TROY – The city plans to use budget cuts and up to three rounds of short-term borrowing to make up for $6.6 million in lost revenues in an effort to avoid layoffs that would irreparably harm the police, fire and public works departments, Mayor Patrick Madden and his staff told the City Council.
Madden’s administration has turned to this four-phase plan in anticipation of federal funding flowing sometime later this year to bail out local governments that have seen their revenues fall due to the coronavirus pandemic.
“It’s a measured approach,” Madden advised the council Thursday night during a presentation to inform the legislative body about pending budget maneuvers.
Madden has said that he doesn’t want to implement layoffs and is taking steps to avoid reducing the city workforce. The cities of Albany and Schenectady have said they anticipate layoffs.
In June, the council will be asked to approve $2 million in budget cuts that will impact every city department as the first phase. At the same time, the seven council members will be asked to approve issuing bond anticipation notes of $1 million to cover expenses that would have come out of general fund revenues in what is described as the second phase. The remaining $3.6 million would be dealt with in later rounds of borrowing if necessary.
“We need to put ourselves in a position to maintain city services for city residents and lookout for city employees,” said Deputy City Comptroller Andrew Piotrowski.
The department heads were directed to comb through their budgets to curtail spending as the city began to see some revenues such as parking fees and sales tax income start to shrink with the shut down of businesses in March in response to the pandemic. In order to save money, the city has instituted a hiring freeze and is not filling 31 vacant positions.
The city’s $74.7 million general fund 2020 budget is partially funded by $12.2 million in state aid and $16.5 million in sales tax income, accounting for 38.4 percent of the city’s revenues.
Unlike its urban neighbors in the Capital Region, the city cannot fall deeply into the red or its finances will be placed under state oversight. This is called for under the legislation establishing the Troy Municipal Assistance Corp. that borrowed money in the 1990s to pay off the city’s budget debts. The Troy MAC debt is anticipated to be retired in 2022. The annual payment is about $6.5 million. The state draws from the city's sales tax revenues to make the annual debt payments.
“We’re tying this debt to COVID. We’re only in this position because of the pandemic,” Piotrowski said of the round of June borrowing.
The city is prepared to borrow again in August by issuing short-term revenue anticipation notes to deal with potential cash flow issues. For a fourth phase, the city would borrow a third time issuing tax anticipation notes.
Madden said the city is monitoring its cash flow and analyzing what property tax revenues it will see in July when the second round of tax payments are due.
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Troy to rely on short-term debt to avoid layoffs - Times Union
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