WPCNR CITY HALL CIRCUIT. By John F. Bailey. September 30, 2008 UPDATED 12 Noon EDT, October 1, 2008. UPDATED 1:10 PM:  The city issued a news release  Tuesday declaring the sales tax collections by the city have started well and are meeting the expectations for July, August and September (WPCNR-estimated as $12.4M)  as of last week. The news release states that  Mayor Joseph Delfino is conducting meetings with city department heads to look at “creative ways to save expenses and maintain the level of service White Plains residents are accustomed”

WPCNR asked the senior Councilpersons Rita Malmud and Council President Benjamin Boykin last week if they felt the city should be looking at budget cuts for the present year in light of dire revenue shortfalls in the state. Neither responded.  WPCNR  repeated the questions after receiving today’s release as to whether they or any other councilpersons wanted  to be in on the meetings, had positions on spending cuts. Ms. Malmud finally responded Tuesday evening and WPCNR awaits Councilman Boykin's response. As of noon, Councilman Boyking has not responded.

In today's New York Times, a front-page article notes that muncipalities across the country are having difficulties finding financing for key projects, requiring many to cut back projects, and in New York City having to offer a higher rate of return on bonds costing the municpality more in interest payments. This raises the spectre that White Plains and the White Plains City School District will be facing higher debt service on any new issues in the future. You may read the Times report at http://www.nytimes.com/2008/10/01/business/01muni.html?_r=1&adxnnl=1&oref=slogin&ref=todayspaper&adxnnlx=1222876866-4HQ0uOmCqBKyIxM0R/80uQ

In the absence of city response to questions on how city obligations to the state pension fund might be affected by the market downtown, WPCNR spoke with Robert When of the State Comptroller's Press who told WPCNR moments ago that there will not be an increase in state pension contributions for municipalities in 2009-10, however the market downturn in 2008, may be reflected in city pension fund obligations in the 2011-12 budget year -- two years down the road. The lagtime, he said is that the Comptroller's office has smoothed out contributions, establishing a floor contribution for all municipalities (4.5% of salaries) since 2003.

Ms. Malmud responded this evening  to that question by saying that the Budget and Management Committee will be meeting shortly.

Mr. Boykin the Chair of the Budget and Management Committee asked last week if he was going to convene his committee soon in light of the state revenue shortfalls widely lamented by Governor David Patterson, has not responded yet. We await Mr. Boykin, the Council President's thoughts on city financial policy.

Malmud in a statement wrote “Budget issues will be first examined by the Budget and Management Committee.  I expect them to meet shortly. The Mayor has not sent me the press release you mentioned nor informed me of any planned review of department budget cuts.”

This would indicate that the Mayor had not invited key councilpersons to give input in a bipartisan fashion, or conversely, Ms. Malmud at least, nor any other councilperson had expressed concern about city spending to the Mayor.

WPCNR asked Ms. Malmud if she had any policy suggestions on how the city should approach the police, fire, teamster and Civil Service Employees Union contracts that expire this June.  

Malmud  wrote, “According to NYS law, only the Mayor can negotiate such settlements.  The Mayor has not chosen to consult with us on this matter.”

WPCNR asked Ms. Malmud about the possibility of the city financing the stalled LCOR affordable housing project at 55 Bank Street or borrowing for city municipal improvements now as possibly being attractive to the market, Malmud  issued this comment:

 “The whole national economy and lending framework is in a major state of flux now.  Although White Plains has an excellent credit history, we will be impacted by national economic and lending issues. In another week or two, we should have a better idea of what direction those national issues are heading and the likely impact on us.”

Project Money Issues

Ms. Malmud asked about  the Horton's Mill request for the city to cover their cost overruns since the county has refused to do so said  did not indicate how the council feeling on the Horton’s Mill request, though at the time, the council acted reluctant to pay the $581,140 dollars.

