On December 29th, the Council adopted the City’s 2004 budget. As you know from several previous updates, New Rochelle, like many other communities, has wrestled with serious fiscal challenges for a number years. In response, we have cut services, drawn down our savings account, deferred hirings, scaled back out capital investment program, and pleaded for additional State aid. Despite these actions and because of a huge $5.7 million mandated payment to the New York State retirement system, the City entered this budget cycle with a projected deficit for next year of some $9 million.
In order to meet this challenge, the City Manager proposed and the City Council accepted a program of additional revenues designed to close the 2004 budget gap and place the City on firmer financial footing in the years to come. This program includes a 13.9% increase in City property taxes, which will be devoted almost exclusively to the above-referenced retirement costs, and a $165 per household fee for sanitation services.
These figures should be put in context. Because the City accounts for only about 1/6 of every property tax bill, the total increase in the average annual bill (new fee included) will be approximately 3.8%. Moreover, New Rochelle has the lowest City tax rate of the five urbanized communities of Westchester, each of which has raised taxes far more than New Rochelle in recent years.
Nonetheless, this is a difficult and painful budget. The sanitation fee is particularly objectionable, because it is regressive and, unlike property taxes, not tax-deductible, but the more traditional option of a higher property tax rate was denied us under the tax cap imposed by the State government.
I reluctantly supported the 2004 budget because I was convinced that these steps were absolutely necessary to avert very deep cuts in essential core services. I was also convinced that no realistic alternatives existed to the new revenues referenced above. Certainly, none were presented during the course of our deliberations. If there is a silver lining, it is perhaps that the City can look forward now to some relief from the fiscal crunch that has dominated our public debates and compromised our capacity to improve the quality of life in New Rochelle.
One additional note: on December 22, we were pleased to receive word of a $1 million grant from the State government. This is good news, but because it is one-time-only assistance rather than a recurring revenue source, this grant does not fundamentally change our budget calculations. We have prudently chosen to utilize these funds for urgently-needed capital investments and to augment our uncomfortably small contingency account.