Auditor pleased Auditor commends Schenectady on improved finances Tuesday, May 21, 2013 By Kathleen Moore (Contact) Gazette Reporter
SCHENECTADY — Auditor Jim Cusack, who had harsh words for the Schenectady City Council a year ago, said Monday that he was finally pleased with the city’s financial condition.
His audit of the city’s 2012 spending found only minor problems, including old, uncashed checks collected for small fees.
Most importantly, he said, the city finally cut back on its expenses to live within its means.
Last year, he told the council that it would go “out of business” if it kept spending more than it brought in. The city was then on pace for a third consecutive year of deficits, which the city covered by spending its ever-decreasing savings.
When council members protested Cusack’s criticism, he told them bluntly that the end was in sight.
He said the city could only keep spending its savings for “another couple of years — at best.”
Then it would be all over.
A year later, the same man was smiling as he presented the 2012 audit.
“This is a very good start,” said Cusack, an independent auditor with Cusack and Co.
The city didn’t spend a cent of its savings — although the 2012 budget had included plans to spend $5.4 million of the savings.
And the city more than just tightened its belt. It brought in $3.6 million more than it spent, adding to the city’s savings.
“They’re heading in the right direction,” Cusack said. “I’m pleased with what I saw this year.”
But, he added, the city isn’t out of the woods yet.
“It’s just a start,” he said. “I’d like to see continued operating surplus, consistent surplus.”
Finance Commissioner Deborah DeGenova agreed.
“You should look at this as a good story but I want to stress caution,” she told the council. “It’s the beginning of a way to create long-term fiscal health. It is a beginning and I do caution you.”
The city collected far more of its taxes than it has in the past, which DeGenova attributed to the effort last year to foreclose on properties that were years behind on taxes. Many owners paid up to keep their property.
The city still hasn’t seen any revenue from selling foreclosed properties, but it did make money by selling two firetrucks, she added.
Now it has to sell off the houses it took in foreclosure, getting revenue from the sale and getting them into the hands of owners who will pay taxes.
DeGenova added that in future years, the city has to budget to spend less than it receives, to build up savings in case of an emergency.
In a comparison to household finances, she said a household would be wrong to plan to spend exactly as much as it brought in.
“You weren’t creating any savings for yourself. You weren’t giving yourself any soft landing if you fell,” she said.
The city now has a very soft cushion in an emergency. It has a $3.7 million “unassigned” savings account, which can be used to smooth cash flow or to pay for unexpected expenses.
That’s a welcome change from 2011, when the city had just $75,000 in cash after paying the county for all the taxes unpaid by property owners in Schenectady.
This year, the council plans not to pay the county.
DeGenova said she was happy with the emergency savings account. It’s 4.7 percent of the 2013 budget, and she said experts recommend a savings of about 5 percent of the budget.
costly mistake
But the city’s success came at a cost: the sewer, water and golf funds finished in the red last year.
That’s because of what DeGenova called an “oops.”
The City Council decided last year to collect about $2.7 million that it had loaned those funds in 2004.
At the time, Cusack said, the loans were intended to save the funds, which were badly in deficit. The city loaned money from the general fund to pay for two months of operations, which was enough to get them back on their feet. But the money was never repaid.
In 2011, when the City Council was desperately searching for additional revenue to balance the 2012 budget, it turned to that loan to make ends meet.
Cusack said it was legal, and reasonable, for the City Council to call in the loan last year.
“It was, once they felt confident the sewer fund could operate, the water fund could operate,” he said.
The only problem was that the City Council added the revenue to the general fund without subtracting it from the other funds. So those funds vastly overspent their budgets when they were asked to pay back the unbudgeted loan.
DeGenova said that was simply a mistake.
She noted that the funds all had ample savings accounts and could withstand the expense.
The water fund ended up $800,000 in the red and the sewer fund overspent by $700,000. The golf fund was $200,000 in the red.
The nayboob monkey is bound to have a stroke over this piece of good news.
George Amedore & Christian Klueg for NYS Senate 2016 Pete Vroman for State Assembly 2016[/size][/color]
"For this is what America is all about. It is the uncrossed desert and the unclimbed ridge. It is the star that is not reached and the harvest that is sleeping in the unplowed ground." Lyndon Baines Johnson
Watch the COWARDLY CUCKOO WUSS come post on here gloating.
