Dear Honorable Supervisor Katz, Deputy Supervisor Tipp and members of the Town Board:
It is my pleasure to present the 2023 tentative budget for your consideration. Last year when we prepared the 2022 tentative budget, it was our hope that the COVID-19 pandemic and its effects would be in the rearview mirror as we returned to “normal.” It is now readily apparent that the COVID-19 pandemic continues to impact our budget process. Although the daunting challenges of revenue projections and planning expenditures do not rise to the 2020, 2021 and even 2022 levels, they are still with us. Our consistent practice of utilizing conservative revenue projections and continuing to curb discretionary spending and costs helped us successfully navigate the uncertain times during the pandemic. As we emerge from the long shadow of the COVID-19 pandemic, we continue to employ these tried and true methodologies to guide us going forward.
The 2023 tentative budget proposes a 2.38% increase in total appropriations over last year ($1,074,800), with a 3.52% increase in the levy ($802,632), once again keeping us within the tax cap. This is a lesser increase than was contained in the 2022 budget. Last year, appropriations rose by $2,015,237 with a levy increase of 3.03% or $672,296. The refuse component of the budget continues to be the major driving force behind this year’s increases with the refuse levy alone rising 13.86% or $410,465. The general fund incrementally contributed 1.02% or $126,953 to the levy with the highway fund rising by 5.36% or $245,142. It is noteworthy that there is no fund balance allocated to offset the highway increase this year. Like last year, the refuse component of the levy had an overwhelmingly negative impact on our budget increase. Like last year, where the Town had the ability to control expenditures, as with the general fund and the highway fund, the increases over last year were modest: 1.02% and 5.36%. The collapse of the international recycling market as well as the loss of local transfer stations and limited avenues for disposal continue to have an outsized impact our budget and will do so for the next several years.
The average homeowner with an assessed value of $170,000 or $1,014,925 market value, will see a $116.12 increase in the tax bill. There are two components that contribute to this increase, the general and highway fund that is applicable to all parcels and special districts which are dependent upon where the parcel is located. The general and highway fund will increase $43.92 over last year and special districts* will increase $72.20 over 2022. The strong housing market ignited by the pandemic continues to positively impact our housing prices and the mortgage tax revenues.
* As part of the special district component of the Town and County Tax bill, Town residents receive fire protection from three different entities. Each carries its own budget. The Millwood Fire District will increase by 2.52% (tentative budget numbers); Northern Fire Protection will increase 1.75% (final budget numbers); and New Castle Fire District numbers will rise no more than 2.85%.
Expenditures – Increases for 2023
As the economy slowly emerges from the long shadow of the pandemic, we see a gradual return of some of the traditionally stable revenue streams: camp revenue, county sales tax, mortgage tax, building permits and, to a lesser extent, parking permits. As the economic forecast is guarded at best, unsettled and volatile are the more common descriptors, we have continued our conservative revenue projections for 2023. In addition, we have continued to curb our discretionary spending.
However, inflation is the “elephant in the room” in every budget discussion for 2023. Its effect on the prices of necessities from gas to food to building supplies and everything in between is undeniable. Despite our best efforts to control discretionary spending, inflation negatively impacts our bottom line as we continue to provide essential services to our residents.
- Employee Benefits: Overall employee benefits increased 1.84% or $163,758.
o Retirement contributions are projected to increase by a modest $29,077; Employee retirement contributions continue a downward trend with a decrease of 1.46% but the Police/Fire retirement contributions increase by 3.35%.
o Health Insurance costs are projected to rise by low single digits, 3.47% or $170,076.63. The Town offers two health care options to employees: MVP and MEBCO. Although MVP is expected to increase by 6%, we only have 19 of 203 employees enrolled in that plan so that the impact will be minimal. The overwhelming number of employees are enrolled in MEBCO and those rates are projected to rise a mere 3% after remaining flat last year. The last factor impacting the health insurance expenditures is that employee contributions to health care have increased as new employees pay a higher percentage of premiums.
o Workers’ Compensation premiums are projected to continue to drop as our favorable safety history allowed us to switch providers and lock in a more favorable rate while at the same time increasing services. The reduction in rate will be offset by the elimination of the premium we have received annually with NYSIF, our former insurer, so the decrease of $71,101 will have a minimal effect on the budget.
- The Liability Insurance premium continues to increase due to several large claims in the recent years, most notably the catastrophic failure of the standby generator at the Millwood Water Treatment Plant. We remain limited in the potential field of companies that can underwrite this policy for the Town due to the presence of the Minkel Dam. Once the Minkel Dam is decommissioned in the winter of 2023-2024, we will be in a position to competitively shop for liability insurance.
- Last year, we anticipated that IT contractual services would increase as a result of a new contract with Logically, the successor company to Sullivan Data, which was absorbed by this larger concern. Our old contract with Sullivan Data expired in March of 2022 and we have now received the new contract we were anticipating last year. The 2023 agreement contains the anticipated increase of $64,000 but more importantly, implements significant and necessary security and technology upgrades which were long overdue and critical to protect our IT infrastructure from threats. Also included in this budget line is expenditures for NCCMC. NCCMC continues to maintain hybrid communication lines for Town meetings and operation which were instituted during the pandemic. Although the State emergency order allowing remote meetings has not been renewed, our hybrid meeting platform has continued to afford the public unfettered access to Town meetings and has increased citizen participation.
