Cornell should significantly increase its payment to the City of Ithaca to help the city reduce its $3-million budget deficit, Mayor Svante Myrick ’09 said at a public budget meeting Monday.
“I think the University should pay far more than the one and a quarter million dollars they pay now,” Myrick said. “If Cornell were fully taxed, it would pay $30 million a year. I don’t think that the University should pay that much or even close to it, but it needs to be more if we’re going to be successful as a city and if Cornell is going to be successful as a university.”
City finances are under increasing pressure from rising pension obligations and stagnant or falling state and federal aid. Attempts to close the deficit are also complicated by Cornell University’s tax-exempt status, according to Myrick.
Sixty percent of the assessed value in the city is tax exempt, and Cornell owns 89 percent of that tax-exempt land, Myrick said. The potential tax value of this land exceeds the $20 million in property taxes collected from the rest of the city, according to documents released by the City of Ithaca.
While the University contributes $1.2 million to city coffers each year under a Memorandum of Understanding, or agreement made with the city, Myrick said he would like to see the amount rise to $3 million in order to better cover the burdens the University imposes on city infrastructure, such as increased maintenance of roads and bridges that traffic necessitates.
The large amount of tax exempt land in the city is also related to another issue that Myrick said affects the city’s budget: state aid. Myrick said he wants New York State to change the formula by which revenues from the state income tax are distributed to its cities to include the amount of tax-exempt land within a city.
New York State has also placed additional pressure on the city’s budget through its management of the state and local pension system. According to Myrick, the city’s pension costs have increased 300 percent annually for five years.
These increases, Myrick said, were necessary in order to cover shortfalls in the state’s pension plan. According to Myrick, the New York State and Local Retirement System — which administers the city’s pension plans — assumed that the markets in which the plan invested were safe and thus stopped asking for employee contributions. This action undermined the solvency of the plan when the markets crashed.
To a lesser degree, the city is also suffering from the expiration of money provided by the American Recovery and Reinvestment Act of 2009, also known as the stimulus package, according to Myrick.
“The stimulus helped us save jobs and complete much needed infrastructure projects, but while the infrastructure will be with us for decades, the job funding has evaporated,” he said.
The city has also taken steps to save money outside of the budgeting process as well. The city has offered retirement incentives in order to reduce payrolls and has refinanced its debt, which Myrick said will save the city $700,000 over the next 10 years.
Myrick will submit his budget to the Common Council by the first week of October, which the Common Council must vote on by the first week of November.
Original Author: Matthew Rosenspire