The ignorant, foolish, crazy cuckoo who will think that putting a city in debt AND failing to pay bills is a good thing.
See, unlike the dem mama's boy, I have a home. Yes, I have a mortgage (two more years, thank goodness). Now, since he does not understand budgets, finances, taxes, etc, maybe this will help him.
Apply what the city has done to one's own personal household finances (again, as a certain person does not nor has ever owned a home nor paid taxes, he really won't understand). Imagine this as the case. I have a mortgage. I have a furnace that needs to be replaced and a roof to put on the house. I have a car loan. My expenses exceed my income. I'm in a hole. I could declare bankruptcy, I might be eligible. But I want new landscaping. I want some fancy lighting in my back yard on my patio. I want some nice outdoor furniture. I want a front porch on my house. I make my decision. I stop paying the mortgage this year. And I only sporadically pay the car loan. With the money I "saved" from not paying my bills, I get the landscaping, the fancy lighting, and the outdoor furniture. The loan I take out more than pays to put a porch on the house. I rehabbed the garden shed building in the yard and putting a new facade on it. All these projects have not increased the value of my home any, has not increased resulted in an increase in the assessed value (tax base) of the home. I didn't put in a new furnace, nor did I replace the roof. But after paying for all this new/rehabbed stuff, it did not tally up to the total loan I took out. So under my mattress I have $2,000. I have a surplus. And according to the dem cheerleader, this is a good thing, I have improved my financial picture.
So very sad when people who hold positions (paid or unpaid, elected, appointed, or volunteer, full time or part time), are allowed the "right to vote" in various elections (whether local or federal and anything else in between) to vote for reps that will do just what my hypothetical household finance, above, is. No wonder this country, from local to fed and everything in between, is in the sad shape it's in.
Avoid paying debts to create an imaginary surplus, cause drastic reductions in the tax based and home values, and what do we hear? "Rah rah, cheer, cheer"
Optimists close their eyes and pretend problems are non existent. Better to have open eyes, see the truths, acknowledge the negatives, and speak up for the people rather than the politicos and their rich cronies.
The nayboob monkey is bound to have a stroke over this piece of good news.
What's good cuckoo?
Tell us what is good about creating an IMAGINERY surplus by failing to pay bills and taking loans out just to put money in the bank?
Tell us what is good about a falling tax base combined with increasing tax bills, and plummeting home values and people putting their homes up in order to flee the highest taxed city around?
Can you elaborate, explain HOW FAKE surpluses and a DRASTICALLY falling tax base are good?:????
Optimists close their eyes and pretend problems are non existent. Better to have open eyes, see the truths, acknowledge the negatives, and speak up for the people rather than the politicos and their rich cronies.
Now, for the dem cheerleader cuckoo wuss, let's look right from the story itself, maybe he can understand how THIS IS NOT A GOOD THING!!!!!!!!!!!!!
Quoted Text
Now it has to sell off the houses it took in foreclosure, getting revenue from the sale and getting them into the hands of owners who will pay taxes.
Uh, how will this be accomplished since house sales in the city are FALLING!
Quoted Text
DeGenova added that in future years, the city has to budget to spend less than it receives, to build up savings in case of an emergency.
In a comparison to household finances, she said a household would be wrong to plan to spend exactly as much as it brought in.
“You weren’t creating any savings for yourself. You weren’t giving yourself any soft landing if you fell,” she said.
Gee, ya think?????? But in the household finance, let's go ahead and fix the facade on the shed, let's put up new lighting on the patio.
Quoted Text
That’s a welcome change from 2011, when the city had just $75,000 in cash after paying the county for all the taxes unpaid by property owners in Schenectady.
This year, the [DEMOCRAT] council plans not to pay the county.
This last box is in DIRECT OPPOSITION to what that DeGenova making reference to household finances! In household finances one does NOT choose to avoid paying their debts.
So, this just proves that the city IS STILL BIG TIME IN DEBT and that is NOT a good thing. And I DEFY any WUSS out there to explain why choosing not to pay bills, thus creating mounting debt on top of existing debt, is a good thing.
