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Budget Committee Reviews Sobering Financial News

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Budget Committee Reviews Sobering Financial News

Monday, February 22, 2010
The Legislature's Budget and Capital Committee today recommended an adjustment to the 2010 County budget that would decrease the funding received by programs and agencies under the County's municipal sales tax agreement with the City of Ithaca. The recommended decrease of more than $46,000 reflects 2009 sales tax collections within the City that came in nearly 5% below the revenue budgeted.

Finance Director David Squires also reported that County sales tax receipts for January came in more than 3% below the same period last year--' receipts within the City of Ithaca holding nearly steady and those outside the City down by more than 6%. While the January figures amount to only an initial indicator, County Administrator Joe Mareane cautioned that, with a 3% increase in sales tax revenue projected in the 2010 budget, the situation definitely amounts to a cause for concern.

County Administration presented preliminary information provided by County departments indicating that the Governor's proposed budget, if enacted, could potentially reduce state reimbursements to county programs by nearly $900,000. Suggested impacts include reductions which would affect a number of social services programs--'both those offered by the department itself and through community agencies. The departments of Health, Mental Health, Assessment, and District Attorney also anticipate reductions, as do the Office for the Aging, and the Assigned Counsel program. Administrator Mareane told the committee County leaders will be contacting the County's legislative delegation to express concern about the proposed reductions, many of which the New York State Association of Counties already opposes.

Administrator Mareane presented a projection of the County's future employee pension costs. Because of significant investment losses in the State retirement fund, pension costs are expected to more than double over the next five years. Mareane also discussed how those costs would be affected by a State proposal that would allow a portion of the expense to be financed over a ten-year period. While the amortization plan proposed by the State would result in lower initial costs, Mareane characterized the option as "short-term gain but long-term pain." He projected the County paying about $2 million less between now and 2014 if it were to accept the amortization option; however because of interest costs the long-term cost would be about $8.2 million greater. Mareane said consideration of which option to pursue will require very careful thought over the next few months. In response to committee questions Finance Director Squires advised that, while the County, with its strong bond rating and recent experience, would be likely able to borrow at a much lower interest rate than the 8% the State is expected to charge, it is doubtful that option would be permitted under local finance law.