Discussing the City’s 2021 Comprehensive Budget
I presented the 2021 Comprehensive Budget to the City Council on October 6. Since then I have noticed a significant amount of confusion regarding the realities to which this budget responds and how it will affect delivery of city services.
The unpleasant reality is that the economic impacts of covidare real and far reaching, with no end in sight. State and local governments are in dire need of aid from Washington. Absent such aid, services will be compromised or eliminated, with millions of people losing jobs and/or significant portions of their income. The City of Saratoga Springs is facing a significant revenue decrease in 2021, having already suffered severe reductions in 2020, and we have to be prepared to carry on without that much-needed federal assistance.
I estimate that the revenues underlying the 2021 comprehensive budget will be $6.8 million less than those originally budgeted for 2020 - and that’s after increasing property tax rates by 6%. That means planned spending for 2021 needs to be $6.8 million lower than was planned in the original 2020 budget – a 14% decrease. This is the challenge I am faced with as Finance Commissioner. Cuts in spending must be made. It is my job to work with the Council to figure out how.
We can’t spend money we do not have, and we can’t pay for operating expenses with debt. That’s akin to a family borrowing money for groceries and housing. It’s not sustainable.
To minimize the number of required layoffs, the budget contains a 10% reduction in all city employee salary lines. With a 10% pay cut we can limit the layoffs, but they are still significant: 25% reduction in Public Works labor lines and 15% in Public Safety. A lower pay cut requires more layoffs, fewer layoffs will require a larger pay cut. Furthermore, budgeted Recreation Department expenses have been reduced but not completely eliminated, maintaining only the costs of the Director of Recreation, one staff person, and building and grounds maintenance and utilities.
This means Recreations programs cannot incur any additional costs to the city, it does NOT mean that Recreation is shutting down. As budget neutral programs are implemented, the Budget will be amended to include them.
This is a best effort to construct a budget that works for the city while minimizing pain. I firmly believe it is better to share pain equitably amongst all of us than to ask relatively more of some than of others, and that is what I have set out to do. As we address these challenges we must also be concerned about the city’s financial sustainability and longer-term fiscal health. We were able to tap into reserves and our fund balances to whether the pandemic through 2020.
I have used similar funding, within reason, in the 2021 budget to mitigate expected revenue decreases. Allowing these reserves and balances to drop below minimal thresholds will have material long term consequences and should only happen as a last resort, which is why he 2021 budget maintains them at prudent levels.
With a close to $7M expected reduction in revenues, the city must closely manage costs, reducing salaries and head count while ensuring that any nonessential services or programs are budget neutral. We must whether the uncertainties of 2021 together, as we are all riding out the same storm in the same proverbial boat. We’ll need a little luck, too - 2021 is not the time for unexpected or unnecessary additional expenses, such as expense that will be created if residents vote to change our form of government.
I am hoping we can all work together as a community to avoid such expenses and meet these challenges together as the great city we are.