these costs. In fact, his budget actually ADDS to this expense by adding two additional full time employees in 2013 to the two full time positions he already added in 2012. The two new hires alone represent at $100,000 in increased expense.
Keeping in mind the $180,000=1% tax rate increase equation, and absent any infusion of new revenue, any serious attempt to reduce the tax rate increase in 2014 will most likely require taking a close, hard and painful look at staffing levels. Cutting non staff budget lines can only save pennies, not dollars. And it takes a lot of pennies to add up to $180,000.
One shot savings: The lower 2013 tax rate reflects the $750,000 reduction in the 2013 garbage contract. But what happens next year when that savings has already been built into the budget and there won’t be a “new” $750,000 savings for 2014 -- and other expenses in the Refuse district such as salaries and fuel costs will increase? The Supervisor’s budget also includes a one shot savings in the Water District budget by using $750,000 from the district’s fund balance.
What happens next in the budget process?
The Supervisor’s budget is only the first step in the budget process. Last week, the Town Board spent 10 hours going over the Supervisor’s budget with department heads. (For the highlights of those discussions visit ciyinfo.org.) The Board will continue it discussions on Tuesday, November 13 and, if there’s a consensus on changes to the Supervisor’s budget at that time, the Board will vote to adopt a Preliminary Budget that will be the subject of a public hearing on December 5.
So, between now and December 5, you may want to take a look at both the Supervisor’s budget that’s already on the Town’s web site, yorktownny.org, and the Town Board’s Preliminary budget that will eventually be uploaded to the web site.
Are you comfortable with a 7.72% tax increase? If not, what changes would you like to see in the budget?
Remember, it’s YOUR money that the Town Board will be spending. It’s your quality of life services that are at stake. Make your voice heard on December 5.
For more general information about the budget, visit yorktownbettergovernment.org.