Village Board's Preliminary Budget Would Boost Taxes 6.5%
by Judy Silberstein
Taxes will rise 6.5% in the Village of Larchmont, if the
Board of Trustees adopts preliminary budget plans hashed
out at its work session on Monday, March 31.
That’s far below the 13.4 % hike put forth in Treasurer Carmine De
tentative budget, but somewhat above the 5% level Mayor Ken Bialo had been hoping
and considerably above last year’s 1.9% rate.
Pension contributions and reserve funds dominated the discussion
on Monday night. How much should the Village contribute this
year? How much of the reserve should be applied? And what
might it mean for residents’ tax bills this year and
As predicted, the Board appears set to depart from
the assumptions underlying the Treasurer's tentative budget.
His budget assumes the Village will send Albany a pension
equal to the full amount estimated by Comptroller Alan Hevesi
on February 7, 2003: 15% of police salaries (PFRS) and 11%
of other salaries (ERS). The Board will be using a far lower
figure, in response to a recent proposal by the Comptroller
allowing contributions to be as low as 4.5%.
According to De Luca, the Board has settled on 5.5%. “I
don’t trust the State,” he said. “I wish
I could have used more, but to go with a double-digit increase
would be rough.”
Hevesi’s February estimate assumed the current requirement
to calculate the contributions based on the stock market’s
performance on April 1 of the current year – in this
case 2003, when stocks were down considerably from their
bull market highs. When stocks are down, the pension bill
goes up. However, the comptroller is recommending to the
State Legislature that municipalities be allowed to use the
market performance on April 1 of the previous year – in
this case 2002, when the market was at a more robust level.
He is coupling this with a requirement that they contribute
at least 4.5% this year and in the future, even when the
market is so strong that smaller contributions would suffice.
Hevesi’s proposal is more than a suggestion; as sole
trustee of the Common Retirement Fund, he has authority to
implement the ideas. Nevertheless, he feels the process would
be smoothest with the legislature's approval, spokesperson
Dan Weiller told the Larchmont Gazette.
a March 21 letter
Hevesi wrote, “The plan would take effect immediately
upon enactment, which means the payment due in December of
year would be 4.5% of payroll, not the 11% of payroll for
ERS or 15% of payroll for PFRS.”
Using the 5.5% pension contribution will allow the Board
to lop a significant amount from the Treasurer’s budget.
The Board’s next option for reducing the tax bill
would be to apply additional funds from the reserve. De Luca’s
budget moves $277,000 from the unexpended balance to next
year’s operating budget, a figure close to recent
past budgets. The Board is considering putting in an additional
$140,000 for a total of $415,000. According to De Luca, this
would be almost 50% more than the Board used last year, and
would leave between $1.8 to $2.1 in surplus,
By comparison, Town administrator Steve Altieri reported,
"We applied $850,000 from the surplus into the general
fund as a revenue against expenses this year. That left approximately
$2.5 to 3 million in the general fund as surplus."
So, how about next year? Once again, a lot will be riding
on the pensions. “More than likely, next year we’ll
have to pay the 11% of payroll” said De Luca, “But
let’s wait and see. That’s what they’re
saying, but who knows.
Under Hevesi’s March recent proposal, the Village
will be liable for those budget-busting pension contributions
next year, even if the bull market returns to Wall Street.
This would create considerable upward pressure on next year’s
Village budget, and perhaps for some time to come. “All
credible forecasts tell us that poor economic conditions
will continue for some time,” wrote Hevesi on March
And what about next year’s reserves? In the past,
the Village has budgeted for a larger pension contribution
then they ended up having to pay. At the end of the year,
the unexpended amount fattened the reserves. This has allowed
recent Boards to apply about $200,000 to $275,000
from reserves to operating each year, and then find approximately
amount returned to the reserves at the end of the year when
they didn’t need to spend that money on pensions.
De Luca is not predicting a continuation of this comfortable
situation for next year. “This year, I’m likely
to make up a good portion of the $277,00 we applied in 2002-2003.
Next year is another story,” he said.
The dollars applied from his year’s reserve might
not reappear next year. This might leave next year’s
Board with a bigger pension bill and a smaller reserve cushion.