Even in a carefully prepared budget, setting the property tax levy and rate is a result of not just spending but also the assumptions made on the various revenue streams.
In the case of the City of Watertown budget the biggest single variable is sales tax...It's also the largest single source of revenue, about doubling property tax revenues.
THE FOLLOWING PARAGRAPH IN BOLD PRINT HAS BEEN CORRECTED DUE TO AN ERROR ON MY PART. I am Deeply Sorry, but don't feel the gist of this posts changes.
Two years ago sales tax (plus a tax settlement on PILOTS) yielded city government $17.8 million but last year the recession and the lack of that one time payoff had pushed the take down by about two million dollars. In the last few months sales tax has been on the rise again due to higher gas prices, a return of consumer confidence as shown in the auto sector and an influx of Canadian shoppers due to a favorable exchange rate.
So the fairly conservative budget projection of $16.1 million for the coming year is likely on the low side. That means even with the proposed spending scenario there may well be no need to generate the $350 thousand in additional property tax revenue.
It really depends on your comfort levels with predictions. Indeed a $400K increase in sales tax expectation would obviate the proposed $4.8% tax levy hike. If you feel the sales tax comes in the same amount short you would need to increase the levy further to keep the budget in balance.
For all the talk of state aid, it is likely the Governor's proposed numbers will hold and hydro revenue should be steady due to new equipment to keep the intake canal clear of debris.
There are other variables like fees and fines, the latter of which can be affected by policy.
There are expense variables. The proposed budget has a bulk amount for contingency, which is primarily pending changes in pay for city workers.
As for the rest of expenditures, the only real changes would be achieved by adding or subtracting persons or programs.
Arguing over the number and price of supplies and equipment is pointless as one needs confidence staff will seek to be as frugal as possible. That has been the case during the recent spending freeze.
The effects of variables on the budget process are rarely discussed by media or politicians who prefer to talk about the tick-tock of reviewing line after line of expenditures, most of which will not be changed as they are well prepared by staff anyway.
The city budget review will get more coverage than the many other local governments simply because the city is easy to cover and of interest to the largest single group of news consumers.
We will see what happens, but I think institutionalizing property tax hikes when other revenues are likely to rise may not be the way to go this year. I guess we will find out next month.
5 comments:
Regardless raising taxes in most cases hurts in the long run by driving away the consumer or the homeowner unless they are stuck paying them and that just makes them angry. What's wrong with having surpluses anyhow and then spending or creating a rainy day fund for years that you have a recession. How about putting away 6 months of the budget or a full year in the bank over time so that you have a long time to level out ups and downs. Or pay cash instead of bonding projects and paying them back to the fund without interest. Just some thoughts.
The City of Watertown is a pioneer in local government transparency, as it broadcasts it City Council Meetings on Cable and the Internet.
Putting the Proposed City Budget on an Excel Spreadsheet on its website, and making it available to the public, would give citizens another way of evaluating the budget.
Watertown taxpayers might have some interesting alternatives to propose.
There is a basic disconnect between the operations of the public and private sectors of our economy. It boils down to the ease in which each of these sectors can balance the bottom line. While it is most difficult for a private business to raise revenue, it is a trivial matter for the public sector by imposing a tax or another fee. As a result, there is no inherent disciple to control expenditures. So while we in the private sector cut ours and our employees’ compensation, government belies its arrogance by increasing their compensation. Those in government actually think that what they do is so important that they should be immunized from the pain of an economic downturn. They continue to maintain, if not increase, their standard of compensation on backs of those that have no protection from the vicissitudes of the economy and who, in the end, must support this unbridled arrogance. This even in the face of massive debt.
Politicians liked to be liked. What better way to curry favor than to dole out money that is not yours to others who will support you. It is the third rail of politics – to cut government employee compensation. It has to apply to every sector of public expenditure: public works, education, healthcare, and especially, governmental administration. To do that however, requires the moral imperative that political and governmental leaders cut their compensation prior to cutting employee’s compensation. That, in turn, requires a certain humility and personal discipline so rarely found in those with governmental power.
Mr. Graham’s observations are apt. The cost of supplies are not the problem, it is compensation. It starts at the top. The city manager, along with the Mayor, have no business increasing their salaries. In the end, they just aren’t worth that much. They should cut theirs and then start the unpleasant business of cutting their employees’ compensation.
Doctor heal thyself....Check out the administrator salaries at the hospital and compare them to city administrative costs.
I absolutely agree. In fact, when the Lewis County Legislators were debating raising the Lewis County General Hospital's CEO salary I spoke out against it. Why any private board of trustees would pay a CEO such an obscene salary is beyond me. See my comment regarding Espada in an above post.
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