In an effort to grapple with ever increasing retirement and healthcare costs, along with maintaining the city's contingency funds, Batavia City Manager Jason Molino is recommending a property tax increase for fiscal year 2012-13.
The proposed budget increases the tax levy by 4.32 percent, or $241,221, to cover anticipated expenses of $15,758,611.
The increase is about $4,000 less than allowed under the state's tax cap law, according to Molino's budget message.
The rate would become $10.94 per $1,000 of assessed value, or $37 per year, or $3 per month, on a home assessed at $80,000.
Near the end of his budget message, Molino, a huge hockey fan, writes, "Put in perspective, Time Warner Cable increased the standard cable rate December 1, 2011 by $4.55/month or $54.60/year, and now you can’t watch the Sabre’s games."
However, as stated in this message the City is faced with challenging decisions due to detrimental increases in state mandated costs. Use of reserve funds have been tapped to larger extents this year as fixed costs in retirement and healthcare surge, and needed equipment replacements and sidewalk repairs are required. In addition, for the first year in the last five, it is proposed that the City utilize unappropriated/unreserved fund balance to assist with balancing the budget.
State aid for municipalities will likely be reduced again, Molino said.
Retirement contributions are expected to increase 15 percent over the previous fiscal year, or by $182,000.
Healthcare is expected to go up 16 percent, or $256,000 over the prior year.
Much of the healthcare increase is being driven by an increase in health insurance for retirees.
Even with the increase in taxes, the city will need to tap $100,000 from its undesignated reserves to help balance the budget.
The budget also includes setting aside funds for future, potentially larger, increases in retirement and healthcare costs. Those reserves built up in previous years will be tapped in this budget for $65,000 apiece.
"The State’s woes cannot be an obstacle to the City’s success, and this budget continues to put our best foot forward by building our great City to its fullest potential," Molino said.
Designated reserves for equipment replacement ($210,000) and sidewalk repair ($75,000) are also expected to be used in 2012-13.
The undesignated fund balance as of March 31, 2011 was $493,273, which Molino said is far below the NYS Comptroller’s recommended levels of 5 to 10 percent of general fund operations, which would mean a healthy reserve would be $750,000 to $1.5 million.
The city will need to spend $36,000 on a new phone system, according to the budget message. The current system was scheduled for replacement in 2009 but wasn't. Its manufacturer will discontinue support for the system this year, making repairs more expensive and less reliable.
Water rates will go up 3 percent, if the proposed budget is approved, to $4.44 per 1,000 gallons. Water customers will also pay $8-per-year for anticipated infrastructure repairs and improvements. The fee increases 50 cents year-over-year.
There are no anticipated adjustments to the sewer rate.
In the conclusion of the budget message, Molino writes:
It is strongly encouraged that the City Council considers the proposed tax increase in order to safeguard against significant increases in retirement, healthcare or other costs. While it is understood that a property tax increase is not a popular decision, approving a modest property tax increase complemented with an increase in the contingency account may avoid the need for a more drastic tax increase in following years, which may require overriding the tax cap.
To read the budget message, click here (pdf).
Photo: City Hall photo, file photo.