Erie County towns are feeling a financial squeeze from the Covid-19 outbreak as they prepare their 2021 budgets.
Some communities saw sharp drops in sales tax, mortgage recording tax and recreation fee revenue because of the pandemic and, while those categories are starting to rebound, they fear further losses in state aid next year.
In response, two towns – Amherst and Orchard Park – are proposing steep property tax increases for next year to help fill their budget gaps. Towns also are borrowing, spending down their surpluses, leaving jobs unfilled and trimming spending on nonpersonnel items.
This all makes for a challenging 2021 budget season.
Here’s a roundup of the proposed budgets for some of Erie County’s largest suburbs. Town officials will review their spending plans in the coming weeks and their town boards must approve the budgets in November.
It’s important to note town taxes are just one component of a property owner’s tax bill and, generally speaking, school taxes are the largest piece.
The tax levy, the amount the town collects in property taxes, would rise by 8.54% to $88.7 million under Supervisor Brian J. Kulpa’s preliminary 2021 budget.
The tax rate would rise by 7.6%, to $8.33 per $1,000 of assessed value. The owner of a home assessed at $230,000, the average value in Amherst, would pay $1,916 in town property taxes in 2021, an increase of about $136 from this year.
“It’s terrible,” Kulpa said. “I don’t want to have to do that.”
The town projects a $6 million deficit for 2020 as sales tax revenue is likely to come in $2 million or more below expectations and recreation fees, interest payments, court fees and other revenues also are off by millions of dollars, Kulpa said.
Amherst is taking numerous steps to close this hole, including imposing a hiring freeze and a cap on overtime; keeping positions open following employee retirements; laying off a handful of employees, primarily in the part-time ranks; and cutting spending on training, office supplies and other nonpersonnel expenses.
The town is not dipping into reserves and, in fact, $715,000 would be applied to the fund balance to make sure that account is equal to 10% of the proposed $140.9 million as required under town policy, Kulpa said.
And the 2021 budget also includes $1 million in extra personnel costs for contractual raises.
The budget assumes Congress and the White House will not reach agreement on a stimulus package that provides Covid-19 relief aid to municipalities. If that does happen between now and Nov. 9, Kulpa said, the budget could be amended and the tax increase eased.
The town projects it will take in $1.25 million less in 2021 because of ongoing financial problems driven by the pandemic, said Supervisor Diane Benczkowski. This includes lower sales tax, interest income, court fees and other revenue sources.
Cheektowaga tried to offset this lost revenue as much as possible with spending cuts, she said. Benczkowski said the town is not including salary increases for full-time workers and has reduced payroll spending by $350,000 thanks in large part to “significant” cuts to part-time and seasonal staffing.
But other expenses are rising next year, including an extra $1 million the town must pay into the state retirement system for municipal employees.
The town’s $93.7 million preliminary 2021 budget raises spending by $809,000, just under 1%, from 2020. The tax levy increase of 2.3% is within the state tax cap.
The total property tax bill for the owner of an average home assessed at $100,000 would rise by 3.06%, or $51.41, to $1,729.
“I work to ensure that the town is run in a fiscally responsible manner each and every day,” Benczkowski said in her budget message.
In contrast, Hamburg Supervisor James Shaw has proposed a 2021 budget that keeps the tax rate flat while lowering the tax levy slightly.
The tax levy of $28.6 million is $106,000, or 0.37%, lower than the 2020 tax levy. Someone who owns a home in the town assessed at $100,000 would continue to pay $1,107 in town and highway property taxes, a figure that doesn’t include special district taxes.
The town is expecting lower video lottery terminal revenue and state aid in 2021, though it is expecting sales tax revenue will continue to rebound and mortgage tax revenue has held steady, Shaw said.
The town would spend $2.1 million in the 2021 budget from its various fund balances, leaving it with $9.8 million.
The town is cutting spending by $1 million for 2021, largely through a hiring freeze imposed in July, restrictions on buying costly new equipment and vehicles, cutting back on overtime, reducing employee travel and nonpersonnel costs. And only union employees where contracts require raises will receive those pay increases, Shaw said.
“The people in the community are suffering, and we’ve got to tighten our belts, too,” he said.
For now, Orchard Park is proposing the steepest rise in its tax levy among towns included in this review, a 9.89% increase to $18.5 million.
The tax rate would rise nearly 10.2% under Supervisor Patrick Keem’s budget. The owner of an average home in the town, with an assessed value of $116,250, would pay $956.78 in property taxes next year, an increase of $88.18.
The town’s revenue for 2020 is down $1.3 million this year because of the economic effects of the pandemic, Keem said, with nearly half of that due to a decline in sales tax revenue.
Payments into the state retirement system on behalf of town employees, and health care costs for town workers, are among the expenses expected to rise next year, Keem said. The town has not imposed any layoffs but is leaving some positions unfilled and will tap about $200,000 from its reserve fund.
Keem, who is stepping down this week to better care for his chronically ill wife, said he hopes the tax increase can be lowered by half through further budget changes.
Spending would rise by 0.1%, or less than $100,000, in the town’s $102.9 million proposed budget, with Supervisor Joseph Emminger citing employee raises, slightly higher employee health insurance expenses and rising state pension costs for workers.
The town saved money when it furloughed between 400 and 500 part-time workers in March and saw lower-than-expected utility costs, Emminger said.
The town is projecting a 5.7% decline in nonproperty-tax revenue next year and would apply an additional $2.5 million from its fund balance to make up the difference.
The town budgets conservatively, however, and if sales tax and other revenue sources rebound better in 2021 some of that money would return to the fund balance, Emminger said. The tax levy in 2021 would rise by 0.45%, to $48.7 million.
The town sets different general and highway fund tax rates for residential and nonresidential properties.
That combined tax rate would rise by 1.07%, to $17.56 per $1,000 of assessed value, for homeowners. However, Emminger said most homeowners will see a decrease in their overall property tax bills because the lighting district tax, among other special district taxes, is expected to fall in 2021.
The owner of an average home assessed at $50,000 would pay $1,354.79, or $4.15 less than in 2020.
“I believe this budget not only addresses the needs and concerns of our residents and business owners, but it also takes into consideration the many challenges we face together,” Emminger said in his budget message.
Property taxes remain flat as well in West Seneca. The tax levy would rise by 0.67%, to $26.9 million, but the tax rate would stay the same in 2021 under Supervisor Gary Dickson’s proposed budget.
The owner of a home with an average assessed value of $60,000 would continue to pay about $1,313 in town property taxes next year.
To offset lost revenue from the Covid-19 pandemic, the town will not immediately replace 13 full-time workers who retired and is cutting back part-time employment as well, Dickson said.
The town is not dipping into its reserves – “They are grossly underfunded,” Dickson said – but it does plan to borrow $600,000 on a short-term basis to help make up the shortfall.
Town general fund and highway taxes have risen 20% over the past five years, Dickson said, and he doesn’t want to further burden West Seneca property owners.
Published by The Buffalo News