NEW SCOTLAND — At about $8 million, New Scotland’s budget for 2024 is, on paper, down about $1.3 million from this year’s adopted spending plan. But the only place the double-digit decline appears is on paper, a very expensive reminder of the quirks of municipal accounting. 

In reality, the New Scotland Town Board last month adopted a budget for next year that is up about $515,000 over this year, according to Lisa Boehlke, Supervisor Doug LaGrange’s clerk and bookkeeper. 

But the $1.8 million swing, accounted for with bookkeeping techniques employed by most municipalities, won’t have an immediate impact on some residents’ property tax bill, while for others it may never. 

To pay for some services, New Scotland uses what’s known as an interfund transfer, a standard accounting practice whereby a pot of money gets allocated among the municipality’s individual departments.

Sticking with the metaphor, each revenue bucket is designated for a specific purpose like road maintenance, public safety, or parks, and interfund transfers are the way those resources are moved from one bucket to another, which ensures adequate funding. 

The general fund town-wide (Fund A) for next year has a $2.46 million appropriation; this year’s adopted plan has an A Fund allocation of $2.24 million. 

Included in the A Fund are the town hall employees’ salaries and benefits, what the town pays for emergency services from the sheriff’s office, and the parks budget. 

As of late, property taxes have made up the bulk of A Fund revenue, about 70 percent, with a not-insignificant amount of mortgage tax accounting for the fund’s second-largest source of income, about 11 percent — and over the past few years, that estimate was pretty low. 

The general fund for the town outside the village (Fund B) this year received $2.65 million, and covers about $815,ooo in employee benefits, another $470,000 for recycling and refuse services, and then has a $1.47 million line item earmarked for interfund transfer to Fund DB, the highway fund for the town outside the village. 

The B Fund receives most of its revenue from sales tax, which is collected by Albany County and distributed, on the basis of population, to its municipalities.

This year, the DB Fund, which covers highway department wages and benefits, its capital outlays, in addition to its equipment, was appropriated close to $2.3 million, about 70 percent of which came from the B Fund, which appears at first blush like a case of money being counted more than once, a thought lent credence by the DB Fund’s 2024 budget, $1 million. 

But, with interfund transfers, the state’s chief fiscal officer likes to see included as both an estimated revenue (the sales tax from the county to the town) and funding source (the transferring of revenue from the B Fund to the DB fund), creating the the potential for perception of a white-collar crime having taken place. Actually, the total dollar amount remains unchanged, a process that has been likened to moving money between different pockets of the same coat.

During an October budget workshop, LaGrange explained New Scotland’s town-wide general fund (A Fund) — which serves all residents, both town and village, and covers, among other things, salaries of town employees, town-owned buildings, and ambulance services — was facing a serious shortfall. 

He said how the housing-sales boom of the past few years papered over some issues.   

A few years ago, he said that the A Fund was running out of money fast, and at the time he suggested shifting resources from the B Fund to the A Fund, with a specific focus on sales-tax revenue. The move, however, was not implemented at the time, and the A Fund was buoyed by an unexpected surge in the mortgage-recording tax.

But today’s historically high interest rates has led to reduced mortgage tax revenues for the town, so the A Fund would be out of money in two years if the board had not taken some kind of action.

In Albany County, residents pay a recording tax of $1.25 per $100 of mortgage. The local municipality receives 25 cents, as does the county, in addition to the Capital District Transportation Authority, and 50 cents is returned to the state, which in turn sends some of that money back to the county while keeping some to help fund the Mortgage Insurance Agency.

In recent years, 2021 and 2022, in particular, mortgage-recording taxes were much higher than initially anticipated: $434,000 in 2021, which is about 46-percent more than the town planned when it adopted its budget, and $349,000 in 2022. For 2024, the town expects $228,000 in mortgage-tax revenue, which is down from this year’s estimate of $255,000. 

In October, LaGrange proposed tapping the town’s share of county sales tax to help stabilize the A Fund, a move that comes with legal hurdles. 

With the B Fund no longer being taxed, snow-plowing expenditures would get moved to the A Fund, an approach LaGrange said was common in many towns and villages.

By allocating sales tax towards budgeted services, the B Fund can effectively support the A Fund, preventing excessive tax increases for A Fund taxpayers and allowing B Fund residents to use their substantial fund balance.

“B fund services would receive sales tax towards budgeted services and their fund balance,” LaGrand said. “This budget reflects that move, and will save A Fund taxpayers from excessive tax increases to stabilize the A Fund balance and give the B Fund residents a pause to use down their substantial fund balance.

Budget and taxes

The town-wide property tax rate is due to increase slightly next year; in round numbers it will be $1.50 per $1,000 of assessed value for all New Scotland property owners. 

But the biggest difference in next year’s budget is with the B and DB funds, the general fund for the town outside the village and the highway fund for the town outside the village, respectively. 

Those two funds will not be taxed. 

“People outside the village will not have that tax on their bill,” Boehlke explained. “They’ll still have their A Fund tax, but they will not be billed for B and DB.”

This is because the property-tax rate level — the amount of A Fund taxes levied this year, about $1.58 million — is comparable to next year’s anticipated levy, about $1.6 million, which is because “we just have more assessed value now because we have built out,” Boehlke said.

All told, the total town-wide levy for 2024 — including special districts like those for lighting, water, and fire protection — is down about $225,000 compared to this year, from about $3.2 million to $3 million. To fill the levy gap, New Scotland will increase its use of rainy-day funds from about $495,000 to $750,000. 

Rather than allocating sales tax to the B and then DB Fund, New Scotland in 2024 is appropriating that revenue across its four main funds: about $268,000 to A Fund; $628,000 to DA; $496,000 to B; and about $1.22 million to DB.  

Among the increases in next year’s budget are a 5.4 percent bump for fire service protection, from about $769,000 to $810,500, which was attributed to increased maintenance costs for aging fleets, and ambulance services, which are estimated to increase by about 14 percent next year, from about $359,500 to approximately $410,500.

While some individual districts’ costs are up and others are down, the overall water appropriation for next year is expected to rise about 7.6 percent, from about $892,277 to about $960,000.