Budget Committee MINUTES OF MEETING September 4, 2018

Transcription

1 Budget Committee MINUTES OF MEETING September 4, 2018 Meeting of the Budget Standing Committee of the Chemung County Legislature Minutes of a meeting of the Budget Committee of the Chemung County Legislature held in the Legislative Chambers, 5th floor, Hazlett Building, 203 Lake Street, Elmira, New York, on Tuesday, September 4, Members and officials present: John Pastrick, David Manchester, L. Thomas Sweet, Joseph Brennan, Kenneth Miller, Brian Hyland, Dr. Neil Milliken, Peggy Woodard, William Fairchild, Martin Chalk, Aola Jackson, Paul Collins, Richard Madl, Donna Draxler (Chairman of the Legislature), Rodney Strange, Richard Keyser, Michael Krusen, Michael Mucci, Andy Avery, K. Bill Hopper, Samantha Potter, Christopher Moss, Bryan Maggs The meeting was called to order by the Committee Chairman, Donna L. Draxler. The County Executive presented an overview (attached hereto) on the sales tax distribution formula as it currently stands and on proposed changes as negotiated with the City of Elmira. The current sales tax agreement expires November 30 th. Mr. Santulli stated that six years ago following the review of local budgets by a group of private sector business folks, a new formula was developed. At that time, the County budget was severely impacted by the cost of Medicaid and other unfunded mandates. Those programs require one hundred percent of the County s tax levy and twenty percent of its sales tax revenue. No other local governments experience this burden, he described, and the burden to County government is unique to New York State where today one in three residents is on Medicaid. The total local share cost for Medicaid in New York State is $7 billion. The total local share cost nationwide is $9 billion other states do not shift the cost. The cost and the growth is unsustainable, Mr. Santulli noted. Chemung County does not have to share any of the sales tax revenue with the local municipalities except for the City of Elmira. However, it does share, and it shares generously. The County had few options raise taxes or look at the collective fund balances and financial strength of the towns and villages and reduce the amount of sales tax revenue distributed. At that time, he stated, the average fund balance, not including the City or the County, was eighty-five percent. The County s was thirteen percent and the City s less than that. Many towns had healthy reserves, some over one hundred percent. We are not in the banking business, stockpiling money, he continued, and today after the change in the distribution formula, the average fund balance is still fifty-five percent much more than the State Comptroller recommends. Taxes in New York State are sixty-eight percent higher than the national average, Mr. Santulli advised, and raising taxes was not option. This burden has caused young people to leave the area, and it does not attract business investment. The County Attorney received a communication from the City s Corporation Counsel recently, Mr. Santulli explained, asking that the sales tax agreement be re-negotiated as quickly as possible. The City has the right

