City Manager's Multi-Year "Plan" is a Multi-Year Disaster: Council Must Assert Itself

New York State requires the City of Geneva to file multiyear financial plans. It’s an excellent planning exercise that has forced City Council to confront the stark realities of its General Fund budget through to 2010. What the plans shows is that the City faces massive increases in retirement, health insurance, and debt costs. It also shows that what the City Manager refers to as a “balanced budget” is really a combination of tax increases, dipping into the Fund Balance (cash reserves) and borrowing, borrowing, borrowing.

But the response cannot be to keep raising local property taxes. Property taxes are already far too high. They burden every local tax payer. They depress property values. They are an obstacle to economic development. Business models simply will not work with the high cost of property taxes. We saw that last year with the withdrawal of proposals for condos downtown on the OEO site and housing development in the First and Third wards.

The City needs to pursue other, more creative strategies. Working with Ontario County for more equitable distribution of sales tax dollars to the City was a major, positive development, netting an estimated $350,000 in new revenues. The proposed hotel tax is another new revenue stream (a more detailed post on that issue is forthcoming). The Financial Plan lists other strategies: sharing of services and further economic development to increase the tax base. Councilor Espenscheid successfully put forward an energy conservation initiative to reduce costs. Councilor Capraro has proposed “wellness programs” for City employees that might reduce health insurance premiums. Councilor Augustine has asked for a more thorough assessment of capital projects to make sure that the City gets the greatest return on its investment. Those projects are a double burden on the tax payer: If paid for with cash, they draw a great deal from the General Fund but paid for with bonds, they add heavy weight to our debt burden. A recent bonding proposal was projected to cost $1 million in interest alone.

The plan submitted to the state assumes a yearly tax rate increase of 3%. That will put us over $20.00 per thousand dollars of assessed value within a few years. We know that the tax rate is pricing people out of their homes, and the associated disinvestment in our neighborhoods just perpetuates the problem. We worry when we hear the rest of Council encouraging this approach. It’s irresponsible, keeping us stuck in a vicious circle of tax increases. To avoid discussing the matter in any depth, some people try to throw up a roadblock, saying that the only way to get a handle on taxes is to cut city employees or city services, they usually mention the police and fire departments or our DPW workers. Well, that’s simply not true. But, in an election year, some people use it as an effective smokescreen for a lack of ideas.

The fact is that we need to think differently, more creatively about generating revenue and using it wisely. At the most recent council meeting, the City Manager gave a presentation previewing the 2008 budget. We’ll have a post on that soon, stay tuned.