ITHACA, N.Y. — The City of Ithaca Common Council held a special budget meeting during its general council meeting last week to discuss the city’s finances in light of the COVID-19 pandemic, as well as projections for the 2021 budget.
The agenda for August’s meeting can be found here.
As previously announced, the city has projected a loss between $4 million and $13 million to the 2020 budget because of the economic impacts of the COVID-19 pandemic, which led the city to make a budget adjustment of $5.4 million at the end of April. City Controller Steven Thayer said at the meeting that the city has not seen a negative impact on the upper end of the range and is continuing to trend toward the lower end of the scale. However, sales tax collection can change drastically, which would have a further negative impact on this year’s budget.
Still, Thayer said that he is not recommending any further cuts right now, but may do so in the future if state aid comes in lower than anticipated.
The city has yet to receive state aid because the state is waiting to see how much aid the federal government provides to support municipalities. Thayer said he is expecting at least a 20 percent cut in state aid, which is about a $522,00 reduction in aid, and he anticipates further cuts in aid next year as well. The normal amount of aid to the city from the state is about $2.6 million. Additionally, the enhanced unemployment benefit of $600 per week ended in late July and it is unclear if they will be renewed, which has impacted the approximately 40 furloughed city employees.
“It’s looking less likely that something is going to happen, at least in the short term, maybe down the line they’ll come to an agreement,” he said. “But at this point we have no agreement on federal aid and as a result, our state aid is in a holding pattern.”
The number of furloughed employees is down from the 85 employees who were furloughed earlier in the pandemic. Now, about 41 are back on payroll and more are reinstated. The net savings from furloughing these employees has been about $771,000. Additionally, the city is looking to save on health insurance by moving to less expensive plans for city employees.
Thayer said that with college students anticipated to return to Ithaca, the city’s economy will likely improve with increased commerce. Still, some businesses are limiting their operations and some have closed down permanently due to the pandemic.
“The recovery is still a question mark for us, what kind of recovery will we see going forward believing that spending habits have changed a bit,” he said. “Consumers are very cautious and businesses are having difficulty surviving through this lower earning capacity, so these are difficult times even though we’re in the last phase of this.”
Compared to the same period in 2019, the collected sales tax is 15.5% lower this year, about a $1,029,000 reduction. Thayer said that the year started off well, which accounts for the $6,530,000 million collected to date. However, in the second quarter, sales tax collection went down 32% compared to last year, which is about $1,228,000 less. The most current payment is about 32.5% lower compared to this time last year. Since March, sales tax has been down about $1,242,000. For the rest of the year, Thayer said he is estimating a third-quarter sales tax down about 20 percent and a fourth-quarter sales tax around 17 percent lower than the previous year. There is a potential sales tax reduction of about $2,700,000, but he hopes that the estimates are high and the actual collections come in better.
“We believe that we have seen our lowest point in terms of collections are concerned for sales tax,” Thayer said. “In terms of moving forward, things will still be lower than our budget for sure, but we do think they’ll be a little better than they have been in the past few months.”
Since parking revenue was good last year, at almost $3.4 million, the city budgeted over $3 million for parking revenue in 2020. Today, about $923,000 has been collected, which is off-budget by about $785,000. Since paid parking was suspended during the pandemic in March and is now only being charged at a 50 cent rate rather than $1.50, the city has seen a significant hit.
Fines revenues went down about $205,000 due to the courts being closed.
Youth activity revenues are also lower, but are offset but the programming savings that came from youth service reductions. A number of recent donations have allowed these programs to start again this summer, including the Alex Haley Pool and the Ithaca Youth Bureau.
To date, there is about 6.13 percent of uncollected taxes, or about $1.6 million. The normal collection rate is around 1 to 1.5 percent, but Thayer said he is not too concerned about this number because of further collections for the rest of the year.
The large positive from the budget was building department revenue. Fees other than permits are down $180,00 because of staff on furloughs leading to no inspections, but Thayer said he expects this revenue source to rebound in the next few months because of staff getting off furlough. Permits have been up, and the city collected $1.7 million to date, or 136% of its budget for 2020, which was $1,258,000, surpassing it by about $461,000. Thayer said he anticipates that building activity for 2021 may be up as well, which is positive since building projects are typically difficult to project due to timings of projects and other elements out of the city’s control.