2 of pre-emption, which would provide them with fifty percent of all sales tax generated in the City of Elmira. Or, the funds can be distributed on a per capita basis. When the City changed to the latter method years ago, they immediately realized an extra million, which is now worth about two million dollars. The County Executive and staff met with the City Manager and his team and developed a new agreement. Mr. Santulli said he understood the City s urgency and cash flow situation, so he was surprised when he then received a letter from the City Manager notifying him the City Council wants to postpone action until later in the year. The Corporation Counsel had pushed for an agreement, they reached a tentative agreement, and now it is on hold. Mr. Santulli stated that the County is developing its 2019 budget, and it cannot wait until later in the year to settle one of its most important revenue streams. He will not present an incomplete budget to the Legislature. The tentative agreement provides less dollars to the County, more dollars to the towns and villages, and forgives and modifies payment terms of monies owed to the County by the City. The County Executive announced that October 15 th was the deadline for acceptance of the tentative agreement. This is the only offer. Should the City Council not accept the agreement their negotiating team developed, the current agreement will continue, unless they chose to pre-empt and lose two million dollars. A forensic audit has been conducted by an independent auditing firm, the Bonadio Croup, Mr. Santulli advised, and this audit verifies that the current County/City agreement has been almost cost neutral for the City. It is not the cause of the City s financial woes. He voiced his displeasure with newspaper articles where the Mayor calls the County Executive a liar and says he cannot trust the County. Even after three independent studies, Mr. Santulli cautioned, this is still the rhetoric, and while he deplores these back and forth stories in the newspaper, he cannot let the charges go unanswered. Why does the County continue to try and help the City of Elmira when the City misrepresents and does not appreciate the assistance? The County Executive offered that the City is the County seat, and there are a lot of good things going on including the downtown redevelopment being achieved with state assistance, the proposed new medical school, and other revitalization efforts. Why does the County want to help the towns and villages? The County Executive noted that when the redistribution plan was developed years ago, the County projected a reserve of twenty-one million dollars by Even though sales tax revenue was down until recently, he noted, the cost saving efforts undertaken by the County have increased the fund balance to twenty-four or twenty-six million dollars, so it is a good time to help others. At the urging of several town supervisors, he tried to resurrect the Council of Governments with the intent of the Council formulating a plan to assist the smaller towns and the municipalities with police departments. However, the town supervisors would not support the organization and refused to work together. We have to work together, Mr. Santulli urged, to benefit our residents. Mr. Krusen reviewed a slide presentation outlining the proposed distribution agreement with the City. He noted that the current plan allowed the County to avoid a twenty percent property tax increase and an employee layoff. It was structured for years 2014 through 2018, and when it was adopted, they promised to review the plan to determine if it should be revised. It is critical to finalize this as soon as possible, he advised, so the towns and the County can prepare their 2019 budgets. The current plan was negotiated with the City and adopted by the City Council unanimously. While it was effective January 1, 2014, the financial impacts were delayed a year. The County has been assuming the costs of the City s Departments of Public Works and Buildings and Grounds. The City employees were invited to participate in the County s self-funded health insurance program to save the City money, even as the County knew it would cost the County more than the City would pay (about six hundred thousand dollars more). In 2018, the City Manager at that time, raised financial concerns for the City. By 2016, the City s deficit was two million six hundred thousand dollars with an additional deficit of one million five hundred thousand dollars in The City started 2018 with over a four million dollar deficit after burning through their fund balance which is now in negative status.

3 Mr. Krusen advised that seven of the fifteen local municipalities are up in real dollar amounts even with the implementation of the sales tax plan. Ten of the fifteen have increased the percentage of their fund balances to expenses. There is an average fund balance of fifty-five percent, and the Town of Horseheads has a surplus of one million dollars. The Town of Southport has done an excellent job managing its finances, Mr. Krusen stated, showing a two million four hundred thousand fund balance and one million eight hundred thousand dollars in reserves. These funds are more than the collective total of the other fourteen municipalities. One slide shows the full value tax rates for 2013 through The first eight municipalities on the list have decreased their tax rates and two villages raised taxes but by no higher a percentage during the past five years than the five years previous to the change in the formula. One town (Catlin) was having some difficulties and the County had offered to provide highway oversight assistance, but the town declined. The Town of Chemung has increased its fund balance and lowered its tax rate, Mr. Krusen added. Only the Village and the Town of Van Etten are in worse shape, and they have chosen to consolidate and save expenses. Following the redistribution changes and the County s assumption of City personnel, the City at most lost one hundred three thousand dollars, however, if the sales tax growth continues through the rest of the year, they will realize one hundred four thousand dollars in extra revenue over expenses. The picture becomes even more positive as the County assumes all of the costs for the former highway and buildings and grounds employees. The City s operating losses are not associated with sales tax, the Deputy County Executive explained, and they had to raise taxes seventeen percent along with an increase in the sanitation fee. Mr. Krusen compared the percentages of sales tax contiguous counties share with their municipalities along with the percentage unfunded mandates compared to budgets: County Percent of sales tax Percent for Medicaid Schuyler twenty but it is capped at ten million thirty-three Tioga twenty-five thirty-three Chemung twenty-six fifty-five Tompkins thirty-one twenty-four Steuben forty but half do not take/apply to levy forty This shows the dramatic effect Medicaid has on the Chemung County budget, he stated. We are number one when Medicaid is considered as a percentage of combined property taxes (16.7% at an average cost of $ per resident). Census tracks six, seven, and ten in the City of Elmira are at poverty level. Working on this issue is of the utmost importance in solving some of the City s financial woes. The medical college will help with this effort, as the need for mixed income rate apartments grows. It is imperative to improve the dynamics in the City, he continued, and try to reverse what is happening. Mr. Santulli stated that after the 1972 flooding from Hurricane Agnes, many of the beautiful large Victorian homes were converted into multiunit rental properties with absentee landlords. The City also focused on constructing public housing in those days. This is a high service area, and that is okay, but there needs to be balance. Medicaid has become an industry, and fraud investigators routinely report that folks are encouraged to move here and other upstate New York areas just for the benefits available to them. Chemung County had a successful Medicaid Demonstration Project: tracking doctor visits and prescription refills and utilizing managed care it was a model for the

