2009-07-23 / Front Page

Town to feel pinch of reduced state aid

By Adrienne Downing

State budget decisions have had a trickle-down effect on local cities and towns and Jamestown is no exception.

Jamestown will receive $130,000 less this year in general state aid, the result of a state legislature reduction in revenue sharing from income and sales taxes to cities and towns.

Several years ago, the state committed to provide cities and towns with a percentage of state sales and income taxes to ease the burden on local taxpayers. The state’s goal was to reach 3.5 percent in revenue sharing.

“The state never even came close to reaching that goal and now they are eliminating the program altogether to shave $55 million from state spending,” Town Administrator Bruce Keiser said.

To replace the state funds in the town budget would require adding six cents to the tax rate, Keiser said, which equates to $28 for the average tax payer.

Keiser said $80,000 of the $130,000 had already been appropriated in the budget.

Each fiscal year, the town adds $150,000 to the fund balance. “The fund balance is basically a savings account for the town that creditors use to determine bond ratings,” Keiser said.

The loss of the state funds will make it more difficult for the town to add money to the fund balance this year, Keiser said.

The fund balance stands at $2.95 million, or 14.5 percent of the operating budget. “Creditors like to see that at 15 percent, so we are very close,” Keiser said.

The town was at 18 percent, or $3.85 million, before drawing $900,000 from the fund balance to give Jamestown taxpayers a zero percent tax increase this year.

“We had to make adjustments this year to deal with the economy and changes at the state level,” Keiser said. “We are fortunate that we have a reserve that we could use without jeopardizing our standing and to help us keep taxes low.”

Keiser said town officials felt that using the reserve, which exceeded the standard that credit agencies set, to pay off debt was in the best interest of the town and taxpayers. “Think of it like paying off your mortgage. We were able to reduce our annual debt service by $280,000 over four years,” he said.

The town was paying 4 to 4.5 percent interest on the bonds, but the fund balance was earning less than 1 percent interest.

The town saw a drop of nearly $50,000 in investment income, as well as a $125,000 combined loss between real estate transfer taxes and building permit fees, which needed to be replaced, Keiser said.

There is an upside for the town, Keiser said. “We are fortunate in a way because next year, we do not have to concern ourselves about how much state funding we are going to get before we set our budget. We have been weaned off our state dependency because we no longer receive any state aid.”

Car tax

The only pending legislation that could impact Jamestown fiscally next year is the car tax exemption, Keiser said.

“Currently, the town exempts the first $6,000 in value of a vehicle and the state provides reimbursement for that,” Keiser said.

If the state legislature repeals the exemption, vehicles will be taxed at full value, an expense that would be passed on to the taxpayer.

The town has a history of responsible fiscal management, Keiser said, so the impact felt by other cities and towns in the state is blunted in Jamestown.

“Over 60 percent of town employees pay a 20 percent co-pay on their insurance costs and all town employees do not receive health care as part of their retirement benefits,” Keiser said.

The health insurance co-pay for town employees has been the same for 13 years, Keiser said. “Other towns in the state are trying to catch up to a standard that Jamestown has had for years.”

Although it will be less difficult to build a budget since the town does not have to wait on state aid numbers, Jamestown will have to look for cost-saving measures in the next fiscal year.

“Although it was good to have a fallback in the fund balance this year, that will not be the case next year, so everyone will have to come to the table prepared to work because I don’t see this going away overnight,” Keiser said.

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