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Budget for 2004-2005 Linked Sheet5-3-04

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Budget for 2004-2005 Linked Sheet5-3-04 While the pressures we are facing from these expenditure increases are quite clear, our anticipated revenue levels remain uncertain. This uncertainty stems from the fact that the State of New York has not completed their budget process by the April 1st deadline, School District funding levels as they relate to the Campaign for Fiscal Equity (CFE) lawsuit have not been determined, and the debate over the 1% increase in the local sales tax has not been resolved. The budget I am submitting to you makes several assumptions about these revenues. Should they not materialize before the Charter deadline for enacting a new budget, I will direct my staff, in concert with the Common Council, to prepare a contingency plan for City and School District spending. April 8, 2004 Revenues: There has been much debate recently regarding the addition of 1% to the local sales tax. Approval for an increase has been forwarded by Onondaga County to Fellow Syracusans: the New York State Legislature for their consent. I believe that the State Legislature will not enact the sales tax increase as submitted because they do Pursuant to Article VI, Chapter 1, Section 6-102 of the City Charter, I hereby not agree with the proposed distribution of this sales tax revenue. My 2004/2005 transmit to you the budget I have approved for the City of Syracuse and the budget plan includes the addition of the 1% sales tax increase according to the Syracuse City School District for the period of July 1, 2004 through June 30, same formula that exists for the remaining 3%. This translates into $17 million in 2005. additional revenue for the City and $1.2 million for the City School District. This influx of sales tax revenue will substantially correct the structural budget deficit This is the third, and by far the most challenging budget, I have proposed to the annually facing the City. Common Council during my tenure as Mayor of the City of Syracuse. During these three years I believe we have taken positive steps to position the City for Of the City’s $17 million share of the new sales tax revenue, I have included a the future. SyraStat is well established and continues to expand, the City’s bond direct transfer of $3.8 million to the School District. In this way, the School rating has improved for the first time in ten years, we have provided increased District will receive a minimum of $5 million in new sales tax revenue. If this plan financial support for the City School District, our fund balance remains formidable is enacted by September 1, 2004, a full year of increased sales tax revenue is and service levels have been maintained under very challenging financial anticipated. circumstances. I have said many times, the City of Syracuse should be rewarded by the State of New York for making positive institutional change. Because the State did not meet its budget deadline, the City is forced to estimate Incremental increases in State Aid are necessary to augment our aggressive how much State Aid to budget for the coming fiscal year for both the City and the financial stewardship. Today, however, without outside assistance from the School District. The City of Syracuse has not received any increases in State Aid State of New York and acknowledgement by our County leadership that a strong since 2000. A fourth consecutive year without any increase in this aid has the City is vital to a prosperous County, the tide may be turning. Our financial potential to cripple vital City operations. The budget assumes that the City will be obligations are mounting and we must have the resources to address the provided with a minimum of $5 million in new permanent State Aid. challenges that lie ahead. A further unknown as the 2004/2005 School District budget is finalized is the The 2004/2005 budget contains a total appropriation of $473,103,680: funding decision that will be forthcoming related to the CFE lawsuit. A $224,916,486 for all City operations and $248,187,194 for the School District. declaration that our current educational funding system is inequitable has not The funding levels as proposed represent a 11.5% increase for the City and a translated, so far, into dollars being recognized by any urban school districts. 19.3% increase for the School District over the approved 2003/2004 budget. For With a deadline of July 30, 2004 for an agreed upon proposal looming, and both the City and the School District, these double-digit increases are almost numerous funding proposals being offered, the 2004/2005 budget contains $33.3 solely attributable to a limited number of line items. They are: contractual million in additional State Aid to the City School District. This figure, combined obligations to employees, rising pension costs and rising health care costs. with the $5 million in new sales tax revenue, will balance the School District expected to rise 17% in 2004/2005. Since I took office three years ago, health budget. insurance costs have increased 50% or $8.5 million. Previously approved 2% pay increases are budgeted for all bargaining units except the PBA, which is For the City, a $2 million transfer from fund balance to cover anticipated currently without a contract. A modest increase has been budgeted to expenses will be necessary. We will continue to closely monitor all expenditures accommodate the anticipated costs of the Police contract. to limit the actual fund balance that we need to transfer during the fiscal year. Our projections indicate that even with this transfer, our fund balance will remain within the acceptable guidelines set by the State Comptroller. The current financial position of the New York State Retirement System and the negative impact this has on local municipalities has been well documented over Initiatives: the last year. For the City of Syracuse, the retirement bill for uniformed and civilian employees combined is expected to increase 161.5%, or $9.9 million. If Several initiatives are contained in this budget, including: absorbed by a property tax increase, this one item would lead to a 44% property • A continuation of the sale of property tax liens to the Municipal Bond tax increase and cost the average property owner over $200. We have elected Bank Agency, which allows for the elimination of the annual real estate to exercise the State comptroller’s one-time option of bonding for all retirement auction costs over 7% of payroll. This appears as a revenue item and accounts for $7.1 • Continue to implement energy action plans to reach a goal of 20% cost million in bonding proceeds in the 2004/2005 budget that will directly offset reduction by the end of 2005 retirement costs. Without some further refinement of the State Retirement • Addition of new uniform hires in both the Police and Fire Departments System, this one-time allowance will translate into a direct $10 million • The initial stages of the District-wide School Reconstruction Project expenditure increase in next year’s budget. • Expansion of the Creekwalk as an essential link into our City neighborhoods As outlined, several of the proposed revenue items are contingent upon State • Expansion of the night recreation program to add three additional sites and County action. If, however, funding levels actually received are less than and lengthen the hours of operation at the current sites budgeted, our contingency plan would have to consider property tax increases, • Separation of Clinton Square and Downtown Special Event costs into water and sewer rate increases, additional use of already limited fund balance, one object line in the budget to reflect actual costs to the City service reductions, and lay-offs. • Internal management of the Clinton Square Ice Rink • Funding of the VIPP program and a continuation of the summer employment program for at-risk youth Expenditures: • Completion of infrastructure repair projects including the Overall City General Fund spending is projected to increase $21.6 million in Solar/Kirkpatrick corridor, Southwest Community Center, Wilson Park, 2004/2005. This large increase is due to several specific areas. They are: the Walton Street Bridge and expansion of the North Salina Street project, among others • Retirement cost increase of $9.9 million • Transfer to the City School District of $3.8 million (based on the City City School District: receiving 25% share of new sales tax revenue) • Health insurance increase of $3.7 million The Board of Education submitted a budget to the City containing a $38 million • Employee contractual obligation increase of $2.2 million shortfall. Faced with many uncertainties relating to our revenue outlook, the City • City/County Courthouse increase in bonding obligation costs of nearly School District is also reliant upon actions that will be taken in Albany after this $1 million budget is proposed. If the sales tax and CFE settlements fail to materialize as • Cash capital increase of $1 million since one-time use of cash reserve budgeted, the School District will be facing expenditure reductions that will have occurred this year to be instituted prior to the start of the fiscal year in July. Projected expenditure increases for the School District are very similar to those outlined for the City in A large percentage of these expenditure increases are driven by rising personnel that they are nearly all personnel related. costs. The details surrounding the City’s rising pension bill have been previously discussed. Health insurance costs continue to far outpace inflation and are In partnership with Dr. Jones, I continue to work with our State representatives SUBSEQUENT EVENTS: for approval of the District-wide School Reconstruction Project, the District’s fair share of the CFE settlement and charter school funding relief.
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