2015 Budget Message

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The Mayors Proposed Budget Message
Presented to the Board of Estimate and Apportionment
Mayor Robert M. Palmieri
City of Utica, New York
February 13th, 2015

When I took office in January 2012, the financial outlook for the City of Utica was bleak.

Our financial problems stemmed from the implementation of unbalanced budgets and poor fiscal management. Rather than address our financial reality, the City drained reserves and allocated fund balance to fill budget gaps.

The fund balance was nearly $5 million in 2009 and plummeted in the negative by the time I took office. This violated a 2004 referendum approved by residents calling for the fund balance to be at least 5% of the total budget and a 2010 ordinance passed by the Common Council mandating the fund balance be no less than 3% of the total budget.

If the City did not change its ways we would succumb to the direction of a state control board.

Understanding we needed guidance to fix our inherited financial problems, I went to Albany and met with New York State Comptroller Tom DiNapoli. Comptroller DiNapoli provided great insight about what needed to be done to change Utica’s trajectory. We also spoke with financial rating institutions to solicit their recommendations. We developed a three year financial recovery plan, which called on the City to make difficult decisions if we wanted to improve our financial condition and avoid a control board.

Over the past three years the City has stayed true to its recovery plan and made those difficult decisions. We made cuts, raised taxes, consolidated departments and settled three union contracts. The Common Council did the right thing and voted to override the two percent tax cap each of the past three years. Last year’s proposed budget called for an 8% percent tax increase and there were no changes or cuts made by the Council because the budget was lean.

As a result of smart financial planning we were able to secure $931,000 and $1.5 million surpluses which came on the heels of $1.4 and $1.6 million deficits prior to my term. These surpluses have increased our fund balance from a negative to over $3 million dollars, a milestone of our recovery plan and a focus of the correspondence with Comptroller DiNapoli and the financial rating institutions.

In response to our back to back million dollar budget surpluses and increased fund balance, Comptroller DiNapoli sent my office the following statement;

"Identifying ways to balance the budget while providing necessary services to area residents is difficult, but Mayor Palmieri has worked diligently with his colleagues in government to balance revenues against spending and improve the City's financial footing."

From Day 1, our goal was to improve the City’s fiscal health by implementing responsible budgets that kept taxes as low as possible and provided the services our residents deserve.

The Council’s decision to support the two percent tax cap before the budget was proposed is further affirmation our recovery plan is working and the City’s financial condition is improving. I appreciate the Council’s perspective.

In that light, I am pleased to announce that my FY 2015-2016 proposed budget comes with no tax increase. As with all my budgets, this is a balanced, structurally sound proposal based solely on hard numbers. Our ability to propose a budget with no tax increase is not due to the State’s two percent tax cap, but rather is a result of reduced spending (we are spending less today than we were seven years ago), strategic fiscal management, an expanded tax base and teamwork the City exhibited over the past three years; coupled with high levels of economic development.

While analyzing the proposed budget it is important to note that 85% of the budget is contractual and looking at the facts I believe cutting this budget would be irresponsible. As I stated previously, we significantly increased the City’s fund balance but I will not utilize any fund balance to supplement the budget as this past practice caused our financial downward spiral in the first place.  

Looking at the success of our recovery plan we’ve gone from a City with a negative fund balance, a negative outlook and million dollar deficits, to a City with a $3 million fund balance, an upgraded outlook and million dollar surpluses. We are clearly moving in the right direction.

This proposed budget is a testament to the hard work of the Mayor’s office, City Comptroller Bill Morehouse, Common Council President Frank Meola, Members of the Common Council, City Department Heads and all our City employees. The positive economic turnaround the City of Utica is experiencing is a complete team effort and as Mayor of Utica, I thank everyone who is helping the City realize its transformation. Specifically, I would like to acknowledge and thank our federal partners, Senators Charles Schumer and Kirsten Gillibrand, Congressman Richard Hanna, as well as, our state officials, Governor Andrew Cuomo, Comptroller Thomas DiNapoli, Attorney General Eric Schneiderman, Senator Joe Griffo, Assemblyman Anthony Brindisi and our County Executive, Anthony Picente.