National Economy Impacts New Rochelle
The weak national economy is beginning to impact New Rochelle’s fiscal outlook. Our community’s fundamental strengths — high employment and education levels, exceptional physical assets, and well-managed public institutions — argue for long-term confidence, but in the short-term our budgetary policies must account for a deteriorating economic environment.
New Rochelle does not face a fiscal crisis of the dimensions confronting New York State, which is heavily dependent on income taxes and, therefore, experiencing dramatic shortfalls because of a shrinking bonus payments on Wall Street. Nonetheless, several local revenue sources have been negatively impacted by the economy. These include our mortgage tax and property tax receipts, which are tied to the housing market, and our investment income. On the expenditure side, New Rochelle, like all municipalities, must bear a variety of costs that rise faster than inflation, including energy expenses and labor.
We built up a healthy reserve in recent years, which will help cushion the effects of the present downturn, but drawing down our fund balance is not, by itself, a responsible or sustainable course. Therefore, the City’s management team has undertaken immediate cost-saving measures, including holding positions vacant, and we will approach our 2009 budget with an eye on ensuring long-term fiscal stability. Careful and prudent budgeting and cost-controls now can help avert a crisis later.