As Troy makes efforts to solve its latest financial crisis, WAMC's Capital Region Bureau Chief Dave Lucas has an update on the New York state Comptroller's municipal audit of the Collar City.
Troy Mayor Patrick Madden released his first budget plan for the city in October, a spending plan he branded "a fact-based approach" and allowing that its headline-making 28.2 percent tax hike was a “regrettably harsh consequence for correcting past unrealistic and politically expedient budget practices.”
Madden said "It's a big number. It shouldn't be all that surprising, given the negative comments that we've gotten form the OSC, Office of State Comptroller, over the years. The independent review that the city council had commissioned earlier this year suggested a tax increase of 19 percent. That didn't take into account increases that were likely to occur in 2017."
For several years during the 1990's, Troy struggled with fiscal problems and was recently the subject of a critical audit by state Comptroller Tom DiNapoli. "We've kept an eye on Troy for a number of years, and I do think the mayor has brought in a new and fresh perspective, and I know the council leadership has been very focused on resolving the budget and fiscal issues that Troy has.
Under Madden's proposal the city tax rate would rise from $12.08 per $1,000 of assessed value to $15.46. "I spent 30 years helping people buy homes. I understand the challenges, the burdens of taxes on housing expenses. It's a difficult pill to swallow."
DiNapoli notes the 28.2 percent tax levy far exceeds the current tax cap. Troy's Majority Steering Committee, comprised of four City Council Members and led by Republican Carmella Mantello, advised the Democratic mayor in a November 3rd letter that they will not override the cap. "The four of us are committed to not override that tax increase without substantial cuts and reductions and a freeze on hiring and outside consultants."
Comptroller spokesman Brian Butry says the two sides need to resolve the tax cap issue. "They're allowed to overrride it, but they need to pass a local law to override the limit, so there's measures they need to take there."
The Comptroller's office has suggested other steps be taken, including that city officials identify funding sources for capital expenditures and stop deferring capital costs. "It's more of us telling them to be aware of maybe some of the shortfalls in revenue or other areas that they're gonna need to come up with answers to before they pass the budget. But by no means are they required to adhere some of the recommendations that we've made."
The council and the mayor have been at odds over the council's 16-point plan, rejected by Madden, designed to cut expenditures, raise revenue and cut overtime. And Butry says there are other issues impacting the fiscal mix: "The city has a number, I believe it's six, collective bargaining agreements with different bargaining units in the city that they could face potential significant salary and wage costs when these agreements are settled. And you have a number of them that are long outstanding, looking at more than four, five years overdue for renegotiation. So should the city settle those during this year, that obviously is a concern that they may have with revenues not being able to address those agreements retroactively."
Madden states the vast majority of the items that were raised in the council's 16-point plan have been addressed in his budget plan.
It appears that the impasse is the tax cap: Mantello and the council have vowed to withhold the necessary votes to override it unless Mayor Madden offers recommendations to reduce the 28.2 percent tax hike that they are comfortable with.
The City Council has a November 29 deadline to vote on the budget.
City of Troy – Budget Review (B5-16-15)
Released: November 3, 2016 -- [read complete report - pdf]
Purpose of Audit
The purpose of our budget review was to determine whether the significant revenue and expenditure projections in the City's proposed budget for the 2017 fiscal year are reasonable.
Background
The City of Troy, located in Rensselaer County, issued debt totaling $21,630,000 to liquidate cumulative deficits in the City's general fund for the years ending December 31, 1993, 1994 and 1995. Local Finance Law requires all local governments that have been authorized to issue obligations to fund operating deficits to submit their tentative budgets for the next fiscal year to the State Comptroller for review while the deficit obligations are outstanding.
Key Findings
- Significant revenue and expenditure projections are reasonable.
- The City's proposed budget provides only minimal funding for capital expenditures; $1.7 million (82 percent) of the City's general fund capital plan remains unfunded.
- All six of the City's collective bargaining agreements (CBAs) have expired and the 2017 proposed budget does not contain provisions for any potential increased costs associated with settling the CBAs.
- The City's proposed budget is not in compliance with the tax levy limit and City officials have not adopted a local law to override the limit.
Key Recommendations
- City officials should identify funding sources for capital expenditures and stop deferring capital costs.
- City officials should be cognizant of the potential financial impact of the settlement of the expired CBAs and be prepared to provide for funding in the event that any of the CBAs are settled in 2017.
- Be mindful of the legal requirement to maintain the tax levy increase to no more than the tax levy limit as permitted by law, unless adopting a local law to override the cap.
