BUDGET BLUES

With a cut here, a slice there, Mayor Rosamilia has stated that the tax hike could be as low as 4.9% That only works, of course, if there's a meeting to vote on a tax cap override. Such a meeting has been in doubt but it appears it will go forward.

The 4.9% possibility also throws the issue back to the City Council. Council President Wiltshire previously stated that he could stomach a 5% increase but not a 8% increase. The extra 3% hurt his tummy. We remain skeptical that anything will happen. The 'No's' simply refuse to cooperate.

That said, we have thought long and hard about this situation during Godfather commercial breaks. The conclusion arrived at? While making for semi-interesting drama, this is not the end of the world.

Mayor Rosamilia has his detractors like all mayors. He certainly has his flaws. In particular, his administrative and public relations skills are about as developed as your average mollusk. The budget issues are not one of those flaws. No more than any other mayor.

Lets look at some of the excuses given for tax hikes and/or threatened layoffs.

There's this excuse:

"Based on the current level of spending and a relatively flat increase in revenues, we
have projected costs through .... Major category expenses included an assumption of
salaries at an increase of 3% for each year .... Salary increases at this rate
(3%) are in place for the CSEA and UFA bargaining groups per their contracts through
.... The other large group (PBA) is currently undergoing bargaining
negotiations. However, based on prior negotiations, we feel safe in assuming a three percent
(3%) salary increase for that group as well. Furthermore, given the current trends, we have
assumed an additional 30% of total salary costs to account for employee benefits, and an
increase in other operating categories of 3.9%."

Translation: Expenses go up.

It is ultimately this administrations goal to close these budget gaps through the
measures described above. However, if these means are not sufficient, an alternative plan will
be presented which includes a potential tax increase and/or layoff. In the worst-case scenario,
the budget gap in ... ($1,202,474) would be closed by implementing a 7% property tax
increase equating to approximately $1,050,000. In addition, the City would implement an
employee reduction of at least 5 positions through attrition and/or layoff. This reduction would
equate to approximately $208,000 provided the average salary of each is $32,000 and fringe
benefits of 30% are anticipated.

Translation: We may need more money.

Or this excuse:

"We've done just about everything we can do to put together a budget to continue the quality of life of the residents. By reducing some jobs from the budget, we're able to keep the tax increase to what I believe is a minimum level."

Or this excuse:

"...healthcare costs are projected to increase 7.3 percent for 2011, having already jumped 13.8 percent in 2009 and 6.5 percent in 2010. Altogether, there has been a $1.5 million increase in healthcare costs from 2009 to 2011. Despite employees making health care concessions during the last round of negotiations, it does not necessarily mean the cost to the city is reduced."

Or this excuse:

"There is also a "staggeringly high" 41 percent increase in pension contributions, an amount that may change after the city receives the final amount from the State Comptroller's Office on Oct. 15. Of that 41 percent, the city was able to amortize $1.4 million. Because of the amortization, the pension increase will be around 13 percent, but Mazzariello stressed that the increase will have to be paid eventually. "All we're doing is prolonging the inevitable, and postponing those payments to the future," he said."

Then there is the use of reserve funds to keep tax increases low or non-existent.

These, of course, our quotes from the prior administration when dealing with their own budget woes.

There was the threatened 19% tax increase for 2010.

The administration explained:

"Obviously, this is a very serious situation," wrote Crawley. The city's current situation stands in stark contrast to statements made by Tutunjian to The Record last fall that there was no financial crisis in the city because the total amount of money in city reserve accounts then neared $22 million.
"When I say we're in the best shape we've been in for 20 years, it's true," said Tutunjian at that time.

When asked what had changed since then, Tutunjian said that the city received a bill from the state earlier this month informing his administration that its pension costs were going up by $2 million in 2010.

Ultimately, the proposed budget called for a 4.25% tax increase, later reduced to 2.54% by the City Council.

There was the year when spending went up but there was no corresponding tax increase.

The 4.9% tax increase isn't even the largest in the past decade. If you recall, Tutunjian's first budget raised taxes 6.5%. In the first two years he raised taxes 8%.

That is not to criticize Tutunjian. The 'excuses' his administration made for budget woes remains the same today. It remains the same for many northeastern cities. What some people here and there are the internet seem incapable of understanding is that costs increase over time. In particular, healthcare costs and, of course, contractually mandated raises, COLA's etc. Technology needs updating, roads need to be maintained.... If revenues remain flat or even grow at slower rate than prices, guess what?

Cuts can always be made. There is always something that can go. Sometimes increasing revenue costs money. For instance, we could sell our terrific water to some neighboring municipalities that have a water problem. Most are across the river and we simply do not have the infrastructure to deliver the product. Do we want to invest in that infrastructure?

Do cuts in services help attract investors? Would people be willing to go to private garbage collection?

The point is, this annual budget dance (some years are easier than others) does not represent a systemic problem as much as it represents a new reality. Cuts, like tax hikes, only prolong the inevitable.  Cuts are a one-shot. Tax hikes are a one-shot. Eventually, you can't do either.

Got to love Troy politics. It's never dull.