“It appears that COVID is not stopping local development, which obviously is good news so this might be an area that could save us from major financial issues in the future,” he said.
The solid waste program lost about $77,000 in collections, the water fund is $113,000 ahead of last year’s activity and the sewer fund is about $50,000 ahead of last year’s activity, just short of the projected budget.
The unassigned fund — meaning money that is in the general fund and is not committed to other uses — of the budget is $5.6 million, which is 9.5 percent of the operations budget. Thayer said that this is not a large amount of money if the city did need to dip into the fund.
Departments in the city have received budget guidelines and were given two scenarios: a budget reduction of 3 percent or 15 percent. Thayer said they were given such a large range because it is difficult to make predictions in this environment.
“Most departments could live with a 3 percent cut, but 15 percent would be very painful,” he said.
Looking forward to 2021, the taxable assessment is $2,000,228,000, which is a 7.29% increase in taxable assessments from 2020. The allowable growth levy factor is the current consumer price index, which is 1.56 percent. The tax base growth factor is lower than it has been as 0.19 percent, and so the cap number is starting out lower than the city would want, but those numbers are given by the state. Thayer has not yet calculated the cap number for this year, but said that it will be lower than last year’s number, 3.51%.
Alderperson Deb Mohlenhoff said that based on the budget feedback survey that was sent out to constituents, some suggested a fee structure for entrance to locations like Stewart Park, although this would cause a problem in terms of extra staffing.
Over 70 people submitted public comments to the meeting, with the majority of them being against the implementation of 5G in the city, although that topic was not on this month’s agenda. The City Administration Committee will discuss 5G implementation at its August meeting.
The council later had a discussion about public comments generally, which has changed to individuals submitting written comments that are read by city clerk Julie Conley Holcomb since the council had to pivot to remote meetings.
“This environment is not our favorite environment,” Mohelnhoff said. “This pandemic has significantly changed how we have been able to do business, how government has been able to function, and with the level of people that have been on furlough in the city, it has been really challenging. We’re trying to provide a better way for people to provide input, but acting under constraints, not trying to censor anyone.”
The council discussed three possibilities for individuals to better submit public comments: have people register ahead of time to participate in the Zoom to share their comment in real time, hold a separate meeting for public comments separate from the monthly meeting, or to allow people to send in videos with their comment ahead of the meeting.
“I think since we’ve moved to Zoom and YouTube, it’s way easier for the public to watch our meetings,” alderperson Donna Fleming said. “It’s easier for us to participate in meetings you’re not officially a member of.”
The majority of the alderpersons favored the first option, citing the need for individuals to verbally share their opinions to the council. However, some raised concerns regarding efficiency and time, as well as the technological capabilities of constituents. Mohelnhoff said they will work to come up with a better solution for the next meeting.
The council voted on a local law to establish the Energy Improvement Corporation (EIC) Open C-PACE (Property Assessed Clean Energy) program in the city, as well as to authorize a municipal agreement with the EIC. The program provides a fixed-rate, long-term financing option for property owners and incentivizes developers to use more renewable energy. Both votes passed nine to one, with alderperson Cynthia Brock dissenting because she said she believes it is too restrictive of a program for property owners.
The council unanimously approved funding for a replacement of a traffic signal at the intersections of State and Stewart, Cayuga and Lincoln and Cayuga and Tompkins.
The council also discussed the future of the Newman Golf Course, which is closed this summer due to the pandemic, but is still being maintained by the city. Newman is running a deficit due to the revenue not covering the cost to run it. Many council members did not see what the course would turn into if it was sold, given that it is classified as a parkland and if it were to be developed, another equivalent 70 acres of parkland would need to be created in the city to replace it.
CORRECTION: This story has been updated to clarify that the City Administration Committee will be discussing 5G implementation at its August meeting. An earlier version said that the committee would NOT be discussing it.