CARS HOMES JOBS

$1M county tax bill drains most of Schenectady’s savings

Friday, March 2, 2012
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— Schenectady’s savings account is almost empty.

On Wednesday, the city paid the entire delinquent tax bill owed to Schenectady County, draining its unrestricted savings account to nearly zero.

After various offsets, the city gave the county $1 million. City officials estimate the city has about $75,000 left as a cushion for cash flow and any emergencies that hit in the next 10 months.

City Council members were concerned about using all of the city’s savings and wanted to pay the county off in installments.

They passed a resolution Monday agreeing to pay the overdue bill with the belief that the county would approve a delayed payment.

Instead, Finance Commissioner Ismat Alam immediately cut a check for the full amount.

She explained that the county wouldn’t accept partial payments.

County Attorney Chris Gardner said simply: “We are not a bank. We don’t have lawful authority to lend money to folks.”

That leaves the city in a bind. There is no immediate crisis, but the city could face an emergency at any time, and cash flow may become a problem at the end of the year.

For many years, the city had so little savings that it had to borrow money every December to make payroll.

The problem wasn’t that the city couldn’t afford to pay — it was that it simply ran out of cash while it waited to receive the next installment of city taxes. City property owners can pay in quarterly installments.

Auditors recommended that the city sock away about 10 percent of its budget in unrestricted savings as a cushion against cash flow needs and emergencies. To meet that goal this year, with a $79.2 million budget, the city would have needed $7.9 million.

Some council members want to cut the budget — even lay off employees — to restore the city’s savings. But Alam isn’t worried.

“This year, our cash flow should be OK,” she said, adding that she doesn’t plan to urge the council to cut the budget to put $1 million back into savings.

Director of Operations Bill Winkler was more blunt.

“If we don’t pick it up with cuts now, we’ll have to pick it up when we need it,” he said. “We’ll just have to deal with it when the emergency happens.”

Mayor Gary McCarthy noted that the city does have $15 million or more in restricted savings accounts for specific emergencies — including lawsuits, workers’ compensation claims and blizzards. That money can be used for the type of emergency specified on the account, but he said the funds should provide a cash flow cushion, as well as protection against many of the city’s most common emergencies.

“We’re in a challenged environment,” he said, but added, “We’re going to have enough cash to get through 2012. It’s not an issue.”

He plans to ask for “belt-tightening,” while focusing city efforts to hunt down delinquent taxpayers and force them to pay up. About 12.5 percent of the city’s taxes are not paid each year, and putting an end to that will solve the city’s financial problem, he said.

“I’ve got to collect the taxes,” he said. “By 2013, we’re going to see this turn around.”

Council President Denise Brucker, who had hoped to pay the county tax bill in installments, said she was willing to believe the city budget doesn’t need to be cut.

“Well, they’re the people in charge,” she said, “so I’m willing to go with their answer.”

But Vince Riggi, the only independent member of the council, said the city needs more savings. He recalled that his running mate, mayoral candidate Roger Hull, criticized the Democrats’ 2012 budget for not including items like the county tax bill. Hull said McCarthy was “kicking the proverbial can past Election Day.”

Riggi said the Democrats are still pushing the problem away.

“It looks like we’re kicking the can down the road again. The can’s getting heavier, and the road’s getting longer,” he said. “We have to bite the bullet.”

He called for “meaningful” cuts. “We can’t just keep doing business as usual when we’re paying this kind of money,” he said.

 
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comments

March 2, 2012
7:53 a.m.
wmarincic says...

Vince Riggi, the only sane voice on the city council.

March 2, 2012
9:11 a.m.
justapto says...

Thanks to all who voted in these guys. We could have had Roger Hull and the business help from the Golub Family. Check out the huge investment they have made at Erie with their office building. A 'change' in leadership Schenectady lost out on.
What a shame!!!

March 2, 2012
10:24 a.m.
hodgkinst says...

Sounds like the city's bond rating will decline.

March 2, 2012
11:59 a.m.
catherine9966 says...

Hull wasn't the answer. He is the reason Union College students call Schenectady residents "schenectadroids". Hull is an egomaniac and wouldn't know the first thing about running a city.

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