April 26, 2011

City Prepares for State’s Possible Tax Cap

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As discussion continues in Albany about a proposed two percent property tax cap, City of Ithaca officials are anticipating a larger strain on the city’s budget.If passed, the tax requirement will put a “huge restriction on the city’s ability to fund the budget,” said Steven Thayer, city controller. Ithaca’s property tax rate stood at 3.37 percent in 2010-2011 and 4.25 percent in 2009-2010. Thayer expressed concern about the possibility of a two percent property tax cap, saying that the city relies heavily on the revenue raised by the tax.“Property tax revenue is our biggest source of revenue,” Thayer said. “And because 62 percent of property in the city is tax exempt, mostly because of Cornell, the rest of taxpayers have to pick up the burden.” The city is already facing a $53,273 cut in state aid for its 2011-2012 budget out of last year’s $2,663,671 in aid from the state. According to Thayer, the budget, which will be finalized around the first week of November, will be “appropriately planned based on the decrease in funding from the state.”Thayer said that despite the state’s claims that aid to the city will increase in the future, he believes it is necessary to make room in the budget for potential funding cuts. “Even though they’re saying that they are trying to increase our state aid, we’re still going to plan for them to cut further because of strains on their budget,” Thayer said. According to Alderperson Svante Myrick ’09 (D-4th Ward), the tax cap will cause a rift between state and county authorities in regard to the city’s financial planning.“If the state passes a tax cap and the county continues to mandate us to run certain programs, we’re caught in the middle financially, and there’s nothing we can do,” Myrick said.Thayer said that some municipal programs may receive cuts as a result of the cap and a decrease in state funding, though it is “difficult to say what is going to be cut at this time.” He added that a more likely solution for balancing the budget will be to continue to delay hiring for positions in several municipal departments.“We take a strong look at the position to see if we can hold it open. So far we’ve done that with many of the municipal departments at this time.” Thayer said. “The benefit is that we’re not hiring for positions, even though they are budgeted, and so we don’t have to pay the costs of employee benefits and other expenses.”The Streets and Facilities department may experience delayed hiring, Thayer said. According to Assistant Superintendent for Streets and Facilities Ray Benjamin, the department is already facing difficulties.“We have to do what we can with what we have,” Benjamin said. “It has been harder to get positions refilled as people retire, and we need those employees in years like this one when we have to deal with more snow removal than we typically do.” Myrick said that he expects many of the actions taken in regard to last year’s city budget cuts to continue being implemented after the 2011-2012 budget is approved. “Due to careful planning from the mayor and the City of Ithaca, we decided to authorize some of our savings to be spent, to raise the price of the first hour of downtown parking to $1, and to raise taxes by about three percent,” Myrick said. “This has proven extremely helpful in dealing with expenses.”Thayer said said that the city was continuing to cut costs.“We’re hoping we will be able to take certain things out of the formula like pension costs, health insurance costs, and debt costs, so that it will be easier for us to operate under the two percent cap” Thayer said.Alderperson Dan Cogan ’95 (D-5th Ward) also noted that getting an early start on this year’s budget has been crucial to dealing with the anticipated restrictions.“Even though our budget won’t get passed until October, we know there are going to be cuts, and it’s up to Common Council to give input at this point about where we want to see those cuts come from,” Cogan said. “We want to have time to make modifications.”

Original Author: Liz Camuti