Given the opportunity, I would like to take a few moments to outline current budgetary issues in this year’s plan. First, Sleepy Hollow has a two-tier assessment roll: “homestead,” (all 1-, 2-, and 3- family residences) and “non-homestead” (which includes 4-family homes and larger as well as all commercial sites).
The increase is 9.9% and 8/10ths of 1 % respectively. Why the vast difference? Both portions of the assessment roll are predetermined by the total assessment of each category, the ratio between both as well as what portion of the whole they represent when applied to total spending. This may appear unfair but nevertheless is the formula that NYS authorities assign on a yearly basis. Our budget is adopted once a year (by May 1st) and once it is set, the revenue line linked to the tax rate is fixed.
The major increase in actual municipal budget expense largely can be pinned down to five main areas: New York State Retirement obligations, workers compensation costs, hospitalization and associated worker benefits, social security and Medicare, and Sleepy Hollow’s liability insurance. The cost of all five categories has had huge increases over the last several years and Sleepy Hollow is not alone in having to absorb such mandated costs. Virtually all these costs are associated with the total number of full-time workers employed by the village and we have been reducing that total these last few years.
As an example, this time last year one state agency notified us that Sleepy Hollow’s mandated “contribution” to the NYS retirement was to be pegged at about $486,000. We added an additional 5% to this line, when we adopted the budget, to play it safe. Twice, after we had already adopted the budget, the State came back with additional increases, to a point that the same contribution now stands at $749,000, and this budget year isn’t even over. Again, this occurred after we adopted the budget, set the tax rate and sent out the tax bills. In four of the same five categories the total net increase stands at $579,000 over-budget overall ‚Äî again, additional mandated charges after we adopted the budget. Regardless, the difference had to be made up by the village and we did so by dipping into our reserves and cutting back on people and programs. We now have less full-time workers in Sleepy Hollow than we did in 1999, and we intend to cut more.
But this trend is not over. For the upcoming 2006-2007 budget year, the same five categories have again risen an additional $600,000. This has been put into the new budget. Thus, in less than one fiscal year Sleepy Hollow has had to absorb some $1.2 million in cost. Why?
Despite the first real increase in our assessment roll (about 5%) in over 20 years, local villages continue to take hits from the decline in the stock market as far back as 2000/2001. Add to that the shock of 9/11 to the economic system, and the effects of both have had enormous negative effects on pension funds and insurance annuities. In private industry we all have had to absorb this and municipalities are doing the same even if on a delayed basis.
Previously municipal pension fund demands were largely taken care of through the growth in market values in the stock market. Declines in the market and the effects of 9/11 have fully reversed this largely self-funding trend, and municipalities like Sleepy hollow have steadily had to increase their individual contributions, not only to provide for future demands, inflation, etc., but to make up for the pension shortfalls due to marketplace erosion. Worse, we have witnessed a trend of more people retiring early, sometimes with mandated early buyouts as well as those seeking disability payments. All of these have steadily increased. This is occurring in NYC and Sleepy Hollow and the effects continue to hit hard financially. There is a real cost and we all are bearing it.
Believe me when I say that as your Mayor, this is not a fun time. When you look at Sleepy Hollow’s overall net spending, fully 87% of the budget is mandated. Once you discount all the increases noted above, overall spending is about 3%. I know that is not much comfort to those who have seen steady increases in Village, School, Town and County taxes, but I have shared with you the issues that we are confronting in Sleepy Hollow on a daily basis. Believe me when I say that we’re doing whatever we can to stretch the tax dollar, and make cuts while still delivering services that you want, need and expect. Lastly, we will continue to be fair to all: we will seek out new revenue sources, revise spending and make sure that services delivered are services paid for by those who use them.