Mayor Rolison Releases 2017 Preliminary Budget
October 14, 2016
Dear Honorable Members of the Common Council, and to our Taxpayers and residents, to our local business owners and our non-profits, to our faith-based organizations and to all the stakeholders in the Great City of Poughkeepsie, GREETINGS:
Pursuant to Article XIV of the Administrative Code, I hereby submit the 2017 Preliminary Budget for the Common Council’s deliberation and action. With a proposed total appropriation of $85,125,976, and a General Fund appropriation of $49,571,320, this budget addresses structural and long-standing fiscal problems – first by further trimming expenses and restructuring, secondly by adjusting unrealistic revenue lines that have been adopted in prior budgets, and then, as a necessary last resort, raising taxes. This budget places us on a multi-year path to financial recovery which will take time, careful planning, and extraordinary execution and implementation. We no longer have the option of passing on difficult choices, and we must now live within our means.
The First Nine Months.
In my first nine months in office we have performed an in-depth fiscal analysis. We have convened the City’s first “Fiscal Advisory Group”, which has met weekly over these months to dig deeply into every aspect of City finances. We have thoroughly reviewed, with the help of outside subject matter experts who either volunteered their time, or were grant-funded, the last eight years of financial records in order to fully understand what has led to our current, cumulative, fund-balance deficit of more than $12 Million Dollars. We have been accepted as a “client” of the State’s “Financial Restructuring Board”, which opens the doors to technical, advisory, and financial aid which we hope will play a pivotal role in our fiscal recovery. We have implemented a quarterly financial reporting mechanism, and plan to improve on that by switching to a monthly reporting system in the coming year. As the State Comptroller’s Office has opined, the failure of prior administrations to report to the Common Council regularly on the financial condition of our City has been one of the contributors to our present crisis. Another has been the repeated failure, over many years, to budget anticipated revenues accurately.
The Exhaustion of Our Fund Balance & the Financial Restructuring Board.
In the past Mayors have proposed, and the Common Councils have adopted, appropriations from fund-balance to mitigate projected budget gaps, and to reduce or eliminate potential tax increases. That is no longer possible because today our unassigned fund balance is an astounding $12.6 Million in the red. This is the calamity which we must face together and it is a burden our taxpayers cannot shoulder alone. In other words, because prior year’s budgets were unrealistic and failed to raise sufficient revenue to pay for City operations, we long ago exhausted our reserves – and yet the City continued to spend.
I am pleased to report to you today that we are continuing to work hand-in-hand with the State’s Financial Restructuring Board, and we are working toward realizing an aid package which will help stabilize our finances. This effort strategically targets cost-cutting initiatives which are beyond our sole ability to manage, such as shared services with our State or County partners, and it targets areas where – given help with infrastructure, technology, or personnel costs – we can leverage increases in non-tax revenue for the long term. I am confident that we will be granted the help we need – but the greatest challenge to any request for help is the need to demonstrate to others that we have, really, begun the process of governing for outcomes that are realistic and therefore achievable. This budget accomplishes that, and so it bolsters our call for help by telling our partners at the State, in County government, and indeed throughout the region that the City of Poughkeepsie has turned the corner and is on the road to a meaningful recovery.
A Necessary Tax Increase – No Increase to Water, Sewer or Sanitation
Quite clearly, previous budgets have been so far out of structural balance that even after cutting $1.7 Million from departmental requests, a sizeable deficit remains that needs to be filled through an unavoidable tax increase. A homestead rate of $13.0655 and a non-homestead rate of $16.5832 per $1,000 of assessed valuation is required to close our budget gap – even after trimming expenses by an additional $1.7 Million dollars, in order to adopt a balanced budget. This budget increases the tax levy by 16.51%, from $19,919,106 to $23,207,352, with a total appropriation of $85,125,976 and a General Fund appropriation of $49,571,320, an increase of $1,406,826, or 2.92% from the 2016 General Fund appropriation of $48,164,494.
Fortunately we are able to hold the line on all our user fees (water, sewer and sanitation) and no rate increases are proposed. We will work throughout the coming year to find further efficiencies and plan well for coming infrastructure costs, so that our residents do not see sudden and unexpected spikes of these fees in coming years.
Key Factors Driving the Budget.
Over the last six years the City, like all others, has experienced rising health care costs, and rising costs of required contributions to our pension fund. Other post-employment benefits which the City committed to years ago, continue to drive costs upward. Salary increases and employee benefits from collective bargaining agreements, which were previously negotiated and rising debt-service costs all are contributing factors as well. Even with historically low interest rates, more borrowing means higher overall debt-service cost. Next week I will submit to the Common Council a Resolution de-authorizing millions of dollars in previously approved debt-issuance, and I urge the Council to adopt that resolution swiftly. Moving forward, we will borrow only for approved and necessary capital projects, or to refinance or restructure existing debt on favorable terms. Debt management, like the budget itself, is an area vital to our hopeful future.
With a Little Help from our Friends.
We have strong support from our legislative partners. This partial list of new grants our City has received or will receive very soon is nearly $2 Million. It includes money to attack blight and vacant “zombie” properties and critical funds for new police and fire vehicles. This commitment to our recovery tells us what we need to know. It tells us we are not in this alone. It tells us that decision-makers around the State are gaining confidence in our City
- Zombie Property oversight- $150,000- State of N.Y.
- Fire Engine- $500,000- Sponsor: Assemblyman Skartados
- Fire Ladder- $500,000- Sponsor: Assemblyman Skartados
- Park Improvements- $150,000- Sponsor: Senator Serino
- 911 Dispatch Study- $75,000- Dutchess County Shared Services
- DPW Staffing Study- $75,000- Dutchess County Shared Services
- City Hall- Cooling Tower- Sponsor: Assemblyman Skartados
- Police Vehicles- $150,000- Sponsor: Senator Serino
- Police Vehicles- $125,000- Sponsor: Assemblyman Skartados
- $300,000 SNUG, Anti-Gun Violence Initiative- Sponsor: Assemblyman Skartados
- $130K Dutchess County for Finance Review
- $50K Dyson Foundation
I thank all whose faith in our great city is so constant, and I thank all our citizens for their understanding the urgent need that we make these tough choices now, while we can.
More Work to be Done.
The partnership I have established with our Common Council since the first of the year is the type of partnership we need to meet these difficult challenges. I have said to the Common Council that even though I am delivering this preliminary budget, I am not really letting-go. I and my administration will continue to work with the Council as adjustments may be made which build on this preliminary plan.
There is good reason to see this budget as a turning point for our City: Property values, which declined by 20% between 2010 and 2016, have stabilized this year. Close to $1 Billion in new development is underway, including the $500 Million expansion of Vassar Brothers Medical Center. Here at City Hall work is underway on a pivotal change-effort that encompasses important components such as “shared services” with the County, increased grant-seeking efforts, and transit-system restructuring. In the new-year we will begin a comprehensive review of our Department of Public Works, we will restructure and centralize our parking administration function, and we will seek refunding opportunities on existing debt in order to lower our debt-service costs.
Recognizing the deficiencies of the past is the first step towards realizing our vision for the future. This budget is a course correction and the only way forward if our goal is renewed fiscal stability, the resolution of long-expired labor contracts, the attraction of new investment, and an increased level of inter-governmental support – all of which are within our grasp.
Thank you and God Bless the Great City of Poughkeepsie.
Robert G. Rolison
Poughkeepsie, New York
Download: 2017 Preliminary Budget