A Tax Decrease in 2008 Is Possible! Here's How:

At the August 14th City Council meeting, City Manager Rich Rising said a 0% tax increase “is doable.” That was in response to Augustine’s request for a stable tax rate (see the council meeting minutes). Earlier in the meeting, Rising had indicated there’d be a $215,000 savings in health insurance spending as a consequence of the restructuring of plans and premiums at Blue Cross/Blue Shield. (That will make 2008 the first year we’ve avoided double digit increases to premiums.) This brief exchange highlights the two principal considerations in any budget. What we take in, What we spend.

Before we get back to property taxes, let’s take a look at all of the new revenue the City will receive in 2008. Sales tax revenue is projected to dramatically increase. We’ll likely see an additional $200,000 in 2008. That’s on top of last year’s increase, so we’ll be taking in $360,000 more than in sales tax revenue in 2008 than we did in 2006. The hotel occupancy tax takes effect in 2008 as well. That is supposed to haul in another $160,000 in new revenue. Governor Spitzer has been very responsive to the economic woes of Upstate cities and has aggressively increased municipal aid. Geneva will likely receive $125,000 in additional state aid to cities. Do the math-- that’s already $385,000 in new revenue for 2008, compared to 2007.

Now let’s examine expenses. According to Rising, two areas of the budget will see a substantial increase: salaries and equipment. Last year, he recommended (and Council approved) a complete reassessment of the city’s equipment purchases. The city hired a consultant to analyze our current fleet of vehicles and to draft a purchasing schedule that meets our needs and spends money wisely. We’ll set aside $200,000 for new vehicles in 2008. Salary increases average 2.5%, adding about $250,000 to the budget. Overall, expenses should be up $450,000 in 2008.

Do some more math: $450,000 (new expenses) - $385,000 (new revenue) = $65,000 (budget shortfall). Normally, that means the tax levy would have to increase $65,000 over 2007. But there’s more. We have requested some additional expenditures in the 2008 budget: Filling of vacancies in the police department and adding another full time youth officer will likely increase the police department budget $65,000. Support for Neighborhood Watch groups and Little League will likely total $10,000. That’s another $75,000 in additional expenses for 2008.

It seems reasonable to assume the amount would be covered with a property tax increase, so that the total tax levy (total dollars taken in by the City from taxes) would have to increase by $140,000 ($65,000 + $75,000) from 2007 to 2008. That represents a 2.5% increase in the levy, similar to the current rate of inflation.

Now it’s time to talk about the tax rate. Council voted to earmark the new revenue from the hotel occupancy tax for the City’s ‘tax stabilization fund.’ That means that the $160,000 to be collected in 2008 won’t be used to offset increased expenses. So we have to subtract that from what we called ‘new revenues’ above. The amount to be raised from property taxes in 2008 would then be $140,000 + $160,000, or a total of $300,000.

But does that mean the rate has to increase to raise the total tax levy to cover the total additional $300,000 in spending (for equipment, salaries, additional police, and community services)?

No way! And here's why:

The formula for the tax rate is simple:

Tax levy (amount to be raised) / Tax base (taxable property values) = Tax rate

In 2007, the levy was just under $6 million, the tax base was about $324 million, so the tax rate was $18.26/$1000 of assessed value:
$6,000,000 (levy) / $324,000,000 (property values) = $18.26/$1,000 (tax rate)

We’ve already posted on the fact that, as a result of a 7.5% increase in assessed values of property, the tax levy would be increasing by 7.5%. That is the equivalent of a 7.5% tax rate increase already in the bank. So, if the 2008 levy is $6.2 million, and the tax base increases 7.5% to $345 million, the tax rate would be about $18.00/$1000 of assessed value.

Get this! The tax rate could decrease. That’s right. City services could increase, new employees could be hired, and the tax rate could still decrease. We knew it was possible. The key is new revenue. Now that we have it, it’s time to truly give the taxpayers a break. Let’s give them a decrease!

Rethinking City Living: Efforts to Reinvigorate Our Neighborhoods

The Rochester Business Journal just issued a special report on city living. Of course, the city they are speaking of is not Geneva, but there are parallel issues and opportunities that are worth considering.

The study shows that most of the people choosing to move in to the city are either young professionals or ‘empty nesters’ who like being within walking distance to downtown, who appreciate the architectural styles and historical landmarks within the city, and appreciate being part of a diverse community.

But a growing number of families are choosing urban living over suburban homesteads. The Journal reports that families like playgrounds, cultural offerings, restaurants, and close neighbors. One family profiled in the article said that they chose to live in the city “for philosophical reasons—to help keep it as a vibrant place to live. ‘Cities can only survive if people like us, families like us, stay in neighborhoods and take care of the homes...[and] there is diversity in the city that sometimes you don’t get in the suburbs.’”

We, as a small city with many of the same characteristics should pay close attention to this. We should encourage development of opportunities that appeal to the needs of residents, both existing Genevans and those who would potentially relocate here. This means a continued, or increased, investment in things that make our city a safe and friendly place to live.

