Mayor Delivers Proposed Budget Message

OSWEGO, NY – Mayor Randy Bateman delivered his 2010 operating budget message to the council Monday night.

“As we all know, the country is in dire economic straits. But, the good news is that we may be on the road to recovery,” the mayor said.

During preparation of the city of Oswego 2010 operating budget, the city faced a shortfall of $5,070,041 between department requests and projected revenues, according to the mayor.

“We immediately began looking at department budgets to see where cuts could be made before we looked to raise revenues,” Bateman said.  “I instructed department heads to cut everything possible from their budgets.”

After department revisions, the Budget Commission going through the budget line by line, cutting everything to a minimum and realistically adjusting a few revenue lines – the Port City still faced a shortfall of $2,070,901 to maintain the current tax rate of $8.98 per thousand.

After factoring in the maximum property tax rate increase of 5 percent, which equated to $335,455, the city was still in the hole to the tune of $1,735,446.

After scrutinizing the budget for things that stood out, one line was very apparent, the mayor said.

The Sewer Fund expenses for 2010 were $4,252,908. The projected revenues for the Sewer Fund were just $1,240,000.

There was a Sewer Fund balance transfer of $500,000, which left the property taxpayers of the city to subsidize the Sewer Fund in the amount of $2,512,908, according to the mayor’s figures.

“So, in effect, the people who use our sewage treatment plants and don’t pay property taxes, such as schools, churches, government buildings and other tax exempt properties, are being subsidized that do pay property taxes in the amount of $2,512,908. This is blatantly unfair for the people that do pay property taxes,” he said.

To reiterate, if there were a property tax increase to help offset this subsidy to the Sewer Fund, only the property tax payers would pay and the tax exempt properties wouldn’t, he pointed out.

City officials are currently in discussion with the Environmental Protection Agency, the NYS State Department of Environmental Conservation and the US Department of Justice over an imminent consent order to separate and upgrade the city’s west side sewer system infrastructure.

“You may recall that some years ago the city faced a similar consent order to separate and upgrade our east side sewer system infrastructure. This was accomplished by a Sewer Separation Project and upgrades to the Eastside Sewage Treatment Plant,” the mayor said.

During the initial discussions with the EPA, DEC, and DOJ, they stressed that the Sewer Fund isn’t self-sufficient. It doesn’t have enough revenue to offset the expenses to operate without a subsidy from the General Fund of $2,512,908.

According to the mayor, the DEC, EPA and DOJ “strongly suggested that this fund should become self-sufficient so that the revenue into the Sewer Fund would be sufficient to pay for its expenses.”

In order to accomplish this, the Sewer Fund needs to increase revenues to cover the $4,252,908 sewer budget.

The EPA, DEC and DOJ strongly recommended that as part of the consent order, which is really a mandate, the Sewer Fund revenues should be increased  by three or four times their current level, Bateman said.

“Tripling the sewer fee would result in an estimated additional $1,208,880. It would be paid by everyone, and not just the property tax payers,” he said.

What does this mean for the average flat rate user?

Currently, the flat rate user pays $91 per quarter for water ($65) and sewer ($26).

The Water Fund is essentially self-sufficient and doesn’t require a transfer from the General Fund for 2010.

So, that leaves just the Sewer Fund.

If the Sewer Fund rates were tripled for the flat rate user, they would go from $26 per quarter to $78 per quarter.

The flat rate user total would increase from $91 per quarter for both water and sewer to $143.

“This equates to an extra 57 cents per day,” the mayor noted.

The metered rates would be increased accordingly, he added.

The remainder of the shortfall would be made up from a transfer from the sewer and general funds.

“An increase in the sewer fee, paid by all users, allows the property tax rate to remain the same at $8.98 per thousand and goes a long way to solve the recurrent problem of a multi-million dollar shortfall each year as a result of a Sewer Fund that isn’t self-sufficient,” the mayor said.

“This was not an easy decision to make, and it will not be a popular one, but it is the fairest and most reasonable,” he continued. “The fairest way to pay for a service, in this case sewer service, is to spread the costs to the users and not expect the property taxpayers to subsidize the tax exempt properties.”

This fee increase will convey to the EPA, DEC and DOJ that he city is serious about fixing its sewage treatment issues, the mayor noted.

“If we didn’t increase the fees now and instead increased the property tax rate, we would be forced to increase sewer fees alter, and we would still have the increased property tax rate,” Bateman said.

The mayor’s proposed 2010 operating budget is now in the hands of the councilors for their consideration.

A public hearing on the budget proposal is tentatively scheduled for Aug. 24 in the Council Chambers.