FISCAL YEAR 2016 EXECUTIVE BUDGET MESSAGE

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1 FISCAL YEAR 2016 EXECUTIVE BUDGET MESSAGE April 15, 2015 Yonkers City Council City Hall, 4 th Floor 40 South Broadway Yonkers, NY Honorable Members of the City Council: I hereby submit to you the Fiscal Year 2016 Executive Budget Proposal for the City of Yonkers, prepared in accordance with the Charter of the City of Yonkers and the New York State Special Local Finance and Budget Act for the City of Yonkers. In order to view this proposed budget in context, it should be noted since the beginning of this administration in 2012, I have had the pleasure of working with the Council in a bipartisan manner, and that together we have succeeded in stabilizing the City s financial outlook. As a result of this spirit of cooperation, we have passed three consecutive bipartisan, balanced budgets, all within the property tax cap and without major cuts to vital City services. We completely overhauled the way the City manages its money, installing proper controls, reducing waste, and implementing a cohesive financial plan. The result is that last year, we sold the first A rated Yonkers bonds in 30 years. Not only has our A rating saved us millions in the cost of issuing bonds, but it is an indication that the City s finances have finally assumed stability. Last year we faced a challenge when we learned the Board of Education (BOE) improperly accounted for $55 million in state aid that was never allocated to it. We successfully dealt with this situation by instituting a historic consolidation of services between the School District and the City, freeing the Board of Education of $9 million in annual reoccurring costs. Less than a year after its implementation, the consolidation is being viewed as a statewide model.

2 During the past year we also worked in a bipartisan manner to reach contract agreements with six municipal unions, resolving contracts that had been expired for many years because the City could not afford to kick the significant costs of unsettled contracts further down the road. Each of the newly-settled contracts contains reforms and improvements that will save taxpayer dollars. We appreciate the recognition from union leadership and members that salary increases must be accompanied by productivity improvements and other savings. We have also worked diligently to recoup unpaid taxes from the owners of the approximately 1,200 properties in substantial tax arrears that the Administration inherited in To date, we have filed more than 350 foreclosure actions and collected approximately $6 million in overdue taxes. We are encouraged by positive signs of economic recovery realized in the FY 2016 Budget including increased home sales, PILOT revenues, and income and sales tax revenues. Our rate of unemployment continues to drop, new businesses are opening and development is moving forward. Plans for rebuilding our City will further expand our tax base and provide significant new revenue for the City s future. Despite the improving economy and growth in revenues, we are still challenged to fund increased fringe benefit costs of $5.9 million, as well as a debt service increase of $4 million, of which $2.3 million is for the School District. In addition, as of this date the State of New York has failed to renew $28 million in additional aid that was allocated for this year as part of the solution to the School District s $55 million shortfall. That aid was part of a comprehensive solution that involved not only the consolidation of services between the School District and the City, but also the special deficit financing recently authorized by the Council. The State s failure to reallocate this $28 million, despite the City s successful implementation of the other aspects of the deficit package, can only be regarded as devastating. Indeed, for FY 2016, Yonkers is the only city in New York State that will see a year-over-year decrease in state education funding. While Yonkers will receive an increase of $23 million in formula aid as its share of a statewide increase, and $2 million in bullet aid, those gains are offset by the loss of the $28 million. Thus, although costs have increased significantly year-toyear, Yonkers has been dealt a cut of $3 million in state aid. Again, we are the only district in New York State that will suffer a year-to-year reduction in state aid. The consequences for the School District, should this reduction stand, will be profound. Additionally, the state-funded Aid and Incentives for Municipalities (AIM) Program has remained flat for FY 2016 at $108 million. AIM funding is down 20 percent, or $27 million, from 2009 levels. When adjusted for inflation, AIM is actually less today than it was in The Executive Budget stays within the state-mandated property tax cap, which this year stands at 1.67%. It should be noted that in last year s State Budget, the State instituted a partial Page 2 of 5