City departments like code enforcement, police, and recreation make use of city resources in a way that make the community a desirable place for people to live and raise a family. For example, the personnel department is attempting to streamline the hiring process for police officers (without compromising any of the required steps) to respond to the request made in the Chief’s report to city council. Code efforts in high density neighborhoods are important not only to improve living conditions for Geneva’s renters, but to protect the property values of homeowners in those areas. City government also has a role to play in fostering positive neighborhood relations, in the form of encouraging neighborhood associations and assisting with community gatherings.

These increased efforts, coupled with the significant private investments proposed for downtown and the leveraging of State funds through the RESTORE NY program, will make Geneva a better place to live and raise a family.

Have We Made An Error?

Councilor Cosentino wrote in to us the other day to complain that he had been misquoted in our post on “Rich Rising’s Rising Riches.” First of all, Cosentino was never quoted. We opted, instead, to paraphrase what he had said, to give our readers the gist of his position on the Rising raise. Second of all, Cosentino never told us what he did say. If we had made an error, we would have gladly corrected it. Let’s take a closer look and see if our fact-based point of view is, in fact, fact based.

Here is what we wrote in the post:

"Cass continued to spread fiction in the City, with a letter to the editor indicating that the evaluation had been completed. Even the Finger Lakes Times, that usually bends over backwards to give Cass the benefit of the doubt, wrote an editorial about the problems with the vote. Councilor Cosentino confirmed it in his own letter to the editor. He stated that Rising’s evaluation hadn’t been completed, but that he didn’t care because everyone knows what a great job the Manager does. We think that’s debatable..."


Here is Cosentino's comment (which appears after the post):

"Have some integrity and try to make your point w/out lying!!!!"

Now here are the documents: Cosentino's comments about Rising's raise.


Please take a look. Cosentino, somebody, show us the lie.

Rich Rising's Rising Riches--Part 1: If Cass gets his way, the budget will include another increase for the city manager

At Council’s February 7th meeting, Mayor Cass rounded up the votes he needed to grant City Manager Rising a 5% salary increase, retroactive to January 2006. The resolution authorizing the raise wasn’t originally on the agenda, was presented after a lengthy executive session, late at night, and was false. You can read it here. Cass and his majority told the public that a performance evaluation had been completed and indicated that a 5% retroactive raise was warranted. That’s just false.

Councilors Capraro, Augustine, Espenscheid and Nyrop voted against the raise on the grounds that Rising’s performance evaluation had never been completed. Not only is a yearly performance evaluation the right thing to do for the public, and for Rising, but it is a contractual obligation (see our June 4th post on this issue).

But Cass continued to spread fiction in the City, with a letter to the editor indicating that the evaluation had been completed. Even the Finger Lakes Times, that usually bends over backwards to give Cass the benefit of the doubt, wrote an editorial about the problems with the vote. Councilor Cosentino confirmed it in his own letter to the editor. He stated that Rising’s evaluation hadn’t been completed, but that he didn’t care because everyone knows what a great job the Manager does. We think that’s debatable, but whether you like the job that’s being done or not, the evaluation matters.

Cass also allowed Councilor Paul D’Amico to vote for the raise, even though D’Amico had just joined council and therefore wasn’t able to comment on Rising’s 2005 job performance. We thought D’Amico should abstain, not only because he had no basis on which to vote, but because he could have avoided unnecessary political controversy. But D’Amico was all too eager to get on Rising’s good side, and cast the deciding vote for the raise.

Because that last raise covered Rising’s performance in 2005, Cass wanted to turn right around and ramp up for yet another raise covering Rising’s 2006 performance. At a special meeting of council held later in February, Cass pledged to follow a schedule for Rising’s next round of evaluation/raise. Council was supposed complete the evaluation in May at a special meeting devoted solely to discussion of the individual evaluations. Don’t take our word for it, read it for yourself here.

Well, it’s September and the evaluation has still not been completed. Individual evaluation forms have been completed (see the form we used), but we haven’t moved on to the second step. It was supposed to be discussed in June, then it was put off to July, then August. We aren’t on the bandwagon for another raise for Rising, but come on, Cass needs to get his Mayoral act together, for once, and get this done! Council has a meeting Wednesday, September 19^th. The day after the Mayoral primary. Perhaps then it will be ‘safe’ for the Mayor and his voting bloc to put forward their proposal for yet another raise?

Sorry, Scare Tactics Won't Work: Geneva is No Batavia

We were surprised when the presentation from Geneva’s outside auditor, Laura Landers, turned into a discussion of tax policy. The message that emerged from a series of Council questions is that we ought to continue with tax increases to avoid the fate of taxpayers in Batavia, New York. Landers is from Batavia, and she explained that those poor souls were hit with a double digit tax increase. It sounded like Batavia was an otherwise well run municipality, and if only their council hadn’t insisted on holding the tax rate steady, they could have avoided this year’s massive increase.

This seemed an interesting scenario, and it seemed to dazzle some councilors, but we wanted to run a fact check. We’ve looked into the Batavia budget (and you can, too, in the No Strings document library). There is a lesson to be learned from Batavia, and it is this: City Councilors need to be informed about budget issues and can’t be afraid to question the City Manager about critical budget components. Some councilors might want to use Batavia as a scare tactic to push through another tax increase, but the facts take the wind out of their sails.

