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HomeMy WebLinkAboutMeeting Minutes 9-14-20 1 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. 2 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. 3 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.