ROFL, the ONLY thing we will read is a bunch of nonsense babble because he does NOT have the intelligence to address financial issues, a falling tax base, falling home values, increasing taxes, increasing financial burden on the homeowners.
Optimists close their eyes and pretend problems are non existent. Better to have open eyes, see the truths, acknowledge the negatives, and speak up for the people rather than the politicos and their rich cronies.
What years did the water and sewer and garabage fees get separated from the tax bill?
Life is tough, but it's tougher when you're stupid - John Wayne
TIP TO NEW VISITORS TO THIS FORUM - To improve your blogging pleasure it is recommended to ignore (Through editing your prefere) the posts of the following bloggers - DemocraticVoiceofReason, Scotsgod08 and Smoking Bananas. They continually go off topic, do not provide facts and make irrational remarks. If you do not believe me, this can be proven by their reputation scores or by a sampling of their posts.
Mayor McCarthy and his team are doing a great job in the city. Keep up the good work.
George Amedore & Christian Klueg for NYS Senate 2016 Pete Vroman for State Assembly 2016[/size][/color]
"For this is what America is all about. It is the uncrossed desert and the unclimbed ridge. It is the star that is not reached and the harvest that is sleeping in the unplowed ground." Lyndon Baines Johnson
Does lawsuit signify strain? Dispute over $1.2M in back taxes seen as minor blemish on city-county relationship By Lauren Stanforth Published 9:49 pm, Sunday, May 5, 2013
Schenectady
The Democrats who control city and county government have strived over the last decade to appear united in most endeavors, whether it be through policies adopted or when election time rolls around.
But after what the county describes as "several amicable meetings," it has filed a lawsuit against the city seeking the right to begin foreclosing on tax-delinquent properties — or to force the city to pay $1.2 million in back taxes for 2012.
The kerfuffle began in 2011 when then-Mayor Brian U. Stratton, in search of much needed savings in the midst of the recession, decided the city could legally stop making the county whole for unpaid property taxes.
The tax bill at the time was nearly $1.8 million, and the city — which routinely paid the county in one lump sum — could expect to lose at least 10 percent (or $180,000) of that total as that amount of taxes was deemed "uncollectable."
*** The City still owes the County $1.2 million ***
Schenectady weighs adding to pile of debt City now carries $59.9M in short-term notes, will vote on $6.9M more By Lauren Stanforth Published 10:37 pm, Tuesday, March 5, 2013
SCHENECTADY — While Moody's Investors Service recently downgraded the city's bond rating in part because of its "above-average debt burden," Schenectady will likely add to its tab by borrowing another $6.9 million this spring for water and sewer projects.
Finance Commissioner Deborah DeGenova presented the plan Monday night to the City Council, a financial move that includes rolling over the city's current $59.9 million in bond anticipation notes, known as BANs, for another year. The action will avoid bond interest payments of 2 to 3 percent that would result from sending the money to long-term borrowing. Interest on BANs is only about 1 percent.
Many other urban areas across the state also are facing the same financial crunch as pension and employee benefit costs go up while tax collections and property values go down.
The city says it cannot afford this year to roll its debt into long-term borrowing with higher interest rates. The state requires that BANs can be held for only five years, and $26.1 million of the BANs will time out next year, DeGenova said. The $59.9 million includes $20 million that was borrowed to build the Foster Avenue public works garage, which was completed in 2010. But it doesn't include another about $39 million in bonds the city still carries from projects that date back decades.
Eyebrows rose two weeks ago when DeGenova revealed that a bank rejected the city's application to lease 10 police vehicles at a cost of $330,000 because of the Moody's downgrade and that "the city carries debt well above the median for New York municipalities," according to an email written by Municipal Leasing Consultants, the company working out the lease deal for the fleet of police vehicles. Municipal Leasing said it has another bank that is probably willing to sign off on the vehicles.
The September Moody's report, which assigned Schenectady a "negative outlook," said the city's bond rating could go back up if it decreases its debt burden.
Mayor Gary McCarthy said the water and sewer borrowing is different from the debt Moody's criticized. The rating was based on general fund borrowing, not from the water and sewer funds, which he says are flush with cash.
