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String of deficits

Schenectady County warned about fiscal stress

Analysis does not mean current problem

Wednesday, September 25, 2013
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String of deficits


A man leaves the Schenectady County Office Building on Veeder Avenue Wednesday.
Photographer: Peter R. Barber
A man leaves the Schenectady County Office Building on Veeder Avenue Wednesday.

— Schenectady County needs to be wary of fiscal stress, according to an updated report released Wednesday by state Comptroller Thomas DiNapoli.

The assessment is part of DiNapoli’s monitoring system for municipalities, which looks at indicators such as available cash, past budget deficits and the local economic climate to raise awareness about potentially impending fiscal disasters. Schenectady County isn’t currently facing significant or moderate fiscal stress, the two most severe classifications, but the monitoring system determined the county is susceptible to fiscal stress.

The determination was based largely on the county’s recent string of budget deficits, its small amount of available cash compared to total liabilities and its relatively small fund balance, according to the report.

Despite the warning, spokesman Joe McQueen noted the county appears to be in a better fiscal position than Albany and Saratoga counties, which scored worse than Schenectady County in grades released in June.

“It’s difficult not to feel some stress when 84 percent of our budget pays for state-mandated expenses,” he said. “[Half] of our property tax alone pays for our share of Medicaid, something that no other state in the country passes on to their local municipalities in the way New York state does.

“Additionally, our retirement costs have increased from $4.8 million in 2009 to $13.6 million in 2013.”

According to DiNapoli’s monitoring system, the situation could get worse for Schenectady County, which is projected to fall into the more serious “Moderate Fiscal Stress” category next year.

DiNapoli said in a statement the point of the monitoring system is to keep municipalities from making the same mistakes that have been made in the past.

“We can jump start discussions at the state and local levels about fiscal stress so that corrective actions can be taken,” he said. “There is a continued need for better long-range planning and honest conversations about how local governments operate when their regional economies, demographics and traditional revenue sources change.”

McQueen said the county is making the right choices for the future, noting that earlier in the week the county manager unveiled a budget for next year that raises taxes by less than 1 percent.

“This is due to a long-term strategy of cutting costs and finding efficiencies,” he said. “We don’t just budget from year to year, and that strategy has resulted in an average property tax increase of 1 percent since 2009 — in spite of the mandate increases we’ve seen in that time.”

The proposed spending plan allows county legislators to avoid the controversial override of the state-mandated tax cap they approved during last year’s budget discussion before ultimately hiking the tax levy by 5.9 percent. The budget relies on $5.7 million in reserve fund spending, which is slightly less than the amount in the current spending plan.

In response to criticisms of the monitoring system, which gave a clean bill of health to the city of Gloversville and warned Saratoga County, the comptroller’s office has noted the system focuses primarily on a municipality’s budget and whether it is susceptible to fiscal stress. The monitoring system is not an assessment of a municipality’s local economy or its tax base, and it doesn’t consider how high or low taxes might be in a municipality.

The fiscal stress scores are based on information provided to the comptroller’s office.

 
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