Essex County lawmakers face a $13 million gap as they prepare to put together next year's budget, and county officials hope to calm the nerves of worried taxpayers by highlighting the county's comparatively low tax rate instead of the percentage increase of the tax levy.
Jay town Supervisor Randy Douglas, who chairs the county's Board of Supervisors, said the budget is still in its preliminary stages. He said at this point, it doesn't look pretty.
"We have a $10 million fund balance, and we lowered it down from $21 million," Douglas said. "The tax cap override? It certainly does look like it's going to be likely that it's going to happen. We have to do something. I'm not sure how much of an increase there will be. We've used fund balance for years. We had seven years where we went zero-percent increase.
"You have two choices: Cut services or raise taxes."
Jobs cuts are also a possibility, Douglas said.
County Manager Dan Palmer told the Enterprise that the overuse of fund balance over a 10-year period, which was done to keep the tax levy (the total dollar amount to be raised in taxes) low, is a major contributor to the current deficit. He stressed that no matter what happens with the 2013 budget, Essex County still has one of the lowest tax rates in the North Country.
"Irrespective of how much we go up, we're still the lowest tax around," he said. "Look at the paper today; what does the paper, the Press-Republican, say? City of Plattsburgh is going to meet the tax cap. What's their tax rate? $10.40 a thousand (dollars in assessed property value). Ours is $2.38 per thousand. I'm not going to meet my cap. But I'm not going to be anywhere near $10.40 a thousand.
"That's the part that's simply the most frustrating to me, is that it's always based upon whatever percentage you're going up, and there's absolutely no attention paid to what you're actually paying. And what you're actually paying is based upon the tax rate."
The 2012 budget increased the tax levy by 10.54 percent and eliminated nine positions. It totaled $102.28 million and carried a tax rate of $2.38 per $1,000 of assessed property value. It also used $4 million in fund balance, plus additional funds from tax sales.
Increasing retirement and health insurance costs for employees will have a big impact on the county's budget next year. Palmer said health insurance costs have increased by 15 percent, and the county pays 28.6 percent of retirement costs for sheriff's deputies.
For regular employees, the county's share of retirement costs is 20.9 percent. Seven years ago, that share was 8.9 percent.
Palmer said departmental budgets, sometimes called "wish lists" by some supervisors, are "stripped right down to almost nothing.
"There is no wish list in the budget," he said. "Over the last five years, we've removed almost everything out of these budgets. There was no equipment; there was nothing in there."
This year's tentative budget does include some equipment purchases, but Palmer said they're necessary because the county can't put them off.
So how can supervisors chip away at the budget deficit? Palmer said the county needs to develop a three-year plan to balance the budget.
"In other words, we've got to look at tax increases, and we've got to look at whatever cuts we could come up with, and ultimately get to the point where we're not relying on 40 percent of our actual costs being covered by fund balance," he said. "In 2006 - this is before me - 54 percent of our actual net costs was covered by fund balance. You just can't do that. That's the reality."
The county is also involved in negotiations with union members. Douglas said the next meeting is set for Oct. 25.
Spending on contract agencies like Cornell Cooperative Extension, Adirondack Harvest, the Adirondack Regional Airport and the Clinton-Essex-Franklin Library System was reduced last year to about $700,000. That spending could be reduced even further, Douglas said.
North Elba town Supervisor Roby Politi said taxes are going to go up.
"We've cut I don't know how many jobs - we're down over 100 jobs in the last few years," he said. "I don't think there's really a lot of room there. The problem is, you're mandated in a number of departments, and the state is not giving you as much money as they did in the past."
"If you continually use fund balance to cover reoccurring costs," Palmer said, "then ultimately that's going to drive a gap that you can't make up, because the fund balance starts to disappear, but the costs keep going up."
The fund balance currently totals $10 million. Palmer said he can't use that money because the county covers every school, town and village warrant in the county.
"If you don't pay your school tax in your town, the school - we fill that warrant for the school," he said. "We pay your school tax to the school. And that's how it works in the towns. Whatever amount of money they need to raise - the towns or the schools or the villages - if their taxpayers don't pay that, the county does. And that has to come out of our cash.
"At $10 million, we're dangerously low."
Last year, the county paid out more than $4 million to fill warrants for school districts, towns and villages.
"That occurs every year," Palmer said.
If the county used $1 million in fund balance in the 2013 budget, the tax rate, which was about $2.40 this year, would likely increase by about $1, Palmer said. That would mean $100 more per year extra for someone owning a house assessed at $100,000.
"But that percentage that would go up on my levy probably is 70 percent, and people would go ballistic," Palmer said.
Clinton County's tax rate this year is $6.08, and Franklin County, which has a similarly sized budget and a comparable population, has a tax rate of about $4.06.
Douglas has asked Palmer to create a spreadsheet on tax rates which will include tax figures for some members of the Board of Supervisors. Douglas provided the News with a breakdown of his own personal property taxes, comparing assessments and tax payments from 2006 to 2012.
In 2006, Douglas' home was assessed at $124,760. His town and county tax bill was $1,600.81. In 2012, his assessment increased to $179,000, and his town and county tax bill was $1,641.18. His assessment increased by nearly $30,000, but his taxes increased by just $40.37.
"$40.37 divided by seven years was an annual average increase of $5.77," Douglas said. "People have to look at all this information. In many cases their taxes went down and their assessments increased thousands."
The Horace Nye Nursing Home in Elizabethtown will be sold to the Centers for Specialty Care in the Bronx for $4.05 million. The contract of sale is still being hammered out by attorneys, and it could take much longer for the sale to become official, Palmer said.
Supervisors voted to sell the nursing home in June.
"It takes anywhere from a year to 18 months to close the sale," Palmer said, "because everything has to be approved through the (state) Department of Health. And then you have to impact negotiations with employees. It isn't like you can say, "I sold it, and a month from now, I'm going to get my check.' That's not the way it works."
If the county got paid for the sale tomorrow, it would reduce the budget gap to $9 million.
"Even if you applied the cash from the sale, that's really just fund balance," Palmer said. "That's a one-time shot. If I had it this year to apply, I won't have it in the next year's budget to apply."
The county will eventually save $2 million to $3 million in annual operating fees when the nursing home sale is complete.
"That cost will actually go away once the transfer occurs," Palmer said.
Politi said everyone wants the nursing home sale to happen right away, but it's not that easy.
"It's a lot like getting - although it's not the same thing - if you ever apply for a liquor license," he said. "Do you know how long that takes? You can imagine how long it takes to get the approval to operate a nursing home."
Contact Chris Morris at 891-2600 ext. 25 or cmorris@