Plattsburgh Mayor says the City Needs to Cut Spending

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Plattsburgh Mayor Colin Read says the current state of the budget isn’t sustainable, and more needs to be done to reduce spending.

Read held a press conference Friday morning to discuss the state of finances for the city.  Right now, he says there’s a $2 million structural deficit, and raising taxes isn’t an option.

The mayor’s full address is posted here:

Behind me is an anchor that represents an illustrious piece of our City’s history. It’s from the British ship Confiance that was sunk by our fleet as we stopped British Forces in the pivotal battle of the War of 1812. Just a couple of generations before that, we also saved the nation by delaying their Fleet’s advance in the War of Independence. It bought time for our nation to regroup and win. Now, we must live up to that history.
Our recent financial history hasn’t been so illustrious. A dozen years ago the city lost a great deal of regular revenue as PARC unwound following the closing of the Air Force Base. Poor planning with plunging revenues and rising expenses resulted in a staggering 30% tax hike.
 
Then, half a dozen years ago, the City lost $757 thousand in annual payments from Falcon Seaboard’ s cogeneration plant, and another $800 thousand of annual revenue that had been regularly extracted from the Water and Sewer Funds. Just as before, the City didn’t lower the upward march in expenses as revenue was lost, and with spending exceeding income by a million dollars for each of half a dozen years, last year the City exhausted its once-healthy $6.8 million reserve fund surplus.
 
But not only did the city not reduce spending to adjust for the lost revenue, it also used something called Bond Anticipation Notes (or BANs) to pay for several years of capital improvements to its roads, the purchase of expensive new fire vehicles, and other infrastructure investments. Financing with BANs is like running up a credit card but only paying interest monthly. Once the balance becomes large enough, the city must then issue a bond to pay off the BAN. For the past few years, the City has been kicking the BAN can down the road, and we must now refinance that sum, which is approaching $10 million, through the issuance of a bond. This will increase debt service costs for the City by $839 thousand per year.
 
Compounding these challenges are rapidly rising costs the City paid to the State pension system from 2010 to 2013, and healthcare costs that continue to rise dramatically.
 
Then, on Tuesday, the Public Employment Relations Board proposed a 10% increase in firefighters’ wages and monetary benefits, to be phased in over the past six years. Were the city to issue a bond to pay for the retroactive award, these raises would cost the city approximately $3.2 million over the next five years, or $640,000 per year. Last night the Council deliberated this proposal and realized it is an award we can ill-afford.
 
The combination of lost revenue of $1.56 million and increased expenses of $1.48 million has been partially mitigated by modest growth in the tax base. We are left with an approximately $2 million structural deficit for which the city has to accommodate. Since raising taxes is not a sustainable option, we have asked our department heads for across the board spending cuts of 10%.
 
Meanwhile, the City has an unfunded healthcare liability for its retirees and active employees who expect lifetime health care coverage, even once they become Medicare-eligible. Our auditor calculated our unfunded liability to retirees’ healthcare is now $135 million, and will more than double, to $276 million by 2027. That represents 30% of the value of all the City’s non-exempt property. It in effect mortgages our children’s future. We have asked the retirees to help us find a better way to contain costs but still ensure they have the coverage they need.
 
The responsibility to maintain a sustainable city is not one to be taken lightly. Indeed, the Plattsburgh City Charter expects no less. To ensure City government plans ahead and balances long run revenues with expenses, it specifies that the Council shall produce a five year fiscal outlook on the first of June each year. We’ve instituted that ignored requirement. The Council has been working intensively to produce their outlook through weekly meetings and twice monthly budget hearings since the beginning of the new term. Their plan will specify the expected revenue and expenses for the city and its projected fund balances, based on reasonable expectations of future events.
 
We are starting to right the ship. For the first time in recent history, our City decreased spending compared to the same period in the previous year. But we must do much more.
 
The council’s united in our intention to deal with these challenges head on, without any budgetary gimmicks, so that we can firm up the fiscal foundation for which we leave our children. We are here to make difficult decisions, to keep the public informed, and to answer your questions. This city belongs to us all, especially our children, and we need the ideas and assistance of our managers and employees, our retirees, and our residents to help create a stable Plattsburgh present so we can build a prosperous Plattsburgh future. To do so, we know rising taxes isn’t an option.
 
We all know how difficult this will be, and we will be asking our employees, our residents, and our various stakeholders to help find a path to greater financial sustainability so that the City can build a brighter future on a much more stable fiscal foundation.
 
Last weekend I had the honor to proclaim a young 7 year old from Westport a Friend of the North Country for his organizing of a march that implores adults to make decisions that don’t harm the next generation. At the gathering were people of all ages, and many young parents with children, all of whom make this place home. Our job is to keep our city affordable so young Evan can have a bright future in Plattsburgh.
 
Thank you, Evan, for reminding us that the budget it not about today, it is about creating a sustainable tomorrow.

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