HomeMy WebLinkAboutMeeting Minutes 9-14-20
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BUDGET COMMITTEE
Meeting Minutes - September 14, 2020
Committee present: Eric Levine - Chairman, Pam Bleiwas Committee absent: Pat Leary
Staff present: Mike Solvig, Donna Shaw, Judy Drake, Marty Mosely
Others present: Rod Howe, Bill Goodman
Meeting was called to order at: 12:03 p.m. by Chairman Levine.
AGENDA ITEMS:
• Review and approve meeting minutes from August 10, 2020.
Moved: Pam Bleiwas Second: Eric Levine Motion Passed
• Update on status of 2020 Sales Tax Collections.
For the first seven months of 2020, collections are at 84.8% of the same period in 2019. Sales Tax
collections through July 2020 totaling $1,733,210 are $309,757 short of the $2,042,967 collected
through July 2019. Mr. Solvig stated that the projections reported to the Committee at the last
meeting for the remainder of 2020 still look good. It is possible that total collections could reach
$3,190,000. This would be about $407,000 below 2019 total collections of $3,597,000. On a budget
basis, this is approx. $60,000 under budget, or 98.2% of the $3,250,000 amount budgeted in 2020.
Mr. Solvig noted that while the decrease in itself is not good news, we are happy to report that
collections have been stronger than the initial estimates prepared at the beginning of the pandemic.
At that time collections through July were estimated to total $1,171,881, or 57.4% of the same
period in 2019. We had very little historical information on what to expect when we prepared the
initial estimates. What we have found is that collections during the business shutdown were better
than we estimated, and that the re-opening of businesses is taking longer than expected with the
result that collections during the second half of the year will likely be weaker than estimated.
• Update on 2020 Bond Issue(s).
The Committee reviewed the reports on the 2020 Bond Issues (see pages 3 and 4). Mr. Solvig stated
that this was a very interesting bond issue in several respects, the major one being it answered the
question of how can bonds with very low interest rates be sold. The answer is simple; you cannot
sell bonds with very low interest rates. This is where the bond underwriter “adjusts” the bond issue
in a manner that will furnish the issuer with the funds he needs at a total cost no more than originally
estimated over the life of the bonds, and still gives the underwriter a product he can then sell.
- Public Improvement (Serial) Bonds - Series 2020-A: The last time we ran hard numbers on
this bond issue was in April 2020. At that time we were planning to issue $3,710,000 in new
bonds at an estimated interest rate of 2.50% and a maturity of 15 years, with total payments
for principal and interest calculated at $4,497,250. As we prepared to sell these bonds in
August, interest rates had fallen to near zero and the original bond amount of $3,710,000 was
re-structured for the Town to receive $3,340,000 from new bonds plus $370,000 in bond
premium.
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Final pricing resulted in actual interest rates are 5% for years 1 through 8, then 2% for years 9
through 15, an average interest rate of 2.745% and total payments for principal and interest
of $4,133,528. This is comparable to the original bond amount of $3,710,000 at an average
interest rate of 1.345%.
- Public Improvement Refunding (Serial) Bonds - Series 2020-B: These bonds were issued to
refund the remaining $350,000 of the 2009 Bonds and $1,365,000 of the 2011 Bonds, a total
of $1,715,000 in outstanding debt. The new debt was structured for the Town to receive
$1,725,000 - $1,550,000 in new bonds plus $175,000 in net bond premium. Actual interest
rates are 5% for years 1 through 8, then 2% for years 9 through 11. The average interest rate
is 3.618%, and (still) results in a savings of $156,000 over the 11-year life of the bonds.
• Continue Discussion on Tentative 2021 Ithaca Town Budget.
The Committee reviewed the changes made to the Tentative 2021 Budget since their initial review
at the August meeting.
- The 2021 Property Tax Levy increased from $8,720,500 to $8,728,300. The $7,800 increase
was made to capture additional revenue from increased assessments in Ad Valorum values for
(mostly) Cornell properties where water and sewer services are available, but not connected.
$3,500 goes to the Water Fund, and $4,300 goes to the Sewer Fund.
With this change, the Property Tax Levy increases from $8,548,950 in 2020 to $8,728,300 in
2021, an increase of $179,350 or 2.10% over the prior year. This increase still complies with
the property tax cap for 2021, now $86,805 below the tax cap. Property taxes are the Town’s
largest revenue source, representing 33.06% of total budgeted revenues.
The property tax bill for a typical property in the Town of Ithaca will decrease from $2,078.42
in 2020 to $1,994.78 in 2021, a decrease of $83.64 or 4.02%. The typical property in the Town
of Ithaca is a single-family residence with an assessed value of $300,000.
- As discussed at the August meeting, Sales Tax distributions were redistributed to direct a large
share of the $3,250,000 amount budgeted to the General Townwide Fund. We are able to do
this in 2021 as no property taxes have been levied in the part-town funds. 2021 will likely be
the only year this can be done as we expect to levy property taxes in the Highway Part-Town
Fund again for FY-2022. For FY-2021, $1,750,000 is budgeted in the General Townwide Fund,
and $750,000 is budgeted in both the General Part-Town Fund and Highway Part-Town Fund.
- Capital Projects increase by $300,000 with the addition of improvements to Upper Sand Bank
Road in the Highway Part-Town Fund. With this addition Capital Projects for 2021 now total
$3,240,000. This is an increase of $25,000 or 0.78% over the amount of $3,215,000 budgeted
in 2020.
With these changes, the 2021 Ithaca Town Budget will decrease from $26,266,830 in 2020 to
$26,054,056 in 2021, a decrease of $212,774 or 0.81%.
Supervisor Howe asked if the property tax levy now being over 2% would be a problem with the tax
cap. Mr. Solvig responded that the property tax levy is one component in the tax cap calculation.
With the increase at 2.1%, the Town is $86,805 under the tax cap for FY-2021.
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Mr. Solvig noted that at the August meeting, the property tax levy increase was at 1.99% and asked
if the Committee was comfortable with it now being above 2%. If not, it could again be brought
under 2% by reducing the property tax levy in the Fire Protection Fund. Mr. Levine stated that as
the Town remains under the tax cap, he is comfortable with it being slightly above 2%. Supervisor
Howe asked Mr. Solvig to run the numbers so he could review them.
• Other Items
The meeting was adjourned at 12:52 p.m.
Next Meeting: Monday, October 19, 2020 at 12:00 pm, if needed.