‘You can’t keep taxes under the tax cap and pay your civil employees at the same time.’
One Yonkers Union Official
By Dan Murphy
Can local governments keep their tax increases below the tax cap and at the same time pay for union employees’ new contracts? That is the underlying question that Mayor Mike Spano and members of the City Council are considering as they review a budget for fiscal year 2019, which starts July 1 and cuts more than 400 positions from both the Yonkers Public Schools and city government.
Currently, Spano’s budget proposal is before the City Council. His budget includes cutting 182 city positions and implementing a 2 percent property tax increase.
YPS and Superintendent Dr. Edwin Quezada have submitted a “bare bones” budget that cuts 211 positions, but requires an additional $5 million in funding in order to avoid additional cuts.
On the city side of the budget (police, fire, DPW, parks and other services), a budget hole ranging from $25 million to $30 million is proposed to be closed by Spano, with job cuts and a 2 percent property tax increase.
The City Council now has to review the mayor’s budget and propose increasing property taxes as high as 4 percent, and perhaps raise other revenues to try and restore some of the proposed job cuts – or it can abide by the mayor’s spending plan.
The council adopted a plan from the mayor that would add $5 million in revenue from the state in exchange for some state review of the city’s finances. (This does not mean a Financial Control Board, which the city worked hard to remove 20 years ago.) That $5 million is already included in the mayor’s budget.
The larger question being asked by union officials and elected officials alike is: Can a local government keep its property tax increase at or near the property tax cap, and at the same time pay its union workers with new contracts?
One Yonkers union official said the numbers don’t add up without tax increases to pay for union salary increases. “You can’t keep taxes under the tax cap and pay your civil employees at the same time,” said the official.
Others believe the city and its leaders should have planned better for the new contracts given to every city union. “The union contracts were backloaded,” said a Yonkers union leader. “The workers took a 0 percent or 1 percent increase in the first few years so that the city could plan and be ready for the 3 to 4 percent increases that come later in the contract. Now after the workers took 0 and 1 percent increases, they are entitled to their 3 percent increases, which are coming now, but the city didn’t plan for it.”
Yonkers police and firefighters will receive salary increases of 4 percent in 2018-19.
Last year’s city budget has been mentioned by many as a missed opportunity to save something for the impending contract increases. Last year’s budget increased property taxes at a 0.61% percent rate, below the property tax cap. If the city had budgeted itself to meet the property tax cap, that money could have been saved for a rainy day… which is now. Others believe that last year’s budget was a political one that was passed with a low property tax increase to help some get re-elected.
Other budget information:
* A Journal News story listed the top 10 city salaries, all of them coming from officers in the Yonkers Fire Department. The story highlights 10 assistant fire chiefs and captains, all of whom earned between $272,000 and $293,000 last year. Some of these salaries, which are reported by the Journal News year after year, are due to city employees seeking to raise their average salary in the last three years of employment before they retire to boost their pensions.
This practice is legal, and has been accepted in Yonkers for decades, and those officers on the Journal News list worked massive hours to reach those salaries. Some are suggesting that the time has finally come for the city to attempt to control overtime spending for some officers in the YFD and YPD. But that is a discussion for another day – or for next year’s budget at the earliest.
* A report from New York State Comptroller Tom DiNapoli found that during the years 2014 to 2016, the city repeatedly borrowed without first exhausting prior bond proceeds, that the City Council continued to appropriate its fund balance in the city’s budget without using it, in 2015-16 its non-spendable fund balance was overstated by approximately $4 million, and that the city did not perform internal audits or establish a fund balance policy.
DiNapoli’s office recommended more review and examination practices concerning issuing new bonds before previous bonding has been used, and to audit and evaluate the city’s fund balance to ensure they are properly reported and supported.
City Finance Commissioner John Liszewski responded to the report, stating: “We respectfully disagree with the audit results.” DiNapoli’s response, and the entire report, can be found at http://osc.state.ny.us/localgov/audits/cities/2018/yonkers2017M119.htm.
The real concern is that even if the city taxed at the maximum tax cap last year, and even if some of the allegations in the comptroller’s report were resolved, and even if (a very big “if”) the city could somehow control its overtime spending in the fire and police departments, the total amount saved would still not balance the current city shortfall of $25 million to $30 million.
All budget options are said to be on the table, including property tax increases above the tax cap, some union givebacks (but not a giveback of their contractual salary increase), and a return of the so-called “nuisance taxes,” including the Real Estate Transfer Tax and the Income Tax Surcharge. Both were reduced and eliminated over the past 10 years.
The question of balancing a budget without overtaxing the homeowners, and paying your workers with new contracts at the same time, is not unique to Yonkers. Westchester County government is currently reviewing its budget options, after seven years of a 0 percent tax levy increase under former County Executive Rob Astorino. Contracts are now being settled and the discussion now turns to how high the property tax increase will be at year’s end.
