HomeMy WebLinkAboutMN-CC-2002-10-08
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COMMON COUNCIL PROCEEDINGS
CITY OF ITHACA, NEW YORK
Continuation of October 2, 2002 6:45 p.m. October 8, 2002
Regular Meeting
PRESENT:
Mayor Cohen
Alderpersons (10) Pryor, Sams, Blumenthal, Manos, Mack
Whitmore, Vaughan, Peterson, Cogan, Hershey
OTHERS PRESENT:
City Clerk – Conley Holcomb
City Attorney - Schwab
City Controller – Thayer
ADVICE OF COUNSEL SESSION:
Mayor Cohen requested that Common Council seek the advice of
legal counsel.
REGULAR SESSION:
Common Council reconvened into Regular Session with no action
taken.
Request to Amend a Capital Project for Cayuga-Green at Six Mile
Creek Project - Resolution
By Alderperson Cogan: Seconded by Alderperson Vaughan
WHEREAS, the Cayuga Green downtown development project is moving
forward in design and study, and
WHEREAS, a water main runs through the middle of the development
site on the east and south sides of the library, and
WHEREAS, this water main must be relocated to accommodate the
Cayuga Green development, and
WHEREAS, said water main would not require relocation but for the
Cayuga Green project, and
WHEREAS, the estimated cost of stated water pipe relocation is
$125,000, now, therefore, be it
RESOLVED, That Common Council hereby amends Capital Project #446
Cayuga-Green Design and Study by an amount not to exceed
$150,000.00 giving a total authorization of $695,000.00, to
provide for the relocation of said water pipe, and be it further
RESOLVED, That funds necessary for said project shall be advanced
by the General Fund and later repaid from the issuance of serial
bonds.
Mayor Cohen explained that construction would start in a matter
of weeks. He further explained the City’s current debt level,
and the potential impact on parking during the construction.
A vote on the resolution resulted as follows:
Carried Unanimously
Cayuga Green Report:
Alderperson Cogan distributed a written report on the Cayuga
Green project.
Alderperson Blumenthal asked about what arrangements had been
made to ensure that Ciminelli would reimburse the city for their
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portion of the Cayuga Green dEIS that related to the Cornell-
Ciminelli office building.
Alderperson Cogan responded that the environmental study would
cost between $75,000 and $80,000; Ciminelli will reimburse the
City for their portion of cost.
Alderperson Peterson asked when preliminary financial figures
would be available.
Alderperson Cogan responded that a financial package should be
available by October 10, 2002. He further stated that the housing
and retail Request for Proposal should be sent out by the end of
this week. The deadline for proposals will be early November. The
Planning Department will review the proposals and will make a
recommendation to Council.
BUDGET MESSAGE
Mayor Cohen read the following budget message into the record:
Fiscal Year 2003 Budget Message
The budget that I have presented this year is the budget I
never wanted to have to submit. It contains everything I
deplore; a high tax increase, layoffs, use of stopgap financing,
use of bonding to cover general fund expenses that should be paid
for with cash, a reduction in services and a reduction in funding
to important community agencies. I felt I had no choice but to
submit a budget that reflects the reality of today and the
immediately known future.
We are not alone in this situation. Cities and counties
across New York State are looking at deep cuts and high tax
increases. Some are relying on more of one than the other, but
the situation is still grim almost everywhere you go in our
state. The condition of the state’s finances looks even worse.
I will speak more about that in a moment.
We continue to operate in an environment where our revenues
are not keeping pace with our expenses. We have made numerous
cuts over the past 6 years and we still can not keep pace with
the increases in our other costs. This next year alone, our
state pension contributions will increase by 115% and 182% for
the two funds we contribute to, resulting in an increase of over
$450,000. Indications from the state are that these increases
might be even higher if the stock market continues to perform
poorly. Our general fund health care costs will increase by
approximately 30%, resulting in an increase of over $900,000.
Liability insurance and workers compensation costs are also
increasing by about 15%.
In addition, our debt payments for next year will rise by
over $350,000. That is $350,000 that we are paying for principal
and interest that is not available to us to pay for general funds
expenses. This is an important point to be mindful of. As we
continue to rely on the bonding of general fund expenses to
balance the budget, the cost of doing so is starting to catch up
with us. We can not continue to rely on this funding mechanism
without digging ourselves into a deeper hole that will require
even more drastic measures than those proposed in the mayor’s
budget.
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While it is true that there have been approvals by the
Planning Board of over 600,000 square feet of new retail space,
it is not likely that any of it will be built and open during
fiscal year ‘03. We are unaware of any final deal with Home
Depot and Widewaters, nor is there any substantive building
activity on the site other than fill loading. Benderson is
working on final deals now and was originally targeting store
openings by sometime in November of next year. In the meantime,
the city has received several Freedom of Information Law requests
about the Benderson project from law firms and private
individuals. We anticipate litigation on the matter, which will
easily push store openings into sometime in fiscal year ‘04.
