by Andy Stewart, Orangetown Supervisor

Last week Orangetown Supervisor Andy Stewart presented his proposed 2017 budget to the Town Council, the first step in the annual budget process.  On Oct 18 the Town Council will submit their revised Preliminary Budget. A public hearing on the budget is scheduled for Nov 1 followed by a Town Board final budget vote on November 15.

In Rockland we pay among the highest taxes in the country. I believe this proposed budget strikes the right balance between funding essential services and controlling costs, preserving what is great about Orangetown government, while challenging all of us to work harder, smarter, and more efficiently. I look forward to working with the rest of the town board to make any improvements necessary before adopting a final budget in November, as long as the net impact of any changes does not increase taxes or jeopardize critical services.
My comments here aim to provide a “big picture” of the budget, covering five key topics: the tax cap, our fund balance, capital spending, special districts, certain cost drivers and ways of saving money. Of course, the entire budget will be on the town website later this week and I welcome feedback from members of the public.

Budget Basics: Tax Cap, Fund Balance and Capital Spending (Debt)

Tax Cap – Our tax levy, including sewer unit charge, is down 2.2% from 2016, from $50.6 million to $49.5 million. We are cutting the tax levy and staying under the Tax Cap by $110,000, and this is a very good thing for taxpayers. However, to be clear, taxpayers will not see their bills decrease, but in fact will see an increase of, on average, $49. Why does the average residential tax bill go up just a bit, even though the tax levy is going down by almost $1 million? The answer is basically “Pfizer” – or more accurately, downsizing and demolition at Pfizer and elsewhere has reduced the commercial tax base and shifted the burden of paying for government slightly onto residential property owners.
If it is now clear how tax bills can go up even though we are cutting the total tax levy…. let me clear up another common area of confusion — the difference between our tax levy and gross budget.
The total town budget is not $50 million, which is our tax levy, but $72 million, and the difference of about $22 million is funded not by taxes, but by non-tax revenues. These revenues include, for example, judicious use of fund balance, that is, surplus taxes from previous years, as well as PILOT payments – or payments in lieu of taxes — from businesses with tax agreements with the town and school districts, such as IRG, the company that now owns the Pfizer campus. Other non-tax revenue sources include fees charged for playing golf, permits for construction and road openings and film shoots, dog licenses and a host of other town services. Our budget process includes reviewing and projecting, and sometimes increasing, these fees, and using them to fund town operations that have always cost much more than just what is funded with taxes. So, to be clear, our total budget, the total cost of our government and special districts, is not just the $50 million funded by taxes, which we are cutting slightly, but about $72 million.

Just a reminder, the NYS Tax Cap is a very hard number to beat, and the fact that we have done so is a credit to our town. The “cap” is not 2%, it is not 1%, it is almost zero. Plus, in Orangetown’s case, the New York State comptroller decreased our allowable tax levy under the cap by another $1.4 million to compensate for PILOT payments we are receiving. As usual, we have had to cut costs, find efficiencies, and use some fund balance to stay under the tax cap.
Please find hope, however, in the fact that Pfizer’s impact is fundamentally changing. Whereas the town is paying out in 2017 about $1.5 million to Pfizer and other businesses owed tax-givebacks because their assessments were reduced — what we call “tax certs” — , by 2018 this cost is expected to be a relatively modest $200,000.This is because we are now in the last year of a five year agreement between Pfizer, town and school district by which Pfizer’s taxes were reduced by 45%, entailing yearly payouts to Pfizer from the town budget of over $1 million. Now, IRG has bought the campus, is adding tax-paying businesses to fill vacant buildings, and has a PILOT agreement with town and school district that nets the town $1.75 million in 2017. The development of the property will add to the tax rolls, hopefully reversing the dramatic decline in value of this site. This is a big change and it is good news, and we must continue to work together to retain and grow good, clean, tax paying businesses in Orangetown.
The bad news, however, is that Rockland County is forcing the town to budget in advance for tax cert payments, an accounting change that will have a big impact on the town budget. For years, the county would pay tax certs and then include the costs in the county tax levy on Orangetown properties. Because of this change, our 2017 budget includes an additional $1.5 million in expense for tax givebacks — a big increase in expenses!