Regarding the stymied LCOR project, Malmud rejected the notion that LCOR was going to ask the Urban Renewal Agency to finance the project, a $320 Million project, which the council approved being built in stages last month

She explained, “LCOR - To my knowledge, LCOR has not asked the City to finance their project and have stated that they already have financing in place for 55 Bank Street.”

On several sensitive budget projects, Ms. Malmud wrote these comments:

“ Mortgage tax revenue - has already been estimated for this current fiscal year ($4.1M).  We have many months to go before we can determine whether that is an accurate estimate.”

"Pension fund contributions "demanded by the state" - is entirely up to the state and White Plains will respond as is "demanded."

WPCNR since speaking with Ms. Malmud, has learned from the State Comptroller's Office that the city pension fund contributon for 2009-2010 is actually down, a bit of good news, and will not be affected or reflect stock market declines of 2008 until the city's 2011-2012 Budget year.

Asked to clarify whether she wanted the city to cut, had suggestions as to how to cut, or  was leaving all spending adjustments to the Mayor, and any thoughts on what  general objectives (length, benefit adjustments, increase targets)  the union contracts ($100 Million of the $161.5 City budget this year) might achieve, Ms. Malmud declined to comment.

WPCNR is waiting for the city to comment on the mortgage tax trend, the effects of the current credit markets on city municipal offerings,  and of course, WPCNR awaits Councilman Boykin’s take on what matters he sees the Budget and Management Committee taking up in regards to current budget cuts,  when his committee is going to meet, and of course the looming 2009-2010 Budget.

In today's New York Times, a front-page article notes that muncipalities across the country are having difficulties finding financing for key projects, requiring many to cut back projects, and in New York City having to offer a higher rate of return on bonds costing the municpality more in interest payments. This raises the spectre that White Plains and the White Plains City School District will be facing higher debt service on any new issues in the future. You may read the Times report at http://www.nytimes.com/2008/10/01/business/01muni.html?_r=1&adxnnl=1&oref=slogin&ref=todayspaper&adxnnlx=1222876866-4HQ0uOmCqBKyIxM0R/80uQ

Decade of Growth

It pointed out that the property tax base has grown with 7,000 new residents, most of whom are condominium owners. City Hall notes the residential tax base has been increased and the commercial tax base has increased more. The office vacancy rate has declined from 34% to the point where Robert Weisz of the RGW Group is planning to build the first new office building in the city in 20 years (at 1133 Westchester Avenue.)

The release reports real value property in the city, residential and commercial has grown from an estimated $4 Billion in 1999 to $11 Billion as of July 1. The city blames “the bizarre formula” of the New York Equalization Rate for the city being “inundated” with commercial tax reductions.

Retail Growth the news release reports, brought about by the Mayor’s Economic Development Plans has created a “boom in the retail base, making it much more diverse.” The report says “vacant stores are filled with a thriving business that continues to do well. As late as last week we are being told that our sales tax numbers are still holding steady.”

Sales Tax Solid

WPCNR notes that with the ¼% increase in the sales tax enacted, that would mean the first quarter is projected to be about $13 Million, when the current 5.3% inflation rate is applied and the extra ¼% sales tax increae is figured in. (Last year the city received $10,917,000 in the first quarter with a 2 cent sales tax which was increased to 2-1/4 cents.)

 Now if the city is equaling that $10.9 Million pace of last year,  then the economy may be hurting the city sales tax handle. The rationale for this being the city should get a 5% lift from inflation, plus a 12% lift from the extra ¼% sales tax  as well as the sales tax, if sales are steady.

The city commented on the failure to get more in sales tax than Albany than it did, writing “in order to relieve property tax payers of any additional burdens the Mayor proposed a half percent sales tax increase. This was cut to a quarter percent by Assemblyman Adam Bradley and the Democratic Common Council,” the release said.

The release also noted, that the Mayor “voted against this year’s budget because of the Council’s cuts to the reserve for financing. This is the very fund the city relies on during turbulent times.”