Home > Mid Hudson Times > Town building ‘rainy day’ fund

Town building ‘rainy day’ fund

November 7th, 2012

The Newburgh Town Board Monday night unanimously approved a $27.3 million 2013 preliminary budget following a public hearing that included no comment from the public and very little from board members.

It was only after close examination of the actual numbers that it became apparent that there was a story within Supervisor Wayne Booth’s budget message – a harbinger of things to come.

“This budget contains $27.3 million in appropriations for the General and Highway funds combined,” Booth said. “The combined preliminary budget falls under the 2 percent tax cap levy and General and Highway funds combined have an increased tax rate of 2.1 percent.

“A majority of the appropriation increase is budgeted for the real property tax refund account and anticipation to the reduction in assessments and potential real property tax refunds,” Booth said.

The impact of that last sentence didn’t sink in until I started looking deeper into the numbers. You might ask, “just what are property tax refund accounts and reductions in assessments and personal real property tax refunds?”

The town’s preliminary budget, made available both on the Internet and in paper form Monday night, reveals that Dept. 1964 – Refund of Real Property Tax – was $71,080.46 (actual) in 2011. In 2012, that same line was budgeted for $75,000.

In the 2013 preliminary budget, however, it soars to $1.1 million.

That line, it turns out, is a sort of “rainy day” account. It is being put aside to ease the pain of the loss of property taxes from Dynegy’s Roseton and Danskammer power plants.

Asked if the increase involves certioraris, Booth responded:

“Certioraris, possible loss of revenues … We’re going to have a mass reduction in assessments,” he said.

He said that prior to reaching the agreement with Dynegy four years ago, “we were putting money away in a tax stabilization fund.”

“The problem with a tax stabilization fund, is that you can only use that when you have more than a 2 percent increase in your tax levy.

“We don’t plan to have more than a 2 percent increase next year. Going to 2014, we don’t plan on having more than a 2 percent increase of the tax levy. Matter of fact, we probably are going to shoot for a reduction in expenditures and maybe a reduction in the total tax levy.”

Booth said that regardless of whatever value is placed on what are now Dynegy’s properties, “the tax levy will stay what it is.

“What’s going to happen is the tax rate for you and I and every other taxpayer in the Town of Newburgh is going to go up because we have to make up for what the power plants are losing in assessments.

“This is my way of planning for it,” he said.

Booth said that the difference in spending over revenue is coming from the Town’s unappropriated fund balance – money that wasn’t spent in the past.

Asked if it is a “rainy day” fund, he responded, saying “that’s what it has turned out to be.”

The Town reached an agreement with Dynegy four years ago in which Dynegy promised it wouldn’t grieve its property taxes for five years. After declaring bankruptcy, Dynegy stopped paying taxes to the Town, Orange County, several special districts and the Marlboro School District.

Under normal circumstances, the Town of Newburgh would collect about $5 million from Dynegy in January. The loss to the school district is even more severe – it adds up to about $17 million or about 40 percent of the district’s budget.

There is an auction of the Roseton and Danskammer properties scheduled for Nov. 15. Booth is hopeful that as many as three potential buyers may be involved in the auction.

He believes it is critical to the Town, the county, the school district and all the other entities reliant on revenue from Dynegy that the Roseton and Danskammer properties be purchased so that some portion of the tax burden continues.

Booth extended his thanks Monday night to his fellow board members for “their hard work and diligence, not only in the budget preparation but for their hard work throughout the year.”

He also thanked the Town’s department heads for their “prudent leadership in these difficult times and all the dedicated employees of the Town of Newburgh.”

Booth also thanked Town Accountant Jacqueline Calarco, “who keeps us on the straight and narrow.”


Comments are closed.