City budgets face COVID-19
Albany plan expects injection of federal money, funds key programs, doesn’t seek layoffs
Mayor Kathy Sheehan's proposed 2021 budget does not call for layoffs and fully funds key city programs, but it bets big on an injection of federal money to stay in balance.
The cornerstone of the city's plan is expectations the federal government will pass a fifth stimulus package that includes direct aid for local governments and the state will only make a slight reduction in state aid. Another large factor in the prevention of layoffs is the nearly $6 million reduction in scheduled debt payments the
city will enjoy now that the Rapp Road landfill debt is coming off the books.
So far, there is no sign Congress is close to an agreement on another stimulus package, but Sheehan's hanging the spending plan on Congress reaching a deal to send money to local governments financially wounded by the coronavirus pandemic.
“We believe that after bailing out cruise lines and Fortune 500 companies, Washington would certainly provide direct state and local aid to replace the revenue we lost because of COVID. Unfortunately, that still hasn't happened,” Sheehan said as she outlined the spending plan Thursday.
Sheehan said that if the pandemic hadn’t happened, the city likely would have been able to cut property taxes. Sheehan's proposal raises taxes by 1.8 percent, which
would mean an increase of about a $29 for a property assessed at $150,000 if that Common Council approves the proposed spending plan.
If federal aid does come through, Sheehan said the city ’s goal would be to refund the 2021 tax increase in the 2022 budget.
“We deserve this fiscal relief. Now, more than ever, we should not be cutting city services and jobs because of Washington's inaction,” she said. “We believe our city, like municipalities across the country, deserve federal fiscal relief, and we will fight for it. If we do not build it into this budget, we will not get it.”
The $180.8 million budget is a $600,000 reduction from the city's 2020 budget and includes an additional $1 million in property tax collection. Businesses will see a slight tax reduction. The proposed tax rate for homes is $11.00 per $1,000 of assessed value.
Sheehan’s budget assumes 2021 revenues will be about $1.3 million lower than 2020 revenues,
with the majority of that coming from reduced sales tax expectations. City salaries will rise about $1.6 million, due to union contracts and a proposal to ensure each city employee makes a “living wage,” which the city defines as $15.52 an hour. A breakdown of how many employees would receive that raise was not immediately available.
Sheehan, who stopped taking her salary due to the pandemic, will be taking that $15.52-perhour salary until federal aid comes in.
Other increased costs include nearly $1.5 million more in retirement, health care and employee benefits costs.
In addition to the property tax increase, the city is counting on increased revenues in several key areas, including payments in lieu of taxes and departmental income to help it make up for expected shortfalls in other areas.
With the landfill paid off, debt payments will drop from $23 million in 2020 to an expected $17 million in 2021.
If the stimulus falls through, the city's backup plan calls for drawing on up to $9.9 million from its fund balance, saving $5.7 million from a spendingand-hiring freeze, and furloughing the city's nonunion white collar staff. Those measures are expected to provide the city with a roughly $17 million cushion. Sheehan said on Thursday that fallback plan does not call for layoffs either.
The city is projecting that it will finish 2020 with a $15.9 million budget shortfall due to the coronavirus pandemic. That hole is being filled with a $4.5 million fund balance transfer, $3.5 million debt service fund transfer, $4.6 million in spending and hiring freezes as well as $3.3 million in other savings.
The city is also starting a fund to pay for smaller capital works projects, using some of the money that previously went toward landfill debt payments, and an enterprise fund to help make the city ’s golf course self-sustainable.