The Yonkers City Council held a budget committee meeting on Tuesday April 28, and received an update from Yonkers Finance Commissioner John Liszewski on the City’s budgetary status based on the impact of the Coronavirus. Liszewski and his staff provided information on how COVID-19 has left a hole in current budget (2019-20) and how it will impact the upcoming budget (2020-21).
The major takeaway from this meeting, which was held remotely, is the unknown parts of the Yonkers budget. What will happen with the New York State budget, currently with a $13 Billion budget shortfall? Will the Federal government bail out NY State government, despite the fact that Republican US Senate Majority Leader Mitch McConnell has said NO to any blue state bailout?
Both of these questions must be answered before Yonkers truly knows its financial status, and then, at that point Mayor Mike Spano and the City Council will be forced to make difficult decisions on how to close a budget gap based on a lack of revenues that have stopped coming in.
In the current budget, 2019-20, which ends on June 30, the City is estimating that it has a $16.5 Million budget hole, caused entirely from lower sales tax revenues and lower fees collected from City Hall due to COVID-19. The City will be able to cover that deficit by using some of its surplus (fund balance) and there will be no immediate layoffs in the current Yonkers budget.
` For the upcoming 2020-21 Yonkers Budget, on April 15, Mayor Spano proposed a $1.24 billion spending plan that increases property taxes by 2.08% and had no layoffs. Liszewski explained that the Mayor’s budget includes using almost all of the City’s fund balance of $33 Million.
The Finance Department estimated that Sales Tax revenue and other fees have declined by 40% in April, and will decline by 30% in May and 20% in the months of June-September. The latest set of Sales Tax data will come in on May 12.
The Mayor’s proposed budget relies on State Aid based on the budget passed by the Governor and State legislature last month. But Governor Cuomo and NYS have warned local governments and school districts that their State Education Aid may have to be cut by as much as 20% if NY doesn’t get a bailout from Washington DC. NY State government, and Yonkers, will know more by May 1, and will provide a final budget number to Yonkers and other local governments and school districts on May 15.
So Yonkers will not know until May 15 what their final numbers will be for two critical revenues that they receive from NY State. One is AIM, Aid to Municipal Governments. Yonkers receives $108 Million per year in AIM funding, and a payment is due in the last week of June for $86 Million. If the Governor is forced to make budget cuts of 20%, then Yonkers could lose $22 Million in AIM funding, which is used to fund City operations, (Police, Fire, DPW)
More troubling could be a 20% cut to State Education Aid for Yonkers, which could result in a $70 Million cut to the Yonkers Public Schools. “Everything is fluid, and these numbers will continue to fluctuate. We are hoping for a federal stimulus package. This is not an expense issues, this is a revenue shortfall and we need some type of stimulus. The state has a $13.5 Billion shortfall, and some of our choices will be difficult,” said Liszewski.
During the council’s budget committee meeting, Chaired by Councilman Anthony Merante, all councilmembers indicated that they did not want to wait for the bad news from Washington or from Albany, and that they wanted the administration and finance department to come up with contingency plans in the event that the City would have to make severe budget cuts resulting in layoffs.
“What is the plan B, the plan C, and the plan D? If the train is coming down the track, what is the contingency plan?” asked Council President Mike Khader, who suggested offering early retirement and incentives for employees not to opt into the City’s health care program as cost saving measures.
Councilman John Rubbo said, “ I do have a problem with this budget. The economy is closed, and this budget that we have before us doesn’t reflect that. What if the money doesn’t come from Albany? Without making the difficult decisions now, we may run out of money and next year it will be worse.”
Liszewski added, “I’m not sure how we can educate our kids with a 20% cut. That is $70 Million and would result in 1700 positions cut. That is what keeps me up at night.”
“We have made cuts and difficult decisions but we are not ready to lay people off yet. We are going to be hit by this for many years to come. We need our unions to help us during this difficult time. “
Council Minority Leader Mike Breen questioned why the council will begin their budget hearings next week with all of the unknowns. “We have a budget before us that we don’t know if its real. Are we then going to go back and make adjustments?”
Liszewski said that the city needs to have a budget passed by June 30 so that it can send out tax bills, or borrow money short term.
Councilman and Budget Chairman Merante said, “I think we should have a contingent budget for us to consider and that we start preparing for. I don’t see how we won’t have to make tough decisions.”
Majority Leader Corazon Pineda-Isaac said, “Our revenues are down and our expenses are outpacing our revenues. 74% of our budget goes to our unions. What I don’t see is a plan, where do we go from here? How do we address these questions? I don’t see any answers, plans for contingency budgets.”
Councilwoman Shanae Williams said, “We haven’t laid anyone off but we have to start preparing for it. This budget makes no sense, the numbers aren’t real . Are the overtime numbers for the Police really down?”
Councilwoman Tasha Diaz ended the meeting on a positive note. “I have hope that we can pass a budget that can accommodate the city and the people. I have faith that we can get through this.”
Water Rates will rise by 5% and sewer rates by 6%, according to the Finance Department.
