Tentative Village Budget Projects 10.9% Hike

by Judy Silberstein

(March 26, 2003) Village Treasurer Carmine DeLuca issued a tentative budget for 2003-2004 last week, and, as expected, the budget is up dramatically. De Luca projects a total budget of $11,634,285, up $1,144,365 or 10.9% over last year. In the unlikely event that the Board of Trustees adopts the tentative budget, there would be a 13.4% boost to the tax rates.

DeLuca cautioned that it is still early in the budget process. The Mayor and Board of Trustees will be conferring with the Treasurer and meeting in work sessions to develop their preliminary budget that will be presented at the April 7 Board meeting. However, the tentative budget contains the Treasurer’s cautiously pessimistic estimates for costs and revenues anticipated in the upcoming year.

According to DeLuca, increases in four areas account for over 70% of the tax hike: debt service, health insurance, liability insurance and pensions. There is very little flexibility in these costs, though at the state level there are numerous plans under consideration to ease the impact of the staggering increase in pension contributions required this year. One plan would allow municipalities to stretch out this year’s payments over a number of years.

In making his projections, DeLuca is estimating the Village will have to contribute the full amount estimated by Comptroller Alan Hevesi on February 7, 2003: 15% of police salaries and 11% of other salaries. The actual figure will be based on the performance of the stock markets on March 31.

In recent years, DeLuca set aside more than was being billed for pensions because he knew sooner or later the rates were going to rise and the Village was going to get hit. During the bull market when state pension funds were rising so fast, few if any new contributions were actually required.

For debt service and insurance costs, DeLuca has been anticipating increases for some time. Last year the Board took on new debt, $1.2 million for assorted capital projects, and this year’s budget shows an uptick due to the first-year's payment with a net rise of about $100,000. “We knew general liability was going up based on the large increase seen in the last budget,” said DeLuca. "It was over what was budgeted last year.”

“As far as retirement, we’ve known for months to expect increases in this range,” added DeLuca, who still is dismayed at the rates. "It just wasn’t right to hit us like that. After all these years of very low, low, low rates, now you want to do it all in one year? It just doesn’t make sense. Hevesi seems to be doing something about it.”

Asked if there are potential areas to cut, DeLuca said, “I wouldn’t touch a thing. Other than those four items, the budget is up only 3%. It’s a bare bones budget,” he declared. “Department heads came up the best they could. We can’t ask for anymore cuts. The Board did a good job of keeping it down, the best they could. Now they have decisions to make: how much reserve to use, how much retirement to take out.”

In the past two months, the Board has signaled its intent to keep service levels where they are and to hold the line on tax increases as well. Mayor Ken Bialo has been estimating an increase between 2 and 14% but hoping to get it under 5%.

During the recent elections decided on March 18, candidates debated how much of the Village’s reserves, now estimated by DeLuca as between $1.8 and $2.1 million, to use for lowering this year’s taxes. It would take an additional $600,000 from the reserves to bring the tax increase down from DeLuca's projection of 13.4% to the 5% range. Last year, around $277,000 was appplied from the Village's General Fund surplus, and De Luca has applied a similar amount in the tentative budget.

Though neither side discussed exact figures during the campaign, the Republican candidates, Mike Wiener and Phil Johanson, came out for using the deficit to defray a major tax increase, while the Democratic candidates Anne McAndrews and Geoff Young expressed reluctance to use a substantial portion of the reserve in this manner. Voters opted for Wiener and McAndrews, sending no clear signal on which tactic they favored.

In the weeks to come the entire Board and the public will have opportunities to voice their views on this and other budget matters. Anyone interested in the budget should check with Village Hall for dates and times of upcoming work sessions which have not yet been announced.