As we developed our sales tax projections, we kept these
facts in mind and have forecast no new tax generated from these
two large projects. We have nonetheless forecast a significant
increase in sales tax over this year’s projections. We base this
on the state audited quarters of 2001, during which there was a
healthy increase in sales tax receipts. I had mixed feelings
about our projections, but decided to go with them for the
following reasons. On the negative side, 2001 was a strong year
with strong consumer confidence and a commensurate level of
consumer spending. In 2002, we are seeing a decrease in consumer
confidence. The stock market is still reeling from its
precipitous fall and may drop further. Citizens are rightly
concerned about the possibility of war with Iraq. On the other
hand, interest rates are at historical lows, which is fueling the
housing and automotive markets, the latter of which we derive
direct sales tax benefits from. 2002 sales tax receipts have so
far been strong, but will that continue?
On the positive side of the equation, some new smaller
stores have recently opened and more are slated to open in the
near future. These new stores, with their new revenues, should
in theory offset likely decreases in consumer confidence and
spending. We will continue to monitor this situation, and are
expecting our next quarterly report from the state in less than
two weeks. If the report demonstrates a decrease in revenues
beyond what we might expect, then we will come back to the Common
Council with revised sales tax projections. I sincerely hope
that is not the case.
One final note on sales tax. As you are aware, the chair of
the county board has started a public discussion about the
possibility of raising the county sales tax from eight to nine
percent for the exclusive use of the county. While I personally
would support such a move in lieu of raising the property tax, I
would not support it unless the city received a share of the
proceeds. I have spoken with many of my colleagues across the
county and have not found any town supervisors or village mayors
that would politically support this increase unless the county
shares some of the proceeds with the rest of the municipalities.
This increase would require the approval of the not only the
county board, but the NYS Legislature and the Governor. So while
this initiative could go a long way to addressing the city’s
budget shortfall, the question of whether this would actually
happen is a speculative one at best and it is clearly something
that we can not count on in our planning process at this time.
Our property tax revenues offer some good news. Our taxable
property base continues to rise after many years of decline.
This is due to two factors. There continues to be a high level
of speculative activity in the Southwest. Second, the housing
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market is doing very well, and property values in the city,
particularly in the Fall Creek and Belle Sherman neighborhoods,
are growing at a healthy rate. A one percent increase in the
property tax now yields us $89,000. And the future looks
promising for additional increases in the base and our revenues.
Our next largest source of revenue is one that I feel
compelled to talk about. State revenue sharing has remained
steady for several years now. Last year I expressed serious
concerns that we might see a midyear adjustment this year in
revenue sharing. In retrospect, that was unlikely given this is
a gubernatorial and legislative election year. The likelihood of
it happening next year is very real. Although no one in official
Albany seems to be talking about it during election season, the
state is projected to be in the red this fiscal year by 1 1/2 to
2 billion dollars. The state’s next fiscal year looks much
worse, with deficit projections ranging between 3 to 4 billion
dollars. Two members of council have already shared with me
information they have gathered which supports this. I attended a
NYCOM Executive Committee meeting this past Friday, and our
executive director expressed his concerns that state revenue
sharing for cities is highly vulnerable in next year’s budget.
Looking beyond the city, the county will be further impacted
by state cuts, as will many local agencies. So will Cornell
University, which heavily relies on the state for support of the
SUNY affiliated schools. How that will ultimately affect local
payrolls, discretionary income, consumer spending and our sales
tax receipts is yet to be seen, and yet another reason for
concern.
I am singling out this situation because it clearly would
make a bad situation even worse for us. We can not legally raise
the tax rate midyear. We do not have the same fund balance
cushion we have had in years past. The fund balance is at a
point that it should only be used for true emergencies, and if it
is used in such a case, we would have to immediately replenish it
in the following year’s budget.
We ordinarily could decide to bond additional general fund
activities, but we have already accounted for everything we could
think of that could be bonded for in the budget before you. That
means we do not have this cushion either, an important one that
we have had in years past and one that was effectively used in
the early nineties when the state cut our revenue sharing. To
put this issue into perspective, our total income from revenue
sharing is just over $1.5 million, so a 50% reduction, which is a
real possibility, would mean a loss of $750,000. While I’m sure
we will be able to come up with some creative ideas if this
happens, I see no way for us to cover an amount that large in any
of the usual ways we have before.
That means our only other real midyear alternative would be
additional layoffs. The more conservative we are now in our
deliberations, the less likely that will be the case, or the less
severe our situation will be if there are midyear cuts. If
Common Council wants to consider raising the tax rate more than
proposed in the mayor’s budget, please consider doing so to
increase the fund balance. That would give us more latitude and
the ability to withstand a significant loss of funding from the
state.
