Amsterdam council may adopt budget today - The Recorder

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Amsterdam council may adopt budget today The Recorder

AmsterdamNews.net

Proposal, which includes tax rate hike, to be considered today; Muni concessionaire also to be considered

By JASON SUBIK
Staff Writer
The Amsterdam Common Council will conduct a special meeting today at 3:30 p.m. to vote on whether to override the city’s property tax cap, adopt the 2020-21 budget and approve a concessionaire for the Amsterdam Municipal Golf Course pavilion.
Mayor Michael Cinquanti said Amsterdam’s tax cap for the 2020-21 budget is a little less than 2 percent, and the budget proposal, which now includes adjustments made by the council, will include approximately a 4.6 percent tax rate increase — raising the rate per thousand dollars of assessed property value from $17.37 to about $18.18.
It takes four out of five of the members of the council to vote to override the tax cap.
Cinquanti said City Controller Matt Agresta was still crunching the numbers of all of the changes made by the council on Friday, and he will present the finalized budget to the council during the special meeting. Cinquanti said there’s a chance the final increase may be slightly lower than his proposal. He said the budget increases the city’s overall property tax levy of $5.7 million by approximately $250,000.
Cinquanti said a property tax levy increase is necessary to compensate for uncertainties regarding state aid and sales-tax revenues and to prevent the city budget from being overly reliant on the city’s water fund.
“Because of what the city has gone through for the last 5 years, last 10 years, for the past two years the city has been taking an inordinate amount of money from the water fund, and spending $1.6 million from that can not continue,” Cinquanti said.
Cinquanti’s proposed budget was set to spend $1.6 million from the city’s water fund, which is the surplus generated from water fees after water department expenses are paid. State law allows this money to be used for general city expenses as long as it is transferred properly. The current budget, for 2019-20, also used $1.6 million from the water fund.
Cinquanti’s orginal budget proposal, presented to the council June 15, included $1.4 million for debt service for the $7.7 million the city is borrowing from the municipal bond market to clear off the city’s accumulated budget deficit.
Cinquanti had budgeted for a 6 percent interest rate for the borrowing, but when the city solicited bids from the municipal bond market it received three interest rate bids: 5 percent, 5.7 percent and a surprising 1.89 percent.
Cinquanti said the city’s financial advisor, Municipal Solutions, had told him months ago to expect to pay an interest rate premium for the city to borrow a “callable bond”, which is a bond that allows for it to be paid off early without any penalty, a strategy Cinquanti said he favors.
The city had been planning to repay the entire bond and borrow again on an annual basis anyway, and do that every year over a 10-year period.
Cinquanti said the 1.89 percent interest rate municipal bond is still a callable bond, and he’s not sure why the rate came in so low, but he’s happy it did.
Agresta has said the lower than anticipated interest rate allows the city to pay about $251,000 less than it had anticipated for debt service for the 2020-21 budget. The council last week agreed to use most of the savings from the lower interest rate to use less money from the water fund, reducing the water transfer to about $1.35 million.
Blogger Tim Becker, who operates the website mohawkvalleycompass.com, has called into question Agresta’s estimate of the city having $800,000 to $1 million left in its water fund at the end of the 2020-21 budget. Becker projects the city will have less than $200,000 left, but the $251,000 reduction in spending from the fund will help the city get closer to Agresta’s estimate.
Becker has also questioned why Cinquanti and the council have kept annual water rates flat at $423.89, with no increase for the third straight year, particularly when water users outside of the city in the town of Florida and the town of Amsterdam pay higher fees, money that could be used to lower the property tax burden in the city.
Cinquanti said putting the money saved on the deficit finance interest rate into the water fund ensures the money will be there “for a rainy day” in the future to help offset property taxes.
The proposed 2020-21 budget increases the city’s annual sanitation fee by $10.42 to $280.15, and increases the annual sewer fee by $7.58 to $310.84.
Both fee increases address specific cost increases. The sanitation increase addresses an increase in Montgomery County’s tipping fee price for garbage at its tipping stations, caused by the need to transport garbage to the Seneca Meadows Landfill in western New York.
Cinquanti’s original budget increased the sewer fee by $3.34, but the council increased it an additional $4.24 to help pay for a big spike in the sludge transportation costs, which have cost $215,000 more than anticipated this budget year.
Cinquanti’s proposed $35.8 million 2020-21 budget increases year-over-year spending by about $3.1 million total.
During the council’s budget meetings last week, the council added two $50,000-a-year salary jobs in city hall: one for an information technology specialist; and the other is an assistant position for Amanda Bearcroft, Amsterdam’s community and economic development director.
The council also gave new Police Chief John “JJ” Thomas the option of hiring an additional police lieutenant to help with managerial duties when he is absent.
Cinquanti has said replacing retiring police chief Gregory Culick with Thomas, who had previously been the deputy chief, could net the city $400,000 in savings over a five-year contract with Thomas, provided the city transfers the duties of the deputy chief to Thomas and not re-fill the deputy job.
The council has not yet voted on a contract for Thomas.
Cinquanti said his budget managed to pay for all of the city’s debt service cost increases and an average 3 to 4 percent salary raise for city employees in the 2020-21 budget with $700,000 in combined spending cuts and revenue increases, plus a $300,000 reduction to the city’s health insurance costs and $400,000 in annual prescription drug rebates.
Other savings were also found by Agresta in salary costs for the fire department from trainees not expected to report to the city until later in the budget than anticipated.
Cinquanti’s budget still includes $1.2 million in “pandemic federal aid” as a revenue, which may or may not materialize.