The $6.9 million in water and sewer projects that the council will likely approve next week are for a range of capital improvements, like renovations to the Stockade's North Ferry Street pump station and the purchasing of backup generators for the water department.
"We pay consultants and analysts to review the market, and it's a balancing act between providing a level of service and being able to pay for it," McCarthy said.
The city ended last year $4.8 million in debt. An audit by the state comptroller's office that was released in November agreed with Moody's concerns but gave a thumbs-up to the city's efforts to generate new revenue, like working to place foreclosed properties in a tax-sheltered land bank.
But auditors also predicted that in 2016 the city will have a $12.9 million budget gap and there will be almost no fund balance to plug the hole.
McCarthy has said there will be a slight surplus shown for 2012 once an internal audit is released in May, money that the mayor says was brought in by threatening foreclosure on hundreds of delinquent taxpayers and by cutting costs in various departments. But McCarthy would not specific numbers.
***Things that make you go hummmmmm. The City is STILL in a blackhole of debt.****
The best plan for Schenectady County is to consolidate all of the municipalities into a single City-County and all of the school districts into a single Central School District. It is long overdue for the state to reduce the number of governments and taxing districts. It would be preferable for the initiative to consolidate to come from the local level. But since there has been little, if any, leadership on this issue coming from the local level, it may have to be instituted by an action of the Governor and State Legislature.
George Amedore & Christian Klueg for NYS Senate 2016 Pete Vroman for State Assembly 2016[/size][/color]
"For this is what America is all about. It is the uncrossed desert and the unclimbed ridge. It is the star that is not reached and the harvest that is sleeping in the unplowed ground." Lyndon Baines Johnson
These financials are just a big shell game. Move from pocket to another pocket. The Income Statement may look good for 2012 but the city is cash poor. It must be really pissing off the County and the School how McCarthy is tooting his horn all the while he is making it more difficult for them to budget. These interfund, general fund liabilities need to be entirely unwound. The City, County and School "loans" need to be totally unwound. There is no transparency.
Mayor Gary McCarthy said the water and sewer borrowing is different from the debt Moody's criticized. The rating was based on general fund borrowing, not from the water and sewer funds, which he says are flush with cash.
Flush with cash but needs to borrow $6.9 million more?!?!?!?!? The $6.9 million in water and sewer projects that the council will likely approve next week are for a range of capital improvements, like renovations to the Stockade's North Ferry Street pump station and the purchasing of backup generators for the water department.
Flush with cash due to these loans from the city?!?!?!!?! "The City Council decided last year to collect about $2.7 million that it had loaned those funds in 2004."
Life is tough, but it's tougher when you're stupid - John Wayne
TIP TO NEW VISITORS TO THIS FORUM - To improve your blogging pleasure it is recommended to ignore (Through editing your prefere) the posts of the following bloggers - DemocraticVoiceofReason, Scotsgod08 and Smoking Bananas. They continually go off topic, do not provide facts and make irrational remarks. If you do not believe me, this can be proven by their reputation scores or by a sampling of their posts.
What town in this county would want to get involved with a city that carries a huge amount of debt to saddle it's taxpayers with.
How will the towns be able to continue to provide fire protection when the number of volunteer fire fighters drops too low and the cost of paying for the numerous volunteer fire districts keeps going up? How will the towns be able to provide police protection when those costs keep going up? How will any of the municipalities maintain roads, parks and other infrastructure and services when those costs keep going up?
At some point, the state has to wipe away the 19th century municipal lines and replace them with new municipal lines that actually make sense for the 21st century.
George Amedore & Christian Klueg for NYS Senate 2016 Pete Vroman for State Assembly 2016[/size][/color]
"For this is what America is all about. It is the uncrossed desert and the unclimbed ridge. It is the star that is not reached and the harvest that is sleeping in the unplowed ground." Lyndon Baines Johnson
Have you ever heard of the Sheriffs Department or the State Police??? The expense for the volunteer fire depts. is due to a lot of state mandates that they must follow. How expensive do you think it would be to not only buy the same equipment as the volunteers need plus pay for the salaries and benefits of the paid fire fighters that the city has??
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