3 school property tax rebate for taxpayers residing in communities that adhere to the tax cap. By staying within the cap this year, as we did last year, Yonkers residents will once again be eligible to receive property tax rebate checks. EXECUTIVE BUDGET SUMMARY The Executive Budget package takes significant steps towards fixing many inherited structural problems in a balanced manner, while also conforming to the property tax cap. The Executive Budget for the Fiscal Year 2016 is $1.04 billion, an increase of $21.3 million, or 2.09%. The Executive Budget includes a $525 million appropriation for the Board of Education. The City will again increase its Maintenance of Effort (MOE) for the BOE. This year s $2 million increase to the MOE comes on top of a $6 million increase over the last three years, thus increasing the MOE by a total of $8 million to $212 million for FY Combined with funding $26.2 million of school district debt service, the total City contribution is more than $238 million. This is the largest contribution to the BOE in the City s history. Also included in the appropriation for the BOE is the municipal operating budget assumption of $9 million in administrative costs from the School District, which results from last year s historic consolidation. The $9 million investment has allowed for the much-needed reduction of overlapping non-academic functions between the City and BOE. In order to close the Board of Education s deficit presented this year as a result of loss of $28 million in state funding, the Executive Budget confronts the unavoidable reality of reducing the BOE s enhanced services and workforce. We will urge the State to revisit the $28 million reduction that it has imposed. Continued inaction, however, will cause the elimination of not only the minimal level of enrichment programs that our students have, but will also result in the elimination of personnel. The quality of education will be reduced. While the Superintendent of Schools will identify specific reductions to present to the Board of Education, the menu of cuts will likely include: Eliminating all sports Eliminating all elementary art and music instruction Eliminating library services in elementary and middle years programs Eliminating staff positions including administrators, teachers, safety officers and clerical and school aides It is my hope that we will work in unison as a City -- our administrators and teachers, our parents and PTAs, and other education stakeholders to join in our fight for additional funding that is so essential to our School District s budget. Page 3 of 5

4 Included in the Executive Budget is a municipal operating budget of $518 million. Recognizing that property taxpayers have been overburdened for far too long, the Executive Budget proposes an increase in the property tax levy of 1.67%, one of the lowest property tax increases since The tax rate per thousand dollars of assessed value would increase by $17.93, an increase in the tax rate of 2.56%. (The increase in the rate is higher than the increase in the overall levy due to a continued reduction in the assessment roll as a result of tax certiorari challenges.) This is the fourth consecutive Executive Budget that stays within the state-mandated property tax cap. As a result, Yonkers homeowners are once again eligible to receive the New York State property tax rebate. Under the proposal, a typical one-to-three family home at the median assessed value of $11,300 would see their annual property tax bill increase by $202.61, or approximately $17 per month. There is no proposed increase in the Personal Income Tax rate or in the Property Transfer Tax. There is a proposed 8.4% increase in the water rate, due almost exclusively to the increased cost of water charged by the New York City water system, and a proposed 13.3% increase in the sewer rate, which is required in order to close a deficit in the Fiscal Year 2014 closing balance. Under the increases, a typical residential customer would see their annual water bill increase by approximately $75, or $6 per month. As always, the Executive Budget continues to be a lean budget which does not propose additional cuts to vital services or tax increases beyond the cap. The Budget provides for more efficiencies and savings through reorganization efforts while maintaining the same level of services, includes cuts to vacant positions and contains no layoffs. The Budget also capitalizes on federal funding that will allow the City to hire 10 additional police officers and reassign up to 8 officers to newly-created walking posts, providing an additional 18 officers to police Yonkers and help maintain historic decreases in crime. Due to the improving economy, the City expects added revenue for 2016 including an increase of $1.35 million in sales tax revenue from the 2015 Adopted Budget and the increase of nearly $250,000 in PILOT revenues. As Yonkers continues to face challenges, I propose a budget that is balanced and honest, and one which protects property taxpayers. I urge the City Council to build upon the spirit of cooperation that has passed three consecutive bipartisan budgets during my time in office. While we will work to continue to provide a quality education and services, I ask the public to continue in the spirit of shared sacrifice as we confront ongoing fiscal challenges. Page 4 of 5

5 I look forward to an active and healthy discussion of our City s finances as we work to rebuild the great City of Yonkers. Sincerely, MIKE SPANO Mayor Page 5 of 5