Before I considered running for City Council, I had very little idea how much our city spends, or from where the money comes.
I’ve learned a bit since then, and I wanted to take this opportunity to share some surprising things I’ve learned about our city’s budget. These comments relate to the city’s general fund.
The city receives the smallest percentage of our property tax dollars. Each property tax bill gets divided among three recipients; the City of Rye gets 16 percent; Westchester County gets 23 percent and the Rye City School District gets 61 percent.
As an example, from a $30,000 tax bill, the City of Rye receives $4,800.
The city’s revenue comes from two main sources, property taxes and discretionary revenue. Property taxes, or the tax levy, contributed $21 million, or 62 percent, to the city’s 2013 revenue of $34 million. The remaining $13 million of the city’s 2013 revenue came from discretionary sources, including sales and use taxes, mortgage tax revenue and building permit revenue.
Because this revenue is not determined by property assessments, the city projects how much it expects to receive from these discretionary sources in any given year in order to determine how much money is available for spending. These discretionary revenue sources can vary widely from year to year and are, at least in part, driven by the overall economy and interest rates.
What keeps me up at night is, in recent years, Rye’s discretionary revenue has been sufficient to fund projects such as sidewalk repair and road resurfacing. In a year in which the economy contracts and/or interest rates rise, discretionary revenue, much of which is tied to real estate development, may decrease, making it difficult for the city to do much more than pay its employees.
Employee salaries and benefits represented two-thirds of Rye’s 2013 expenses. Rye spent $22 million on salaries and benefits for the city’s employees. This includes all of the employees who help to maintain the quality of life in Rye by keeping our town safe, clean and running smoothly.
The majority of Rye’s remaining spending goes toward infrastructure and maintenance, including road and sidewalk repair, equipment, material and supplies, snow removal and the library.
Our roads aren’t perfect because fixing them is surprisingly expensive. Maintaining the quality of Rye’s roads is a priority and a central component of pedestrian safety that Councilman McCartney recently addressed in this column. Paving the roads is much, much more expensive than I realized. Rye’s 2013 transportation related costs totaled $3.2 million, or 30 percent of our non-employee related expenses. This includes street maintenance and lighting, as well as snow removal and engineering.
The council recently approved a request for $486,000 for street resurfacing in 2014, the majority of which will go toward repaving the roughly one-mile stretch on Locust Avenue between Theodore Fremd Avenue and North Street.
There are limits on how much we can reserve. Setting aside funds in prosperous years protects us in down years, just as a private homeowner might do. At the end of 2013, our unreserved and undesignated fund balance was $6 million, roughly 18 percent of our 2013 expenses. This is considered a good measure of liquidity, and it is at the high end of what is considered good practice for a municipality to reserve.
Although this might seem like a lot, it would be insufficient to cover current spending levels during consecutive down years.