Let’s Talk About Fund Balance

Our proposed 2017 budget plans to use $2.4 million in fund balance to prevent a larger tax increase. As just mentioned, $1.5 million of this amount is needed simply to cover the cost of the tax cert payments to Pfizer and others. This is a reasonable use of fund balance — the town has budgeted to use between one and three million in recent years, and every year we actually use less fund balance than we budgeted, thanks to conservative fiscal management. Our overall reserve funds are at a VERY healthy 30% of the town budget and have actually grown by 40% since 2012 — this is taxpayer money that we should use responsibly to avoid taxing people more than necessary, while making sure we have sufficient reserves for a “rainy day.”

Special districts

The town funds four libraries, two ambulance groups, paramedics and the Blauvelt Volunteer Fire Department. We have financial responsibility for these organizations even though we do not directly manage them. These organizations serve and protect the community so well, involving many dedicated volunteers. At the same time, we cannot fail to scrutinize their budgets just like all other town spending. For example, the libraries took huge 10% cuts in 2013 and 2014. They had accumulated very large reserves due to being treated as one budget under state law, and these reserves are now dwindling fast. I propose funding the four libraries at their very modest requested levels of funding. Anything less may imperil their future, particularly in the case of Orangeburg Library. I am so impressed and thankful for the library staffs and trustees efforts to address these tight fiscal times, and I look forward to working together to insure their future health.
I want to make special mention of the Blauvelt Volunteer Fire Department, a group of people with amazing dedication to community. Because of their tight fiscal management, the department’s own budget proposal allows spending to be reduced by $200,000 in 2017, and they will still add a minimum of $160,000 to reserves for the future purchase of expensive trucks. This is because the department finished paying off a bond, reducing its debt service costs by $158,000 per year, and because it has run a surplus, in addition to setting aside money in capital reserves, of around $85,000 a year. The members of this department deserve our gratitude for their fiscal management, their role in helping the town keep taxes under control, and their investment in additional forest fire fighting equipment, among other important projects.

Capital Spending, Debt and Bonding

Orangetown, like state and local governments throughout the country, uses bonds to purchase long lasting equipment like trucks and to build things, like roads. Typically, the town bonds for about $4 million every other year, a strategy that keeps transaction costs and interest rates very low. Our bond last year allowed us to replace aging police cars, sewer lines, tennis court surfaces, road surfaces all over town, and a street sweeper truck among many other things. Our next bond will be late next year, but in the meantime we are including certain critical items in our budget:

• the demolition of derelict buildings located at Blue Hill and Cherry Brook Parks,
• upgrades to Braunsdorf Park in Pearl River;
• sealing of cracks in basketball courts at Veterans Memorial Park and others;
• Installation of a Computer Aided Dispatch system at the Police Department to help dispatchers and supervisors tter manage and document calls for service, and reduce paperwork;
• replacement of old pickup trucks at the Highway Department and Animal Control;
• And our biggest items:
  • the replacement of an aging “pressure truck” at the Sewer Department.
  • upgrading sensors and alarms at sewer pump stations so operators can monitor their vital signs and respond to incidents more efficiently.

Please note that wherever possible, older vehicles are put on light duty, such as police cars getting used by fire inspectors, and worn out vehicles are auctioned to recoup any remaining value for the town and taxpayers. While I’m on the topic of safety equipment, I want to thank the Tappan Zee Bridge Community Benefits Fund for a forthcoming grant to pay for two police cars, two electronic messaging signs, and traffic counter devices that can actually count bicycles. Our aggressive grantwriting program does create a lot of paperwork for our staff, but it is always nice to have help from outside sources to pay for things we need!
It should go without saying that we scrutinize our capital spending and always leave our departments a bit disappointed. This is understandable, since our employees and department heads are so dedicated to providing top notch services and don’t ever want equipment failure to compromise service to town residents. However, experience has shown that we can often keep equipment going longer than expected, and that bundling capital purchases for low-interest rate bonding is also a great service to taxpayers! Most importantly, Orangetown is in good financial shape. From January 2012 to January 2016 our overall reserves increased by more than 40%, our overall debt has decreased, and our Moody’s rating remains a very respectable Aa2.