4 nation and the State shut it down. We cannot only not restrict services, at this time applications cannot be scrutinized for validity until after the medical care has been given. People do not even have to apply in person; it can be done online. There was discussion on the impact of two state prisons in the area. Mr. Krusen does not feel they cause families to locate here to be near a loved one as inmates are released back to their home counties. Mr. Krusen spoke about the poverty reduction initiative Elmira has received, and he urged all to become involved in reversing the trend of poverty. What impacts the City, impacts us all, he added, and the City cannot improve until poverty and its associated issues (crime and drugs) are addressed. Mr. Krusen reviewed the specifics of the tentative agreement and the growth in funding to the towns and villages, along with the two-year extension on payments by the City to the County. The City Manager had told him this assistance should keep the City from instituting another tax increase. Mr. Krusen just learned health insurance rates should be stable, which is good. The County will also assist with the City s cash flow issues and their challenge to borrow any money. The County s employees made many changes and concessions over the years to achieve the County s stable financial situation, things unheard of around the State. Mr. Krusen gave particular mention to the employees of the Nursing Facility. It would be nice for the County and the local municipalities to set up an emergency reserve, Mr. Krusen suggested, to assist when there are storms. Expenses are tough in those situations for the smaller jurisdictions. While most of the municipalities have managed the change in the sales tax distribution very well, it would be beneficial to have a work group that would assist those in distress. Mr. Chalk stated folks in the area want the City and the County to get along. He noted the City needs more than extra sales tax revenue, they are only treating the symptoms and not the disease. Letters to the Star Gazette do not help, and it is time to put the past in the past and work together. Mr. Krusen replied that he understood it is time to move on. He would like to see a small group from the Legislature and the Council talk and solve some of these issues. Mr. Santulli said it would be nice if the City would recognize all that the County has tried to do to help them and for officials to tell the truth. Mr. Strange asked when the new agreement would be presented to the Legislature. Mr. Santulli replied that he wants it considered soon as October 15 th is the drop dead date. If it is not approved, things remain the same as they are currently, but they have to be able to prepare the budget. Mr. Miller said he did not understand why the new plan would not be acceptable. Mr. Krusen said he hopes the City Council will ratify the agreement. Mr. Santulli explained that years ago it was former County Executive, Tom Tranter, who suggested the City move from pre-emption to per capita. Even with the knowledge they would immediately gain one million dollars in revenue, it took City Council three years to act. In response to questioning by Mr. Manchester, Mr. Santulli explained it is a six-year agreement front-loaded with benefits. We can help them, he continued, but they have to be willing to make hard choices and change their operations. Chemung County employees have seen their health insurance benefits change dramatically, they have gone without pay increases, the union has given up their steps no one else is doing this, he added. Mr. Sweet agreed noting those changes and reminding everyone that twice the Legislators had to vote to lay off employees these things all came before the sales tax distribution was modified the County has done a lot to control costs. Mr. Strange asked why his towns and the village do not see the numbers the same way. He asked where these number come from. Mr. Krusen replied the numbers are taken from the annual financial statements the towns and villages file with the New York State Comptroller. They are public information. Mr. Strange said Wellsburg feels they have no fund balance, they only have money in a reserve account for a fire truck. Mr. Krusen advised that it is not a restricted fund they have money, they are just choosing to spend it all at once, which is a personal decision.

