Bethlehem leaders at a recent workshop feasted on a triple-layered cake of budgeting issues, considering borrowing, services and taxes.
The Thursday, Oct. 13, workshop saw members of the Town Board laying out their philosophical views of the town’s 2012 budget, ending with a promise to hone in on specific changes they’d like to see and getting into those details during another workshop on Monday, Oct. 17.
Supervisor Sam Messina released his tentative budget earlier this month. Probably the clearest rift between his vision and board members’ priorities is the tentative budget’s 1.27 percent property tax hike. Messina said this is a responsible increase, and added that in a recent review with Moody’s Financial Services, it was said an avoidance of levying taxes could impact the town’s AA credit rating.
“Some influx of revenue … was on the mind of Moody’s,” Messina said.
But board members said a property tax hike should be held to a limited amount. Councilman Kyle Kotary said he’d be aiming to have a flat tax rate; Councilman Mark Hennessey said the town should aim to lower taxes.
“I am not in favor of a tax increase right now,” Kotary said. “The worst time to increase taxes is during a recession.”
The proposed hike is below the state’s property tax cap. Under the state’s formula, Bethlehem could increase taxes by up to 4.11 percent without having to override the cap.
The town’s bond rating is still holding at AA — a rather good level for a municipality—and that in part means the town could borrow money at very favorable rates.
There is $5.9 million worth of borrowing in the tentative budget. Another roughly $1.1 million would be spent out of capital reserves. Those figures are in addition to $38.6 million worth of straight appropriations.
It was clear board members have trepidations about taking on debt.
“We didn’t invest in infrastructure for dozens of years. It’s nobody here’s fault, but it’s our problem,” Hennessey said. “We understand what the needs are, we just have to find out the right way to fund it.”
Councilwoman Joann Dawson said the town is still in the process of assessing damage from Tropical Storm Irene.
“To sit around the table and say, ‘yeah, we’ll deal with that later,’ is having our head in the sand on that issue,” she said. “We can’t pretend this budget is just going to go on its merry way with that elephant in the room.”
Comptroller Suzanne Traylor said the town carries relatively little debt (about $22 million worth right now), and that this is the most effective way to tackle the town’s “code red” infrastructure needs without dealing a short-term blow to taxpayers. Bonding purchases that will last for many years is considered a good accounting practice, she said.
“We’ve never had to do this before, but we’re faced with a lot of decisions,” Traylor said.
There are more than 20 projects or purchases for which borrowing is proposed as a financing mechanism. The big ones are a sewer pump station rehabilitation for $1.5 million, a new Department of Public Works field operations garage for $700,000 and upgrades to the Clapper Road Water Treatment Plant for $500,000. It’s also proposed to continue borrowing for highway paving ($760,000 worth in 2012), a practice that was only started recently.
To cut the tax hike, the town would of course have to find other revenues or reduce expenditures. There are already several austerity measures built into the budget, including taking five unfilled positions out and increasing co-pays on employee health insurance. $200,000 worth of “limited merit increases and incentives” for worthy employees were recently built into the budget after a no-raise scenario was originally floated.
Kotary said he think it might be time for the town to take a hard look at its services, mentioning the amount of paving the Highway Department does every year.
“There are certain areas one could argue we over service the public,” Kotary said.
Messina countered that the town has already trimmed the fat through measures like increasing fees, doing less paving and keeping vehicles on the road for longer.
Mood at the meeting was cordial, though at this juncture there are no line-by-line cuts on the table. It was promised that the next workshop would see some discussion on specific areas.
“I’m also at the point where we’ve got a lot of information. … If we can get this to a place where the numbers look different, maybe we can close this,” Hennessey said.