The City of Glen Cove, like many other municipalities, is facing extraordinary financial stress this coming year due, in part, to the Covid-19 pandemic. Additionally, we are struggling to recover from years of operational inefficiencies primarily as a result of the prior administration’s mismanagement of funds.
Between 2014 and 2018, the city received approximately $13.1 million of non-recurring revenues. Not only were most of these one-shot revenues expended during those years, but even worse is the fact these non-recurring revenues were used to balance their budgets, thus claiming there was no need to raise taxes.
In addition to using these non-recurring revenues to project a balanced budget, they relied on debt and interfund transfers, primarily from the Water Fund, to further balance budgets and meet normal operating expenditures.
According to the Office of the New York State Comptroller’s Report of Examination issued January 2018 covering the period January 2013 – December 2016:
“The council has not adopted structurally balanced budgets. The council relied on non-recurring revenues, debt and interfund transfers to balance budgets and meet normal operating expenditures. In total, city officials included $6.2 million in non-recurring revenues in the city’s budget from 2013 through 2016. The budgeted non-recurring revenues as a percentage of the total budgeted revenues increased from 0.02 percent in 2013 to almost 10 percent in 2016. The city also issued debt totaling $4.9 million in fiscal years 2013, 2014 and 2015 to meet recurring operating expenditures such as tax certiorari refunds and separation payments. Such practices are imprudent and can negatively affect the city’s financial condition.”
Now that I finally have a supportive council and a more competent and dedicated management team, we must move the city forward and work towards building a much more secure and prosperous future for our residents.
It is important to remember that the actions of the past administration do not come without consequence. As all their one-shot revenues have been exhausted and questionable budgeting practices, such as using interfund transfers, are no longer part of our practice, we must act accordingly and be champions of fiscal responsibility and prudence.
With that said, I present to the taxpayers of Glen Cove my 2021 Proposed Budget. I have been working on this budget for many weeks; reviewing each department’s needs and requests and so as to determine the best use of taxpayer funds.
Unfortunately, like most municipalities, our financial condition has been worsened by the pandemic. We are expected to lose a significant portion of our state and county aid, which historically has averaged 9 percent of total revenues. Compared to 2020, this year’s proposed budget includes lost revenues from these sources of approximately $770,000.
There are also non-discretionary expenditures which increase year after year and are either contractual, mandated and/or uncontrollable including, but not limited to, union contract escalations (step increases), certain service agreements, pension contributions, termination payments, tax certiorari payments and healthcare costs, which are considered normal operating expenditures. Compared to 2020, the non-discretionary increases from these sources totaled approximately $2.4 million.
With that said, we were looking at starting 2021 with a deficiency of approximately $3.1 million from items outside of our control. Additionally, the individual department budget requests accounted for another $3.0 million in excess of 2020 adopted budget amounts.
Basically, I was facing a $6.1 million budget gap from the 2020 Adopted Budget. And just so you understand the severity of these amounts, taxes would have had to be raised by 20 percent for residential properties and 15 percent for commercial properties to offset the $6.1 million gap. That burden was something I certainly would not impose on the hardworking taxpayers of Glen Cove, and so I had my work cut out for me.
As I began to develop the 2021 Proposed Budget, I had several goals in mind, with the most important and fiscally responsible ones being (1) eliminate wasteful and non-essential spending and (2) consolidation and/or elimination of duplicative functions and/or services.
Foremost, with our taxpayers in mind, I had to make some very difficult decisions in order to execute a plan of cost reduction. As challenging as it was, I had to go line by line within each department and make the difficult decision to reduce costs while still maintaining operational integrity and continuing to seamlessly service the residents of Glen Cove.
The last and most difficult decision was to remove six active staff positions from the budget, which provided a savings of approximately $550,000 including salary and related benefits and two staff position vacancies from 2020 which will not be filled, totaling approximately $100,000 including salary and related benefits. In total, I have excluded $650,000 of compensation related costs from the proposed budget as a result of this action.
At the completion of the budget review and analysis and with all cuts, we cut $3.6 million and have a balanced budget that requires a tax increase of 8.48 percent for residential properties and 3.88 percent for commercial properties. A residential property with an assessed value of $500,000 would realize an increase in their City taxes of $260/year, while a commercial property would realize an increase of $338/year.
The last thing I wanted to do right now is raise taxes. However, it has fallen on the shoulders of this administration to right the wrongs of the past and bring the tax rate back in line with reality. The prior administration used one-shot revenues to balance budgets and present the illusion that the city was in a much better place than it actually was. Operations were not made more efficient, nor were escalations in non-discretionary spending planned for appropriately. These one-shot revenues were not appropriately used for future investment. Tax rates should have increased slowly and in a manner more manageable and tolerable to the taxpayers over the past several years, rather than what we are faced with today.
It takes strength and financial understanding of the city’s needs to make the right decisions, as tough as they may be. I realize this is not the popular thing to do, but it is the responsible thing to do – it’s what others were afraid to do.