5 A Council of Governments would have been a good idea, he said, so officials could learn about debt service management. Some municipalities borrow, and some do not it would be good to have a healthy discussion on when it is appropriate to borrow (long life expectancy) and when it is not (annual operating expenses). Mr. Santulli suggested that paying cash now for a huge piece of equipment when it is so cheap to borrow might not be the best decision. It would be better to share services, equipment and expenses. Mr. Collins asked if the towns and villages will receive the increased sales tax revenue if the City does not sign the agreement. Mr. Krusen replied no - only the City and County are parties to sales tax distribution and without the City s approval, the distribution formula cannot be changed. Mr. Pastrick remarked that his towns say are broke, and he asked where the County gets the numbers it uses. Mr. Santulli explained these are the numbers the towns reported to the State Comptroller. Mr. Krusen applauded the Town of Veteran and the great job they have done with their budget. He noted the tax rates are down and they have a fund balance of fifty-five percent. Mr. Santulli added that if the numbers are wrong it can only be because the town filed an incorrect report with the State Comptroller. Mr. Chalk questioned the impact of this local revenue sharing on the County s budget. Mr. Hoover replied he felt the County might have to raise taxes in 2020, but since the sales tax revenue has increased and with everything else remaining equal that possibility is remote. We are not wealthy, he stated, but we do have control over our destiny. This is a good time to help others. Mr. Santulli said there is a risk, but that is why we need to share services. At some point, he advised, the County will not be able to continue like this. He told the City Manager at one of their meetings, the City is going to have to make changes. It still upsets me, he added, they will not tell the truth. We did not take money away from them and do nothing in return. Mr. Brennan brought up the County s poor health statistics. Mr. Krusen replied that he was meeting the following week with a group from Monroe County, Common Ground, on public health rates, housing, poverty outcomes, etc. He said it should be the goal of all Legislators and City Council members to address the poverty situation in the City of Elmira. He invited all to the Library at one p.m. on Monday. The County Executive said with all the services in this area, the smoking and obesity rates drive him crazy there should be more progress. The system is geared to keeping people on assistance. Mr. Krusen reported people on public assistance feel they need twenty-five dollars an hour to replace their benefits. Mr. Santulli said an area where Amazon built a warehouse was thrilled with the influx of all those jobs. However, the pay was so low the employees were eligible for food stamps and benefits, which ended up costing the community more in tax dollars. Mr. Krusen noted some wage inflation is needed in this area, but the business community is naturally opposed. Mr. Sweet added that it is hard to consider bans on smoking when at the same time the State is holding hearings on legalizing marijuana. Motion was made by Strange, seconded by Collins, and unanimously carried, to authorize certain transfers and appropriations by the County Executive. The meeting was adjourned on a motion by Woodard, seconded by Strange, and carried.

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40 CHEMUNG COUNTY ROUTE SLIP * PERSONNEL REQUISITION Sales Tax Allocation - Update from the County Executive Resolution #: Slip Type: SEQRA status State Mandated OTHER False Explain action needed or Position requested (justification): CREATION: Date/Time: Department: 9/4/2018 2:34:41 PM Legislature Chairman APPROVALS: Date/Time: Approval: Department: 9/4/2018 2:36 PM Approved Legislature Chairman ATTACHMENTS: Name: Description: Type: Sales tax presentation Sales_Tax_Allocation_Powerpoint Attachments.pdf Cover Memo Item # 1

41 CHEMUNG COUNTY ROUTE SLIP * PERSONNEL REQUISITION Resolution authorizing transfers and appropriations by the County Executive Resolution #: 01 Slip Type: SEQRA status State Mandated OTHER False Explain action needed or Position requested (justification): Transfers: $5,000 from Contingency to STC/Water's Way Planning Grant $113,450 from NF/Contracts to NF/Legal $20,000 from NF/Supplies to NF/Medical CREATION: Date/Time: Department: 8/29/2018 6:36:08 AM Legislature Chairman APPROVALS: Date/Time: Approval: Department: 8/29/2018 8:01 AM Approved Budget and Research 8/29/2018 9:05 AM Approved County Executive 8/29/ :49 AM Approved Legislature Chairman ATTACHMENTS: Name: Description: Type: No Attachments Available Item # 2