Troy posts $2.3 million budget surplus
Madden warns city ‘not out of the woods yet,’ calls for continued frugality
TROY, N.Y. >> Mayor Patrick Madden took office in January 2016 under a dark financial cloud, with officials expressing serious concerns that the city could run out of money and have to turn to property owners for a rare, midyear tax increase.
While the city is “not out of the woods yet,” Madden said it has a little more breathing room after ending 2016 with a general fund surplus of just over $2.3 million, according to a cumulative financial report for 2016 prepared by Deputy Comptroller Andrew Pi- otrowski.
“The findings of the City Comptroller’s Office highlight the effectiveness of prudent financial management and the necessity for making tough choices to strengthen our city’s financial foundation,” Madden said in a statement that accompanied the public release of the report Thursday afternoon. “While we are pleased to close 2016 with a surplus, significant budgetary challenges re- main, including major increases in healthcare and pension costs and municipal debt obligations.”
Madden attributed the surplus to four factors:
• Aggressive collection of revenues that resulted in the city exceeding its budgeted income by nearly $350,000 • Tight control of expenditures that resulted in the city spending more than $2 million less than was budgeted
• One-time revenues — such as a $360,000 settlement of the city’s legal battle with its landlord when City Hall was located at 1776 4th Ave. before moving to the Hedley Park Place building on River Street — that Maddon has continually warned should be seen as windfalls and not counted on to cover recurring expenses.
• Unexpected good fortune, such as the collection of nearly $2.2 million in billing for the city-run ambulance service, nearly $500,000 more than expected
City Council President Carmella Mantello said she only received her copy of the report late Thursday morning and said she would review it before a thorough discussion at the Finance Committee meeting scheduled to precede Thursday’s monthly meeting of the entire council.
“I just received the preliminary fourth quarter 2016 financial report from the mayor and will be reviewing the report to determine what it means to city taxpayers fiscally, do the financials justify the 14.5 percent tax increase passed in 2016 and did we end the year with a surplus or not,” Mantello said by email Thursday afternoon.
The council’s minority leader, Lynn Kopka, D-District 5, welcomed the news as a sign the city is on a path to financial stability under the stewardship of fellow Democrat Madden.
“Troy is now at a point where the administration can begin to replenish insufficient reserves, as outlined in the [state Comptroller’s Office’s] audit and the City Council’s Corrective Action Plan,” she said by email. “The city still faces challenges, but is on a firmer financial footing
thanks to the careful stewardship of Mayor Madden and his team.”
Madden and the City Council have been staring down the barrel of a fiscal crisis from the moment they took office, primarily because of a 2016 city budget that outgoing mayor Lou Rosamilia and a Democrat-controlled council with only four members set to return in 2016 admitted was troubling before agreeing to pass those problems off to Madden and the new, Republican-led council.
“We had some issues with it,” Madden said of that budget. “It had all of the things that I hate … one-shots that are speculative, overstated revenues, understated expenditures; they had all of that in there.”
Just a couple months into 2016, concerns were further heightened after audit reports from both the state Comptroller’s Office and a private accounting firm hired by the council raised similar concerns and concluded the city could face a year-end deficit of as much as $3.9 million. While the city exceeded that result by more than $5 million, Madden warned officials shouldn’t expect such fortuitous events as the settlement with Judge Development of the lawsuit over 1776 4th Ave. or the windfall in ambulance fee collections to be annual occurrences, nor should they automatically assume a continuation of the economic growth that led to increases in sales tax and building permit revenue in 2016.
“I anticipate that there
are going to be those who say, ‘ Well, great news, but why did you need a tax increase for 2017?” Madden said. “and there are going to be others who say, ‘ Excellent news. Now, we can fix the pools,’ but I want to be careful. The factors that led to a surplus in 2016 are unique to 2016. A lot of things change from 2016 to 2017 and out years, so this is not to be taken as an indication that Troy’s financial problems are behind us, we’re out of the woods, everything is going to be milk and honey from here on out.”
Even with the addition $2.3 million to a fund balance that had dipped below $1 million, largely as a result of previous administrations and councils dipping into it to minimize past property tax increases, Madden warned that accrual of unspent money from previous budgets is still well below the recommendation by the state Comptroller’s Office that the city keep about 10 percent of its budgeted general fund spending in reserve. The estimated $3 million fund balance the city had at the end of 2016 is still less than half the $7 million recommended for a 2017 general fund budget of $69.9 million.
“The preliminary results from 2016 in the city’s general fund move the city’s fiscal condition in a positive direction and is the next step in correcting long- standing deficiencies identified in the Office of the State Comptroller’s report,” Piotrowski said in a statement accompany-
ing the report. “These results, however, should be viewed with cautious optimism, as it shows actual revenues and spending for a 12-month period, including one-time revenues and budgetary savings. While the surplus will improve the city’s unassigned fund balance, additional measures need to be taken to increase the unassigned fund balance, as repeatedly recommended by the Office of the State Comptroller.”
With that in mind, Madden said he will continue to resist political pressure to take this news as an excuse to spend money the city should instead be setting aside to prevent a repeat of the fiscal problems that led to the city having to issue more than $50 million in bonds to remain solvent in the mid-1990s and brought them to a similar precipice 20 years later.
“We’ve come a long way, but again, I have to temper people’s expectations about what this actually means,” he said. “I tend to be very conservative when it comes to budgeting, and there’s a lot of pressure against that in the political sphere.”