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U.S. Rep. Paul Tonko, D-Amsterdam, and the Democratic majority in the House of Representatives has passed a $3 trillion HEROES pandemic aid package, which contains at least $1 trillion in aid for state and local governments, but the bill has stalled in the Republican majority controlled U.S. Senate.
Tonko’s office has provided a breakdown showing the city of Amsterdam would receive $8.8 million in an interest free grant over two years if the House bill were to pass.
Cinquanti said after the $7.7 million in deficit finance money is in the city’s possession the city will be secure at least until January, even if the federal government does not provide any pandemic assistance to local governments. He said the politics on the state and local government bailout may change after the November election, but if it doesn’t he is prepared to make mid-year cuts.
“We’re going to have to look at every option, and layoffs are an option, but I’m not going to say I’m going to lay anybody off,” he said. “I’m planning that in the event that we get nothing from the federal government we will be just fine until January, and at that point in time we will figure it out.”
Uncertainty about whether New York state’s fiscal crisis will be helped by a federal bailout will also play into how Amsterdam will use the $7.7 million it is borrowing to pay off its accumulated budget deficit.
The city owes most of its budget deficit to its own funds — sewer, water, transportation and money borrowed for capital projects — which, over the past 10 years, some former city officials improperly transfered money from to pay day-to-day city expenses.
Cinquanti said how the deficit finance money will be used to repay the city funds remains to be seen. He said some money is owed from the general fund to the water fund. He said he plans to use some of the money to begin the process of projects that are part of the city’s $10 million Downtown Revitalization Initiative grant from the state, as well as long-delayed infrastructure projects like the $1.9 million reconstruction of Church Street, but he said the city won’t borrow any money to begin those projects until there is clarity from the state as to when it will pay for the state reimbursements the city has already been awarded, but can’t receive until it first pays for the projects.
“If it wasn’t for the anticipated loss of sales tax and state aid, I would start that Church Street project without bonding for it, but I can’t do that at this point in time because I just don’t know if we have enough cash to do those kinds of things in this environment,” he said.
Last week, the Montgomery County Legislature voted 6-3 to approve a 20-year, 1 percent interest repayment plan for $1.24 million in county taxes Amsterdam city officials collected but then used for city expenses over the past 15 years.
District 9 Legislator Robert Purtell, who was one of the legislators who fought for the repayment plan, said the city of Amsterdam will pay between $72,00 and $74,000 annually to the county.
Cinqaunti said he’s grateful the city was not required to borrow the $1.24 million as part of its deficit finance bond and then pay it back plus interest over 10 years. He said Montgomery County will have the ability to withhold the annual debt service payment from the disbursement of sales tax the county sends to the city.
“Or we could just write them a check,” Cinquanti said.
Concessionaire
The Common council will also vote on whether to approve Northeast Culinary Corp. in Altamont to be the concessionaire for the remainder of the season at the city’s municipal golf course.
Cinquanti said the company will have “first dibs” on applying to be the concessionaire at the golf course clubhouse/restaurant/bar after it is reconstructed and ready for next year’s golf season.


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