Let’s back up. At City Council’s regular meeting, September 5, we received an executive summary of the City’s 2006 finances from the independent auditor (Freed, Maxick and Battaglia). It was business as usual. The 40+ page audit was on our desks waiting for us, an 8 page executive summary attached. We were expected to peruse this while Landers made her presentation and then we could ask questions. Not a lot of time to digest the complex material. We insisted that she return at a later date, when we’d had time to review the documents in full, but some councilors were prepared to pepper her with questions about our tax policy. They wanted her to say that we’d better keep raising taxes, and she warned us about Batavia.

Actually, her findings were fairly positive. We budget fairly conservatively, which meant we had a surplus of $183,00 for 2006. We took in more than projected and spent what we planned. That surplus went back into the fund balance, the city’s savings account, which Landers said is much healthier than almost any other city she deals with. There are a few areas in need of improvement, but it seems that last year’s hiring of an additional employee in the Comptroller’s office will take care of those things.

The audit discussion eventually turned from administrative oversight of the budget to policy-making when Councilors questioned the auditor about the tax rate. Councilors Cosentino and Schroeder asked her to comment on the negative impacts of tax cuts. Some people, they claim, want us to cut taxes, but isn’t that a recipe for disaster? Couldn’t we end up like—a hush falls over the room—Batavia?

She described Batavia’s situation as a desire to keep taxes low at all costs, resulting in the city draining its fund balance, running a deficit last year and facing a double digit tax increase this year. Right on cue, Cosentino followed up with another question; “Was fair to say,’ he asked, “that ‘everything goes up’?” Translation: spending more and taxing more are just a fact of life and shouldn’t we just get used to it and vote an increase? She agreed that unless something is done differently, you can’t pay for rising costs without raising taxes.

No kidding! So you can increase taxes or you can do things differently, like increase revenue from sources other than property taxes!

Long ago we joined with former Councilor Nyrop in arguing that City of Geneva taxes are too high (see our posts on this issue from March and April) and they are having a negative impact on economic development in Geneva. The cost of business in New York State is bad enough. We shouldn’t make it worse by continuing with a tax rate that is at least 3 times higher than our Ontario County counterparts. Our assessment has increased, but it doesn’t represent a lot of new taxable properties, just higher values on existing properties. So residents will feel the pinch of a higher assessment if the tax rate stays the same, and will get a double whammy if the rate increases.

But some councilors want us to believe that taxes must go up because they see only three options:

1. Raise taxes.
2. Reduce taxes by cutting services.
3. Reduce taxes by following Batavia’s lead into deficit-spending.

We say the correct answer is “D. None of the Above.” And we’ll even use the case of Batavia to show you why:

Here’s what really happened in Batavia. Just look at their 2007-2008 budget message announcing the double digit tax increase. Their tax rate will rise to $9.54 per $1000 assessed value. That’s just about half of Geneva’s rate! We are currently at $18.26 per $1000). Batavia’s new city manager reviewed Batavia’s mistakes of the past years and gave four reasons for the mess they are in:

1. Overestimating revenues for several years.
2. A city guarantee of school and county taxes (the City pays the taxes upfront for the entire assessment roll and then bills and collects residents. The city then absorbs the cost for people who do not pay).
3. Increases in operating expenses, specifically employee benefit premiums (retirement and health care) as well as utility bills and debt service payments.
4. A potential retroactive raise for staff that was not budgeted for.

No where does he mention that the taxes are too low!!
A NYS Comptroller’s review of Batavia’s budget drew attention to another fact: their ambulance service is a cause of their budget trouble because it operates at a deficit.

Clearly, Geneva and Batavia are two very different communities. Our revenue estimates are always conservative, as reported in our most recent audit. In 2006, our actual revenues exceeded the budget projections by nearly $1 million. Although we provide billing services for the county, we do not guarantee the funds in the way Batavia does. We have seen cost increases in all of the areas Batavia has, but those are aggressively budgeted for, to ensure we meet all costs. And we don’t make a habit of retroactive raises. The city manager’s most recent raise is the exception, not the rule.

Add to that our recent increases in State Aid, sales tax, the savings from the library tax, and the new hotel occupancy tax. We are diversifying and increasing revenues at a rapid rate, something Batavia couldn’t do. So we aren’t fooled by Council’s desire to scare us into a tax increase with images of Batavia. And we hope you won’t be either.

A Great Leap Forward: 2,052 will be a leap year; it’s also how many people have logged on

Today, our 2,052nd visitor logged on. That means 2,052 readers have visited our site at least one time. Nearly half of them (approximately 1,000 people) keep up with all of the new posts! For the five months since we launched No Strings Geneva, we’ve averaged over 50 visits per day. As our content and new readership expand, people are spending more time on the site, about 6 minutes per visit, on average. Loyalty is strong. Three out of four who find their way to the site will return. We’re growing our number of visitors and our total number of visits at a steady pace. We've had almost 20,000 'views.' We're glad that you've cared enough to check the site out and are interested enough to keep coming back. The more we all know about city government, the better things will be for Geneva!