BERNE — Berne’s draft 2022 budget has drawn lots of attention both for its staggering property tax decrease — 88 percent — as well as the potentially illegal maneuvers employed by Supervisor Sean Lyons.

Lyons is a Republican finishing up the last few months of his first and only four-year term as he’s not seeking re-election this year. His deputy supervisor, Republican Dennis Palow, is running for supervisor.

Overall, Lyons’s draft, as it stands, shows appropriations at just under $3 million and revenues at just under $1.7 million. The Enterprise asked Lyons several questions about the town’s budget this week, and he said he would respond to those questions on Monday, Nov. 1, but no responses were received. 

The draft signals a property-tax decrease of nearly 88 percent, leaving the absolute rate at just under 47 cents per $1,000 of assessed value, all while raising spending by $600,000. In other words, the property tax on a home valued at $250,000 — the median list price of homes currently for sale in the town, according to a realty website — would be $117.50, down from about $950 at the current tax rate of $3.789 per $1,000.

So, for an average savings of about $14 per month, critics argue, taxpayers will be losing the security of decades of town savings.

Also, during a budget workshop, Lyons made comments indicating the new Dollar General in Berne was bringing in increased sales-tax revenues for the town, seeming not to understand that a portion of sales-tax revenues in Albany County — whether generated at the Dollar General in Berne or Crossgates Mall in Guilderland — go to the county and then are redistributed to municipalities based on population.

Albany County’s municipalities are currently flush with funds because sales-tax revenues have rebounded since the pandemic shutdown much better than anticipated and also because the federal pandemic-relief funds were given directly to municipalities for the first time ever.

Lyons is decreasing taxes by switching out tax revenues with the town’s fund balance — often called a rainy-day account — unassigned money that has accumulated over time, which he’s made a point of doing in the past while arguing that the fund balance is too high. 

Besides the unassigned fund balance, the town is expected to receive hundreds of thousands of dollars in federal aid through the American Rescue Plan, which is money that comes with regulations on how it can be spent. 

A portion of that money has been put toward the town’s sewer district, which experienced a shortfall this year after the town’s tax office mistakenly taxed residents in that district according to outdated figures. Rather than front the money and have residents of the sewer district pay the money back over time, Lyons is using federal money to plug the gap.

It’s not clear, however, that this is an authorized use of the relief money.

Broadly speaking, the federal guidance for how to spend the money comes down to one thing: COVID. Because the money was authorized for distribution as a means of recovering from the pandemic, all uses are expected to comply with that mission. Considering the various reports that recipients of the money are expected to provide over the next couple of years, the federal government seems apt to enforce the regulations to the best of its ability. 

However, because the pandemic has had profound impacts, what qualifies as a COVID-19 recovery expense is broader than it might initially seem. For example, municipalities can use the money to replace revenue that was lost as a likely result of the pandemic. Or, it can provide economic assistance to those impacted by the pandemic, which Berne is doing through a $200 tax rebate to 1,992 parcels in the town using a mix of relief money and the town’s fund balance.

Indeed, a frequently-asked-questions document published by the United States Treasury states that a list of authorized uses is not exhaustive.

“The Interim Final Rule also provides flexibility for recipients to use Fiscal Recovery Funds for programs or services that are not identified on these non-exclusive lists but which meet the objectives of section 602(c)(1)(A) or 603(c)(1)(A) by responding to the COVID-19 public health emergency with respect to COVID-19 or its negative economic impacts,” the FAQ states. 

Because the sewer-district shortfall is related to simple user error as opposed to COVID, the application of some $40,000 to the district appears to go against the funding prescriptions laid out by the federal government, particularly since the group targeted is not one that is known to have been uniquely impacted by COVID. Normally, services like sewers are funded entirely through taxing those who use the service.

When asked whether using the federal aid to cover maintenance of the sewer district would be appropriate, A U.S. Treasury official told The Enterprise that “Treasury does not pre-approve specific uses for these funds,” and listed the four categories of authorized use, which are, in essence: to bolster COVID-19 response efforts, replace lost revenue “to strengthen support for vital public services and help retain jobs,” support economic stabilization, and address problems of inequity.

“The Coronavirus State and Local Fiscal Recovery Funds provide substantial flexibility for each government to meet local needs—including support for households, small businesses, impacted industries, essential workers, and the communities hardest hit by the crisis,” the official said. “These funds can also be used to make necessary investments in water, sewer, and broadband infrastructure.”

The official added that the Interim Final Rule, which municipalities are relying on for guidance, is the authoritative document on authorized uses until the department adopts and implements a true final rule. 

When asked about the appropriateness of the rebate, the official pointed to the section of the Interim Final Rule that addresses economic recovery payments, which is broad. 

“Assistance to households or populations facing negative economic impacts due to COVID–19 is also an eligible use,” the document states. “This includes: Food assistance; rent, mortgage, or utility assistance; counseling and legal aid to prevent eviction or homelessness; cash assistance (discussed below); emergency assistance for burials, home repairs, weatherization, or other needs; internet access or digital literacy assistance; or job training to address negative economic or public health impacts experienced due to a worker’s occupation or level of training.

