November 12, 2010
City foresees fund balance back in black
Revenue from property auctions, paid overdue tax bills leading to $500,00 surplus
The collection of back taxes and the sale of tax delinquent properties could put the city’s general fund balance in the black for the first time in three years at the end of 2010.
“I’m confident we will be in the positive by over half a million dollars,” Deputy Director of Administration and Finance Lori Crompton said Wednesday, adding that her estimate is a conservative one.
The city’s fund balance had been at about $900,000 in 2003, but was depleted to keep tax increases minimal. By 2008 the fund balance had dipped into the red by $300,000, but the deficit was cut in half the following year.
The city would need a $1.7 million fund balance to fall within state recommended fund balance levels, which advise keeping the fund around 10 percent of the budget. The proposed budget for 2011 is nearly $17.2 million.
The general fund balance affects the city’s bond rating, and climbing out of the deficit would improve the rating and give the city more favorable interest rates on loans.
Crompton said the city’s fund balance went into the red because the city was spending more and not receiving all the tax revenue it budgeted for.
The city received $233,000 in revenue from a tax foreclosure sale in July, where it auctioned off about 20 properties, many of which owed years in back taxes. It was the first time in more than 20 years the city has held such an auction.
According to an independent financial audit of the city’s finances for 2009, the total amount of unpaid taxes had increased by 20.3 percent to $3.2 million by Dec. 31, 2009.
The Common Council will also recognize and appropriate money Tuesday from tax sales of properties at 72 Clinton Ave. and the 31 Owego St. The two properties were a part of the auction in July, but one had a question on the title, and the other had the winning bidder back out and was later sold to the next highest bidder.
As of the end of September this year, the total of back taxes owed is down to $2.3 million after the city received about $1 million in back taxes from the owners of Northwoods nursing home when they sold the Kellogg Road property.
Crompton said the overall amount of tax collection has gone up, since the city now has the authority to seize and auction off properties owing back taxes.
Buckbee-Mears is the last remaining property that owes the city over $1 million. The property on Kellogg Road has been taken off the tax rolls, and did not receive a tax bill for 2010. The property still owes close to $1.1 million in taxes, as well as about $6 million to the U.S. Environmental Protection Agency for cleaning the contaminated site.
One of the main shortfalls of the 2010 budget was the Stormwater Utility Fee, which was budgeted to bring in $250,000. Since the law was never adopted, it did not generate any revenue.
The council tabled the proposal in October, and said it would like to work with local organizations to rework the plan and set a fee structure.
“For the first time in a while, we won’t have a negative fund balance,” Mayor Susan Feiszli said Wednesday.
Feiszli said she believes there will be a zero percent tax increase in 2011, without having to use the fund balance to keep the tax rate down.
The tax rate remained at $15.24 per $1,000 of assessed property in the tentative budget for 2011. The revenue from property taxes went up by 0.1 percent, to $7,972,949.
The proposed $17.2 million tentative budget for next year is 3.2 percent less than the $17.7 million budgeted for 2010.
The council will hold a special meeting Monday to adopt the proposed budget, and is required to have a public hearing no later than Dec. 15. It will need to finalize and adopt the city budget by the end of the year or Feiszli’s budget proposal would become the final 2011 budget.
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