NEW SCOTLAND — At $8.5 million, New Scotland’s tentative budget for next year is up about 4 percent over this year’s adopted spending plan. The town is again under the state-set levy limit; however, residents will see a slight increase in their taxes for the fourth year in a row.

For 2021, the town is proposing the tax rate for all New Scotland property owners (including those who live in the village of Voorheesville) to be $1.52 per $1,000 of assessed value, up from $1.48 per $1,000 this year. In 2019, the rate was $1.45 per $1,000 of assessed value. And in 2018, residents paid a rate of $1.40 per $1,000 of assessed value.

Regarding the tax increase, Supervisor Douglas LaGrange said, “We’re taking advantage of our tax-cap number because we have many things like health insurance, retirement, dental, and things like that,” that tend to increase every year.

The town’s share of employee benefits for next year is set to increase by about 12 percent from this year, from about $922,000 to approximately $1.03 million. 

The benefit costs associated with the DB Fund, out of which highway department workers benefits are financed and which makes up about half of the town’s total employee-benefits costs, account for about 75 percent of next year’s $111,000 total benefits increase. 

There have been three retirements in the highway department in 2020 and another one is expected before the year is out. New Scotland is on the hook for a large chunk of those retirees’ future healthcare costs because they’re covered by a benefit package that has since been amended. But now the town has to cover those legacy healthcare costs in addition to picking up the benefits of the new workers hired to replace the retirees. 

About 25 percent, $84,000, of the overall $322,000 spending increase proposed for 2021 is attributable to special-use districts, like lighting and fire districts, for example, the cost of which is paid by the beneficiaries of the district; of the remaining $238,550, the largest portion of increased spending can be attributed to employee benefits, which account for about 47 percent.

Allowing a small hike in the tax rate so that the town can take advantage of the state-set levy limit, LaGrange said, “That’s important to do.” Otherwise, he said, “We’d lose it next year; we’d lose ground next year.” 

If New Scotland were to use more of its fund balance to close any gaps in its 2021 budget rather than letting the tax rate increase by a few pennies, LaGrange reasons, the town would effectively be leaving money on the table, which would hurt the 2022 budget.  This is because, while all other costs will almost assuredly continue to rise, the town would be starting the 2022 budget season with less money in the bank — the total town levy — and would have to draw down even harder on its fund balances. 

New York State’s economy shrank about 10.7 percent between the first and second quarter of this year, according to the Bureau of Economic Analysis, which is also attempting to document the economy’s recovery in real-time by tracking credit- and debit-card transaction data. Consumer spending dropped by about 4 percent between February and March (the World Health Organization declared a global pandemic on March 11), and decreased by 13.6 percent between March and April. With the exception of a slight downturn in June, month-over-month consumer spending has increased only since the end of April.

State Department of Taxation and Finance data show that New York collected about $1.46 billion in monthly excise and user taxes and fees in the first month of the year. That figure dropped to $875 million in May and rebounded to about $1.2 billion by August. 

According to the most recent available data from the state Tax Department, excise and user taxes and fees collected by New York as of August of this year were about $5.7 billion, down from approximately $6.9 billion in August 2019, a year-over-year, year-to-date decline of about 17.4 percent, or $1.2 billion. 

The state’s total year-over-year, year-to-date tax receipts are down from about $33.2 billion in August of last year to approximately $30.1 billion as of August 2020, a 9-percent decline.

Sales-tax dependency

In Albany County, sales-tax revenue has comparatively stabilized since the nadir of the pandemic, in April and March. The most recent report put out by the state Comptroller’s Office, on Sept. 17, shows Albany County sales-tax revenue for the first eight months of 2020 down 10.7 percent compared to the same period last year. 

The town is hearing that sales-tax revenue for the final two quarters of this year are expected to be down about 8 percent each quarter compared to the third and fourth quarters of 2019, LaGrange said. 

New Scotland now expects to bring in about $1.97 million in sales-tax revenue from the county, a decrease of about 7.5 percent from what the town expected it would receive when it adopted this year’s budget: $2.13 million. 

And the town has carried its pandemic-induced lowered expectations of sales-tax revenue into next year, estimating it will take in about $1.97 million in 2021.

 A report released last week by state Comptroller Thomas DiNapoli reaffirmed former Albany County Comptroller Michael Conners’s past attempts to “curse the darkness with one candle [rather] than do nothing.”

In short, DiNapoli’s office found that too many municipalities in New York State are relying on an increasingly unreliable source of revenue — sales tax — to act as a major building block of their budgets. 

In 2018, with the economy humming and money rolling in, Conners had been cautioning municipalities about their budgets; about not over-leveraging themselves by depending on sales-tax revenue. Most municipalities receive more revenue from sales tax than property tax, which is why Albany County has some of the lowest property-tax rates in the state, Conners told The Enterprise at the time. (The issue in 2018 was New York’s counties losing brick-and-mortar sales-tax revenue to untaxed online sales, which has since been rectified by the state.)

In 2019, the conservative Empire Center think tank found Albany County tied for eighth lowest among the 57 counties outside of the five-county New York City in its 2019 tax analysis, with residents paying $3.57 ($3.56, according to the county) per $1,000 of assessed value in county taxes that year.

For 2020, Albany County property owners pay $3.51 per $1,000 of assessed value in county taxes.

Conners said in 2018 there were municipalities in The Enterprise’s coverage area that would be “slaughtered” with declining sales-tax revenue from brick-and-mortar retail. Most notably, Guilderland, which for every dollar of town-wide property tax levied, receives about three dollars in sales-tax revenue.

Pre-COVID, New Scotland already had in place a “very solid budget,” LaGrange said, “as we usually do,” so when the town had to adjust to a pandemic on-the-fly, it was able to do so with relative ease and without real sacrifice.

New Scotland sales-tax revenue received from the county for the first six months of this year was down about $120,000 compared to the same period in 2019. In response, and anticipating further revenue declines for the remainder of the year, the town cut about $320,000 in spending.

“And by doing that, I’d argue we’re probably healthier, or as healthy, as any municipality in the area,” LaGrange said.

Insulation 

With the mid-year spending cuts, the town won’t have to raise property taxes beyond the state-set levy limit “or anything like that,” he said, to try to make up for losses that may have been incurred during the pandemic. LaGrange said he knows of municipalities that, because of what happened to local budgets this year, are entertaining the property-tax-increase option. 

New Scotland has insulated itself from having to take such dramatic steps by keeping “things as steady as possible” with its annual incremental increase in the tax rate, LaGrange said, in addition to maintaining a healthy fund balance.

Another word for fund balance, LaGrange said, is rainy-day fund, “and you know, it’s been pouring through 2020.”

New Scotland projects its collective 2021 unappropriated unreserved fund balance to be about $3.1 million, and expects to drain about $376,498 from the fund (compared to about $298,500 this year).

About 98 percent, $369,000, of the fund balance expected to be used in 2021 comes from the town’s now-remaining $1.8 million B Fund, which is bankrolled by county sales-tax revenue; last year, the town didn’t have to touch the B Fund.  

New Scotland anticipates its largest generator of revenue next year to be the total property-tax levy, which should yield $3.2 million. The town has seen some growth in recent years, with 30 homes put on New Scotland tax rolls in 2019.

Proposed tentative 2021 salaries for the town’s full-time elected officials are about $64,000 for the supervisor; $59,500 for the town clerk; and $75,600 for the highway superintendent. In part-time posts, the town’s two judges would each earn about $28,750 while each of the four town board members would take home about $9,900.