Allowed vs. appropriate 

Legality aside, some say the way the budget is put together is, at least, irresponsible. 

While the lower property tax rate is no doubt appealing to property owners in Berne, two things should be made clear up front. First, the draft budget is, of course, not the final budget, and figures are subject to change. In 2019, Lyons drafted a 2020 budget that lowered property taxes by around 9 percent, but taxes were ultimately lowered by only 3.5 percent.

Second, reserve money, unlike tax dollars, can only be used once. This means that the tax rate will not likely stay as low as it is, and the jump back to a stable level will probably seem extreme. If the 2022 budget is adopted as is and taxes in 2023 are brought back to 2020 tax levels, the increase would be 792 percent.

With this in mind, Democrats are wary of Lyons’s tactics, as well as his intentions. This is an especially important election year, with every town board seat up for grabs because of natural term limits and unexpected resignations. Republicans and Democrats are competing for each one with the same ferocity that defined the last two federal elections. And because nothing grabs voters’ attention like taxes, the extreme decrease can be interpreted as a political maneuver.

It’s possible that voters will see the advertised tax decrease and associate lower expenses with the Republican majority that’s currently in office, almost all of whom are seeking re-election. If that’s the case, and property taxes are what drive the outcome, the Republicans will theoretically win the election. Alternatively, if the Democrats win, they’ll be forced to correct the tax rate for next year by making seemingly extreme increases, which will likely create political fallout. 

Republicans will obviously need to correct the tax rate if they win, too, though they’ve generally been more willing than Democrats to cut popular services in favor of lower tax rates. For instance, the current board, which is all Republican-backed except for Democrat Joel Willsey, has been making long-shot efforts to divest the town of the Switzkill Farm property, arguing that it costs the town too much money. The Democratic candidates this year and many residents that attend board meetings argue that the property holds value that can’t be measured in dollars. 

But more than that, Democrats worry the 2022 budget will leave the town in a vulnerable position by depleting the fund balance, a reserve that’s generally put toward one-time uses like capital projects or emergency expenses.

In the Hilltowns, fund balances have played an important role in recovering from the devastation of Hurricane Irene, and staying afloat during the coronavirus pandemic, which undercut sales tax, the primary source of revenue for these local governments. Instead, Berne is using the money for recurring costs.

A fund balance is extra money that does not have a specified use, sort of like that in a general savings account, while reserves are special future-use accounts that are regulated to varying degrees by state law, depending on the type of reserve.

Although the Office of the New York State Comptroller warns that fund balances should neither be too large (because that suggests residents are being overtaxed) nor too small (so that emergencies can be handled), it does not give much guidance on how much is appropriate. Instead, the comptroller’s office essentially states that the money should be used responsibly, leaving what that means up to the local governments. 

“Each town, village and county must assess what would be considered ‘reasonable’ for its particular situation,” states a guide to the budget process published by the comptroller. “When making the determination of a ‘reasonable’ amount, a town, village or county must take into account certain factors.”

The factors listed by the guide are:

— the size of the fund;

— cash flow requirements; 

— how well the municipality can predict revenues and appropriations; 

— past experience;

— the amount of contingency appropriations available in the budget; and

— the type and amount of reserve funding the municipality has at its disposal.

Items of note

For next year, Lyons proposes raising the salaries of several employees and officials while lowering others.

The part-time supervisor is to receive a substantial raise, from $19,226 to $23,000 — a 20-percent increase.

At the same time, the budget anticipates paying a technical assistant $3,750 next year, as well as an administrative assistant for the supervisor $20,748 — more than the supervisor earns now.

Originally, Lyons anticipated hiring a full-time office manager, but Deputy Supervisor Palow had suggested the part-time worker instead.

The part-time deputy town clerk will also receive a substantial raise, from $15,912 to $21,840 — a 37 percent increase.

Meanwhile, the full-time clerk’s salary is to decrease from $44,058 to $38,043 as two-term clerk Anita Clayton plans to leave at the end of December.

Lyons explained during a budget workshop meeting that the reduction is a reflection of the experience that either one of the two candidates running for clerk — Democrat Jean Guarino and Republican Kristin Francis — will bring with them.

The part-time town board members are to receive slight raises, from $14,540 split across four members to $14,977 — a raise of just under $110 per board member annually. The two part-time town justices are also receiving slight raises, from $19,962 for both of them to $20,561, or about $300 per justice per year.

The part-time assessors each are getting raises, too: the assessor chairman will receive $14,047, up from $13,637; assessor 1 will receive $12,933, up from $12,614; and assessor 2 will receive $7,877, up from $7,648. 

The part-time deputy supervisor (a post currently held by Palow who is also paid a council member’s salary) will receive an additional $500 on top of the $1,500 stipend the Lyons administration enacted last year, claiming at the time that the money is compensation for signing documents, which the deputy supervisor is authorized to do on behalf of the town. 

The full-time highway superintendent — Republican incumbent Randy Bashwinger is being challenged by Democrat Barbara Kennedy — will receive $58,160 next year, up from $56,466.