A Note on Cost Drivers

Rockland County continues to shift costs onto the towns, totaling $1.9 million for 2017.  The county is charging Orangetown $240,000 to help pay the cost of tuition incurred by town residents attending the Fashion Institute of Technology and other out-of-county community colleges. As I have said many times here, on the radio and to our county government, Orangetown runs summer camp for little kids, and should have no role in paying for college education for adults. The county is also making us pay them $200,000 for running elections and, new this year, as I mentioned before, making us budget for $1.5 million in tax certiorari expenses formerly covered by the county. These cost shifts, again, totaling $1.9 million for 2017 alone, are in addition to, a few years ago, eliminating funding for police officers assigned to the county’s drug task force, and eliminating staff in the Rockland County Health Department who used to play a vital role in preventing air pollution and odor problems from local businesses such as Aluf.
And then there is the State of New York — thankfully, our aggressive pursuit of state grants has helped pay for critical infrastructure like the new bridge on Oak Tree Road in Tappan, the sludge press, sewer re-lining, green infrastructure and bike paths. On the other hand, in New York as well as nationwide, investment in bridges, roads and sewers is in large part a state responsibility and the state funding is just not keeping up. We need more highway funding, and we need the same exemption schools get, that is, school capital expenditures do not count toward their allowable tax levies under the tax cap law. Without this exemption, across the state, towns are unable to spend the money needed to maintain and replace old bridges, roads, and culverts.

Personnel Costs

Annoying as some of these cost-shifts may be, our biggest budgetary challenge is the steady escalation of personnel costs, including salaries, health insurance, retirement, workers compensation, and related costs. Personnel costs have grown to consume over 70% of the town budget and are largely beyond our direct control. In my view, with a few exceptions, the town is currently staffed at absolute minimum levels in most departments, and our residents are taxed to their maximum tolerance. This year’s budget does benefit from retirement of senior employees and the requirement that new CSEA members pay 17% of health insurance, and we were successful in moving both town golf courses to private management, thereby reducing personnel costs and boosting revenues. But these gains are quickly outpaced by escalating labor costs. Ultimately, to prevent further tax increases, residents should demand reform in Albany — of the rules of labor contract negotiation, pension contribution, prevailing wage laws and a host of other items that increase the cost of local government. The websites for the NY Association of Towns and the NY Conference of Mayors both have useful information on these topics.
I will note two small personnel cost changes in the 2017 budget. We are funding an additional assistant maintenance supervisor position at the sewer department at a cost of approximately $75,000, to better coordinate maintenance work. At a somewhat smaller cost, at the request of the Town Board and other elected officials, we are budgeting for cost of living raises for elected officials, who have not seen raises for almost a decade. Recognizing that Orangetown pays all its elected positions less, in general, than neighboring towns, doing something to slow the rate at which these leadership positions are losing value, due to inflation, makes sense. Our employees salaries have increased an average of 4% a year, so raises totaling about 1% a year for elected officials, even less than the rate of inflation, seems quite reasonable, and only increases the town budget by $45,500.

Cost Savings & New Revenues

Having covered some of the cost pressures we face, let me share a few examples of the many ways the town is saving money and boosting revenues.
Perhaps most important, after an often rancorous debate, our decision to privatize management of our two golf courses has reduced town expenses by about $600,000 a year, enabling us to begin paying off the enormous golf debt that has been the only blackmark on the town’s otherwise very respectable independent audit report.
Other examples include:

•  The town replaced a pump station in South Nyack with a sewer line, and got the Thruway to pay for a lot of the project because it involves the new TZB.
•  After a specialized audit, we are getting Cablevision to boost its yearly franchise payment by $25,000 and make a one-time payment of $100,000 to the town.
• We negotiated lower electricity and gas rates.
• We are buying back our streetlights from O&R and converting them to LEDs to save over $250,000 per year.
• Our loadshedding nets the town about $30,000 a year for agreeing to run our generators if there is a shortage of electricity in the grid.
• Our grant writing program has netted money for: culverts, sidewalks in Pearl River, the new bike path by Rte 303, new police cars and electronic message signs, a massive green infrastructure project in Tappan, sewer re-lining, and other projects.
• One such grant, the $250K we got from David Carlucci to overhaul our sludge press, has also reduced operational costs, in terms of run-time, chemical use, and overtime, showing how having the right equipment can make our work more efficient.
• We are pursuing the digitizing of town records to reduce storage space needs and make retrieval easier.

Conclusions

Creating a budget involves many small and large decisions so there will inevitably be some people who would make different choices about how to balance expenditures with revenues.
Over the coming weeks I welcome feedback and ideas from Orangetown taxpayers and from my colleagues on the Town Board on ways to improve this budget proposal. But for me the bottom line is that our final budget must do what the taxpayers of this town demand: it must hold the line on town spending, preserve the public services we enjoy, and most importantly, it must stay under the New York State tax cap. If we do these three things, we can produce a final budget that works for the residents of our town.

Orangetown Supervisor Andy Stewart’s preliminary 2017 budget can be found online at Orangetown.com