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On the issue of layoffs themselves, I clearly recognize the
controversy they engender, and the impact it has on our
workforce. Clearly the individuals in targeted positions will be
impacted by what we decide, and we have made accommodations in
the budget to assist these individuals. Morale for the rest of
the workforce will also suffer. With labor costs constituting
over 70% of our budget, and equipment and supplies cut to the
point that it is starting to get difficult for departments to
perform their basic functions, we have little choice but to now
look for savings in personnel. I think the reasons why we took
such an aggressive stance on vacancies this year is now apparent,
and we were able to elicit significant savings for next year’s
budget. We have tried to reduce staffing through attrition, but
it was still not enough. I understand that the priorities of
Common Council might be different, both in the need to have
layoffs and in what positions are targeted. I look forward to
hearing your thoughts and discussing viable alternatives that you
might propose.
One thing is clear about the impact of the layoffs, position
reductions and position reconfigurations; services will be
impacted. For the past eleven years, department heads have been
asked to reduce their budgets. While it is true that there was
fat in the budgets of years past, that is no longer the case.
The old mantra of doing more with less is no longer relevant. We
can not continue to ask our employees to keep up with an ever-
increasing workload and at the same time reduce the resources
they need to accomplish their responsibilities. We continue,
with the assistance of the Human Resources Department and the
Department of Information Technology, to streamline many of our
processes, but it is still not enough to handle what we now face.
So this coming year, we will instead be doing less with less.
Some departments will be able to continue to provide
services as they have up until now. Other departments will not.
The Department of Public Works is a prime example. The
department’s general fund operations are losing nine people.
That represents an approximately 14% reduction in front line
personnel for the department. We will have to reduce some
services as a result. The position of this department is
compounded by the fact that we rely on many of its employees to
work on capital projects that in recent years have helped to
balance the budget. We identified those positions that leverage
equipment and supplies dollars for these types of projects and
kept those positions in the budget.
The same concept was used in determining cuts in other areas
of the budget. It clearly does not make sense to cut a position
that is fully funded by outside monies. We carefully reviewed
positions in this context, as well as what the impact would be on
the department as a whole and the services that would be
impacted.
Another controversial cut in this year’s budget is for
management increases. I recognize the potential negative impact
on morale for our department heads and other management staff.
Several department heads have told me that they support this move
in lieu of seeing more staff cuts, but I have also heard concerns
expressed about the impact on pensions for those close to
retirement. I was mindful of these things in making this
proposal, and felt that this was the most equitable way to go
within the group as a group.
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I am also not happy to have proposed the elimination of
funding to our community service agencies. I have always
believed that these agencies provide cost effective services to
the city much less expensively than it would cost the city to
provide the same service. But when I was faced with the choice
of laying off 2 or 3 more city employees or cutting this pool of
money, I made our staff a priority. This decision is one example
of many such decisions in the mayor’s budget, and an example of
the decisions this council now faces. We are faced with making
tough choices, and we must determine what are our priorities and
those of our constituents. These decisions must be based on
fact, not just emotion, although I recognize there are and will
be plenty of emotional responses to this budget. We will
endeavor to get you the information you need in a timely manner,
but please be aware that we are down a key person in the
controller’s office and turn around time might not be as quick as
you have been used to in the past.
The increase in costs for our fee driven funds are also not
without controversy. The water and sewer increases at 3% and 10%
respectively represent increased costs for those funds and are
within the range of previous increases. The solid waste increase
on the other hand represents not only a larger than usual
increase but a significant departure from past practice. The
last time trash tag fees increased was in 1999. The increase
this year of 25¢ for both half and full tags is a 14% increase
for half tags and an 8% increase for full tags, but one that is
absolutely necessary to balance the solid waste budget. The rate
increase on its own is not enough to generate the income we need.
The income projections for this fund assume $30,000 in additional
income to be generated from the tagging of yard waste, after
accounting for a significant decrease in the tonnage we would
collect as people find alternatives, like composting and hauling
their own waste. The same tags would be used for yard waste as
are already used for solid waste. Were we not to charge for yard
waste, we would instead have to raise the trash tag fee by either
37¢ for a half tag or 80¢ for a full tag.
There are many more details to share with you about the
budget, but I will do that in the budget presentation itself.
The task before you is not an easy one, and I fully expect you
and members of the public to raise critical questions about the
mayor’s budget. That is an important part of the process. I
look forward to working with you on the formulation of a final
product that reflects the needs of our constituents and the best
interests of our community.
ADJOURNMENT:
On a motion the meeting adjourned at 7:40 P.M.
________________________ _______________________
Julie Conley Holcomb, CMC Alan J. Cohen,
City Clerk Mayor