In preparation for the November vote on the 2021 city budget, the Ithaca Common Council reviewed the city’s extraordinary financial circumstances on Tuesday and planned expenditures for next year.
By and large, council members felt reluctant to drastically reduce funding many of the city’s important resources. But as the city faces a 20 percent reduction in state aid, the council is forced to work within a tightened budget.
“The financial damage that COVID has done is here, and it’s here to stay for quite a while,” said City Controller Steve Thayer. “Hopefully we can come up with a budget proposal that’s reasonable, but still very painful.”
Thayer, who has presented a detailed overview of the city’s finances at every Common Council meeting since March, underlined the difficulty of financial planning given the extreme uncertainty of state and federal funding.
“We continue to wait for information from all kinds of sources and it’s just taking forever to get here. There’s lots that we don’t know,” Thayer said. “And we’re not holding our breath on federal aid.”
Thayer said that the city has received minimal information from New York on funding to municipalities, adding that city officials are expected to follow Gov. Andrew Cuomo’s (D-N.Y.) proposed 20 percent cut to localities. The 20 percent cut comes through the state’s Aid and Incentives to Municipalities program, which provides annual funding to all of the state’s localities, excluding New York City. The amounts of aid are determined alongside the state’s budget, which was passed on April 1.
For Ithaca, a 20 percent reduction in this state aid amounts to a $522,000 cut. Thayer anticipates the funding cut will repeat in 2021.
Compared to this time last year, the city has collected $1.3 million less in sales tax — a 15 percent reduction.
But as the impacts of the financial crisis gradually clarify, a few “bright spots,” as Thayer put it, are appearing in the city’s revenue streams.
The recent return of Cornell students to the Ithaca area bodes well for sales tax collection for the remainder of the year, according to Thayer.
“We’re crossing our fingers that they can stay here,” Thayer said.
Another source of optimism for the city’s finances is building permits, which have generated 138 percent of their expected revenue so far this year.
Since the city’s March emergency furloughs of 87 municipal staff, 66 employees have returned to work, and 16 are still on furlough. The rest have retired.
Overall, the emergency furloughs have saved the city nearly $1 million. Over the next few weeks, the mayor’s office plans to bring back to work the 16 remaining furloughed city employees.
City officials are also considering raising city property taxes to help cushion the budget deficit, which is likely to be over $10 million. But, in discussing the city’s shortage of revenue, Mayor Svante Myrick ’09 recognized that although increasing property tax rates is an effective tool for increasing the city’s revenue, these methods of revenue collection are far from ideal.
“The local property tax is still too high,” Myrick said, adding that the city only has the power to adjust sales and property taxes. “The entire system is rigged — municipalities are not able to collect tax revenue progressively by taxing income and capital gains.”
Alderperson Stephen Smith (D-4th Ward) agreed with the mayor: “We have to keep in mind the importance of reducing the cost of living in this city by reducing taxes as much as possible while keeping the city running,” Smith said.
Following Thayer’s report, Common Council members examined funding for capital projects, based on information of which projects received funding and were preliminarily approved by the mayor and his staff, and which ones were denied.
Some of the entries — which council members expressed skepticism about — were the purchases of electronic messaging boards, each of which cost $40,000, and new vehicles for the Ithaca Police Department, which totalled $309,000. Council members also expressed concern that the mayor and his staff denied funding for a new fire truck, as well as touchless bathroom devices for the Greater Ithaca Activities Center.
Myrick promised to return with more information about these concerns at a later date, and the funding information is subject to revision before a final vote in November.
The mayor will present the proposed 2021 city budget in full at the Oct. 7 Common Council meeting. Council will vote on the budget on Nov. 4, and the budget takes effect on Jan. 1, 2021.
He also tentatively defended the cost of vehicles for the IPD, saying that the New York State purchasing system the city uses to buy public vehicles provides such a discount that the city can later sell the vehicles without losing money on their depreciation. Still, Myrick said he had to confirm this information.
Myrick concluded with a plea for financial support.
“We’ll keep hoping for the federal government to do what it promised it would do which is come back for us and help out municipalities,” he said. “And hopefully if they don’t we can all go out there and hold them accountable.”