Cohoes facing fiscal crisis due to revenue losses
COHOES, N.Y. » Second- quarter sales tax revenue to the Spindle City is down 25% from a year ago, a drop of nearly $400,000 in just one quarter of this fiscal year. Sales tax revenue represents 27.5% of the city’s budget.
“Since March, the economic impact of the COVID-19 pandemic has been affecting our families, our small businesses, and our city finances in historic and difficult ways. This dramatic drop in second- quarter sales tax revenue is not a surprise, but it is a stark reminder of the dire fiscal crisis we are facing,” Cohoes Mayor Bill Keeler said.
“This is just one quarter’s shortfall. We have to assume and plan for additional loss of sales tax revenue in the final two quarters of the fiscal year, along with declines in state and federal funding,” City Comptroller Michael Durocher added.
“First quarter sales tax revenue was down. Third- quarter sales tax revenue reportedly is already down 17% statewide. There is nothing to suggest this trend will turn around anytime soon,” Durocher noted.
In addition to losses in sales tax revenue, Cohoes is facing a 20% reduction in state aid — $550,000 — based on the 20202021 State budget enacted in April.
According to New York State Comptroller Thomas DiNapoli, the State withheld nearly $76 million in aid payments to local governments in June.
The city has also experienced a loss of revenue from building permits due to the halt of construction, and from a range of other permitting and licensing fees due to the COVID-19 related reductions in a range of other activities.
“Filling a $1-million plus revenue gap will require difficult decisions across the board. There are no obvious solution or easy answers,” Keeler remarked.
Seventy-five percent of the city’s budget is personnel expenses, including salaries and benefits.
“We are looking in every corner of the budget to find savings, including reducing overtime expenses,” Keeler said.
In March, Keeler announced a range of staff reductions, program cuts, and proposed 2020 budget cuts to address the significant actual and anticipated revenue shortfalls resulting from the pandemic. Those included temporary staff furloughs, staff reductions based on attrition, and cancellation of contracts, including the contract to manage the Cohoes Music Hall.
A line-by-line budget review is underway. Two furloughed employees have now been laid off, numerous vacancies due to retirements and departures may not be filled, and other reductions to save costs are anticipated, city officials noted.
“While we would hope that the Federal government would provide some relief to cities like Cohoes with deep revenue losses and significant added expenses related to the COVID pandemic, we cannot bank on dollars arriving from Washington,” Durocher said.
“I have been the Cohoes comptroller for more than 20 years. I have only seen something like this once, following the 2008 Recession, and it took more than two years to begin to recover,” Durocher added.