- After holding the line on legal expense for the past 6 years, Keane & Beane has requested a 6% increase in their retainer as well as an increase in hourly rates bringing the total increase to 6.48% or $37,000.
- As we continue the trend of proactively resolving tax certiorari matters, we are maintaining the $100,000 line for these cases in 2023 as no large tax certiorari matters are anticipated for next year.
- Salary increases- There is an anticipated increase in salaries for 2023 as we are hopeful for a resolution of both the CSEA and PBA contracts which have either already ended or will end by the end of 2022.
Revenues – The “New Normal” or the Bumpy Path Back to Pre-Pandemic Levels
Not all aspects of our budget have been detrimentally affected by the pandemic. Even when viewed through a conservative lens, our share of the county sales tax continues to be strong. As a result, we are increasing our projected revenue by 3% or $100,000. Projected revenue from building permits remain steady at $950,000 even in the face of the Toll Brothers’ East Village ongoing development. Although it is certain that some building will continue in the next year, this flat revenue entry is a concession to the uncertain economy looming in 2023. This budget also includes an additional $100,000 infusion of fund balance to offset debt costs of our latest borrowing.
Commuter parking revenue continues to be difficult to predict. Again, to be conservative in our revenue projections, we have maintained a $600,000 budget line, less than two-thirds of the $950,000 pre-pandemic levels. Although we have seen a marked increase in parking at the train station, commuters have been reluctant to return to pre-Covid work habits. The 2023 parking renewal season begins in December 2022, and we are hopeful that the new normal includes a return to train commuting on a regular basis as evidenced by an increase in the sale of parking permits.
Highway Fund’s Limited Fiscal Impacts
The overall budget in the Highway Fund increased by 1.86% or $106,611 over 2022 (The 2023 levy rose by $245,000 because, unlike last year, we did not use fund balance to offset the increase). The paving budget was increased to $1,365,000 up by $120,000, which reflects an increase in paving costs. (Asphalt is petroleum based; as the cost of gasoline rises, so does road paving). Our salt purchases and snow removal over-time lines continue at 2022 levels of $295,000 and $195,000 respectively. Highway staff remains at 2022 levels as well.
Water Fund Increases
The water fund budget rose by $563,010 (5.77%). This increase was due to several factors most notably $382,000 for the emergency generator service. The standby generator for the Millwood Water Treatment Plant experienced a catastrophic failure earlier this year. As a result, we have had to rent a generator at more than $30,000 a month while a plans for a new generator were created and ordered. Supply chain issues have pushed the delivery date of a new generator to over a year. We continue to monitor this situation.
Other contributing factors include an increase in contractual services; to wit, a 5% increase ($59,947) to Suez (now Viola) pursuant to the terms of their contract to run the plant. The last factor is the impact of inflation on the costs of running the plant, including electricity, a 22% increase or $66,576 and chemicals, a 142% increase or $125,551. We have already seen supply chain issues negatively affect our ability to secure necessary chemicals for the MWTP on a regular basis. Routine annual contracts for required chemicals have been cancelled by suppliers unable to secure supplies at a locked-in price for any period of time.
In addition to the water fund levy increase, this year’s budget includes a 10% increase in the cost of water or a $6 increase per 1,000 cubic foot of water. The average home uses 3,000 cubic feet a billing quarter. Homeowners can expect to see an $18 increase per quarter. This increase is necessary to fund the millions of dollars of critical infrastructure projects that are required to maintain the high quality of water service in Town. Among these projects are replacement of aging water mains, including the water main that extends under the railroad tracks by lower King Street, cement lining of older water mains to prolong their service life, replacement of the pumps and generators at the Bedford Road pump station, and replacement of the Alpine Water Tank.
The Disproportionate Cost of Refuse
The high cost of refuse continues to have an outsized impact on our budget. Despite the infusion of $479,228 of refuse fund balance to offset the cost of the refuse contract, (down from $876,075 in 2022), the cost per residence of refuse and recycling will increase by $76. For historical context, the refuse rates in 2011 were $520 per parcel for residential collection, in 2012 residents paid $485 and in 2015 through 2021, residents paid $440 per year. Last year the rate rose to $526 and this year the rate will be $602.
The 2023 tentative budget once again challenged us to create a fiscally responsible roadmap which reflects anticipated revenue streams and expenditures in a post-pandemic economy. Although the uncertainty of what the future holds is a constant in the creation of every annual budget, planning for the future in a post-pandemic economy is unchartered territory. We believe that the 2023 tentative budget acknowledges the potential volatility of the financial indicators, including the threat of inflation in the upcoming year and responsibly projects revenues, controls spending and limits expenditures while maintaining critical services for residents.
I would like to thank Rob Deary for his integrity, expertise, and unwavering commitment to the financial health of the Town throughout this budget process. Once again, he was successfully navigated the unique challenges presented by this unprecedented economic climate. I would also like to thank the entire staff, especially my assistant Tiffany White and the department heads, for all of their assistance in preparing this budget- without them, this budget would never have been produced. It is my privilege to work among these professionals and the Town is fortunate to have such dedicated staff working tirelessly on its behalf.
Jill Simon Shapiro
October 10, 2022