Chemung County Budget Update

I took last week off to spend time with my family after the election and am working hard to get back up to speed on many things that have transpired since November 5th. I intend to keep this blog going (with some much-needed cosmetic changes…coming soon!) while I serve as a member of the Chemung County Legislature to help keep people informed of the issues affecting our community. As always, everyone is invited to share information and opinions directly on the blog or on social media in hopes of generating productive discussions about ways we can improve the way Chemung County does business.

Chemung County Budget

The current Legislature has held two workshops and a public hearing to discuss its proposed 2019 budget. A special meeting to vote on the proposed 2019 budget will be held on November 26th at 7:30 pm on the Hazlett Building’s 5th floor following the Standing Committee meetings. A link to the budget is found here, and all figures and diagrams shown below are contained within it.

There are several notable characteristics of the budget. At the onset, as described in detail in a letter from retiring Chemung County Executive Tom Santulli, the budget does not call for an increase in the property tax rate for the 14th straight year. This is commendable, particularly in a high-tax state like New York, but brings with it some budgetary difficulties.

In Chemung County, the two primary sources of revenue are monies collected through property tax and sales tax. The total amount spent by Chemung County has risen from $158,030,501 in 2014 to $168,941,938 in 2019 – an increase of over $10 million dollars in five years.

approp

Without increasing the property tax rate, how does Chemung County make up the difference?

Challenges predicting sales tax revenue

The first way – at least over the past few years – has been from favorable sales tax collections. The graph below shows a substantial increase in sales tax revenue from 2016 through 2018 of nearly 10%.

Sales Tax The proposed budget calls for this positive trajectory to continue, with projected collections of almost $62 million dollars.

sales tax 4

Unlike revenue generated through the property tax levy that tends to be quite predictable, sales tax is fickle and extremely susceptible to economic and political currents as shown in the graph below. Understanding what economic and/or political factors underlie the increased sales tax collections in 2017 and 2018 – and whether these factors are sustainable – is the difficulty.

sales tax 2

At this time, I do not have an accounting of which specific goods and services generate the largest proportion of sales tax collections in Chemung County, but at last night’s public hearing and budget workshop current Legislator Marty Chalk and incoming Legislator John Burin both raised concerns that the uptick may be related to gas prices. People who buy gas in Chemung County also pay sales tax on it, and therefore the higher the price of gas, the more sales tax money the County receives.  As the AAA graph below shows, gas prices in 2018 have been high and may be related to the increased revenue.

GasHowever, reports out since October show that gas prices have begun to fall, as described here. Although this is good news for consumers, it could affect the projected amount of sales tax revenue for 2019. I will provide more information on this matter once I have additional data regarding the specific sources of sales tax collections in Chemung County.

Deficit Spending is Risky

Even though Chemung County has not raised the property tax levy in many years, it has engaged in consistent deficit spending that pulled more than $8 million dollars from reserves over the past five years.

dcdeficit spending

The projected budget deficit for 2019 is currently $866,549 but will likely go up to over $1.3 million dollars if the Elmira City Council chooses to accept the County’s offer to delay repayments for shared services through a revised Sales Tax Agreement discussed in detail below.

Chemung County has enjoyed a healthy fund balance for many years despite deficit spending, tied largely to revenue generated in 2009-2012 during the natural gas boom. However, current predictions in the 2019 budget show reserves are projected to fall by 67% by 2023.

fund balance

Clearly these are just projections subject to change, but they nonetheless drive home the importance of working as hard as possible to create a fairly balanced budget.

The property tax rate has not gone up — but the levy has

The third way Chemung County has been able to make up for a $10 million dollar increase in appropriations without raising the property tax rate is by increasing the property tax levy.

Since 2005 – the last year Chemung County had a property tax rate increase – the property tax levy, i.e. the amount of money property owners pay in county property taxes in addition to town/village/city property taxes, has increased by nearly $6 million dollars. Some of this growth is due to new construction, but it is also attributable to increased taxes on existing properties based on increased assessments.

tax levyI will try to learn more about what precisely led to the increased levy despite no changes in the rate, as at the end of the day property owners simply care about what is coming out of their earnings, not the accounting that led to it.

Renegotiated Sales Tax Agreement?

As referenced above, the City of Elmira still has an opportunity to accept a new Sales Tax Agreement passed by the legislature earlier this fall. The proposed agreement calls for a 3.4% increase in the amount of sales tax revenue going to Chemung County’s towns and villages, and an extension of time for the City of Elmira to repay the County for certain shared services arraignments.

In terms of dollars, the proposed agreement specifically allows for the City to defer $400,000 payments to the County in 2019 and 2020 for the City to have greater cash flow and regain better fiscal standing.

The City’s 2019 proposed budget is found here. It is my understanding that the budget does not call for a property tax increase for next year, and that City Council intends to vote on the proposed Sales Tax Plan sometime next week.

Elected County Treasurer to be hired back as Deputy

Finally, Chemung County’s proposed budget included at least one unexpected aspect, as it notes Joe Sartori will be hired as the Deputy County Treasurer at a salary rate of $105,000.

Joe Sartori has been the Chemung County Treasurer since 2003. In 2007 he hired Jennifer Furman to serve as his Deputy County Treasurer.

Sartori announced his intention to retire in a statement last year, found here:

After much consideration and discussions with my family, I have decided not to seek re-election for another term as your County Treasurer as I plan to retire in 2019. It has truly been my great honor to serve the citizens of Chemung County in that capacity for the past 16 years.

During that time, I believe we have achieved a great level of success in improving our interaction with the residents of Chemung County. We implemented an installment payment program and repurchase program to help residents avoid foreclosure and sale of their properties. We have also adapted to allow the use of debit and credit cards for payment of taxes, fees and other charges. We have upgraded our financial reporting and have been awarded the Government Finance Officers Association’s prestigious Certificate of Achievement for Excellence in Financial Reporting for the past five consecutive years.

I am confident the current staff will continue to improve the services provided by this office into the future.

Just after this statement was released, Furman announced her intention to seek the position. She was elected on November 5th after running unopposed.

It is my understanding that the decision of who to hire as deputy ultimately lies with Furman, not the legislature or county executive. Nonetheless, it begs many important decisions: Why wasn’t the public informed of Sartori’s desire to be rehired at a high rate of pay ahead of the election? Is it necessary for Sartori to stay on to “train” or “transition to” Furman, as some have suggested, even though they have worked together for over 11 years? Why wasn’t a new Deputy Treasurer identified before now as Furman was running unopposed? Is the pay rate of $105,000 reasonable for this type of “training” or transitioning?

Moves like this have gone on for way too long in Chemung County, and are likely one of the reasons why the elections unfolded in the manner they did last month. If nothing else, these questions should be answered in an open and transparent way to assure the public that rehiring Joe Sartori is the best use of taxpayer dollars.

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