Budget adopted, taxes upped .99 %

The Rye City Council adopted a $49.3 million operating budget for 2014 at its Dec. 18 meeting that carries a 0.99 percent property tax rate increase. For the average household in Rye, which is valued at $1.4 million, this comes to an additional $36.13 in property taxes per the new rate. File photo

The Rye City Council adopted a $49.3 million operating budget for 2014 at its Dec. 18 meeting that carries a 0.99 percent property tax rate increase. For the average household in Rye, which is valued at $1.4 million, this comes to an additional $36.13 in property taxes per the new rate. File photo

By LIZ BUTTON
The Rye City Council has adopted a 2014 operating budget of $49.3 million, voting to lower the property tax rate increase from 1.99 percent to 0.99 percent at the eleventh hour by raising projected mortgage tax revenue.

Next year’s adopted budget also allocates $1 million for capital projects in the city, down from the proposed $2 million before the council agreed to wait on police and courthouse improvements. Adopted at the Dec. 18 council meeting, the budget’s property tax rate comes out to $150.38 per $1,000 of assessed valuation. For the average household in Rye valued at $1.425 million, this will be an additional $36.13 per year in property taxes.

For Mayor Douglas French, a Republican, this is his last budget before he leaves office. All budgets during his term were created in an effort to stem the growing rate of property taxes, a key platform during his 2009 run for the city’s top elected seat.

Under French’s watch, taxes rose by approximately 8 percent during his four-year administration. In 2011, the tax rate increase was 0.97 percent, in 2012 the property tax rate increase was 2.92 percent, in 2013 the tax rate was 2.7 percent.

Next year’s adopted budget falls under the state’s 2 percent cap for property tax levy increases by $323,144. This year, the state has calculated the cap at 1.66 percent due to the consumer price index rate running below 2 percent. The reformulated cap applies to all municipalities, like Rye, in which the next fiscal year begins Jan. 1, 2014.

The property tax levy will increase to $20,813,446 in 2014, which amounts to $250,206 more than the 2013 tax levy.

The council voted to approve the budget after a final, last-minute adjustment in order to get the tax rate increase down below 1 percent, according to Acting City Comptroller Joe Fazzino. The council discussed taking from the city’s $6.2 million unassigned fund balance, equal to 18.6 percent of the bud-get’s total appropriations, to achieve this, but decided against that move to keep the city’s rainy day fund strong.

“[The council] kind of went back and forth on getting it to zero [percent] based on where our fund balance was and what a healthy fund balance should be,” Fazzino said. “First, they were trying to lower the tax rate using fund balance, but decided to use the mortgage tax revenues instead.”

To achieve this, Fazzino presented the option to look at projected revenues other than property taxes, specifically upping the projected mortgage tax revenues by $206,000, putting the projected amount at $1.6 million.

The mortgage tax delivered $975,000 better than budgeted in 2013. Likewise, this causes the property tax levy to lower by $206,000, down to $20,813,446.

Republican Councilman Peter Jovanovich initially expressed doubts about this option, arguing that predicting revenues from the mortgage tax is always difficult due to the inherent volatility of the real estate market.

“I would much prefer this council raise the estimate for the mortgage tax than it ever touch the fund balance because we actually have a yawning deficit in this city which is disinvestment in our infrastructure,” he said.

Ultimately, Jovanovich said he would agree to vote for the mortgage tax change, but added the city should have devoted more money in the 2014 budget for sidewalk and road maintenance and repairs. In the end, the council decided against altering the amount devoted to sidewalk and road repairs.

In the end, the council, with the exception of Republican Councilwoman Julie Killian, voted to approve the projected mortgage tax revenue increase that brought the tax levy down to below 1 percent: A super majority, or five votes were needed to pass the amendment. In addition to the mortgage tax, a number of city revenue streams performed better than budgeted in 2013. Revenue from building permits and the sales tax performed better than expected this year and help offset expenses.

The council needed only four votes to officially pass the 2014 budget: Killian abstained from the vote while outgoing Democratic Councilwoman Cath-erine Parker voted against the budget. Parker will vacate her City Council seat after taking office as a Westchester County legislator in January.

In all, the proposed budget projects $33.6 million worth of general fund spending, including $1 million in capital improvements.

While the earliest version of City Manager Scott Pickup’s proposed budget allocated $2 million for capital projects, $1.25 of which would go to fix the outdated police and courthouse joint facility on McCullough Place, the council amended the budget at the last meeting to devote $250,000 of that money to make improvements to the train station. The remaining $1 million that also would have been used for the police/courthouse improvements, was put back in the unassigned fund balance. The tax rate increase dropped from 2.52 to 1.99% after this decision by the council at its Nov. 25 meeting. It will stay there until the city manager obtains an engineering estimate of the project costs.

The remaining $750,000 left over from the original $2 million is going from the city’s capital projects fund to various projects like a $50,000 Blind Brook study to assess the possible need to repair retaining walls damaged during the infrastructure-devastating floods of April 2007.

Other capital projects provided for in the city budget include $100,000 for sidewalk repairs, another $100,000 for sewer improvements, and $50,000 for a study on replacing the Rye Nature Center Bridge.

The city will also spend $100,000 for a study to revitalize the city’s master plan, which was last revised in 1986.

In the budget, personnel costs are expected to increase by $997,050 or 4.7 percent over the current budget. They rose, in part, because all of the city’s union contracts will expire at the end of 2013.

Employee health insurance expenses will rise by $306,000, or 14 percent, from the current budget. The adopted budget also calls for increase in salaries for Rye City employees, which are up by $582,000 or 4.8 percent.

This year, the city has 146 staff positions, and the 2014 budget calls for 149 full-time equivalent positions. The city’s budget includes adding an assistant building inspector position for $70,000 to $80,000 and spending another $61,000 to hire an additional police officer to fill in for an injured longtime member of the force.

Contact: liz@hometwn.com