OVERVIEW OF THE 2021 PROPOSED ANNUAL ESTIMATE

The attached Fiscal Year 2021 Annual Estimate for the City of Mount Vernon has been prepared by the Mayor Patterson-Howard Administration with limited information from the elected City Comptroller. This Administration has persistently sought to obtain historical financial data as a basis for budgetary assumptions and projections. Recognizing the essential requirement of reliable financial information to draft this estimate, we have repeatedly requested detailed accounting statements, profit-and-loss statements, payroll records, operating statements, and other financial documents from the Comptroller. As of the date of this publication, the Comptroller has ignored requests for and refused to provide three-year expense and revenue comparisons (adopted vs actuals), COVID-19 induced economic threats, and current fiscal year budgetary markers (budget variances).

Link: 2021 Proposed Annual Estimate https://cmvny.com/wp-content/uploads/2021/02/2021-BOE-PROPOSED-ANNUAL-ESTIMATE-2.03.21-.pdf

As a result, our expense and revenue projections are a reflection of the minimal financial reports received from the Comptroller, which included only the 2019 revenue and 2020 expense reports for the first three quarters of the respective years (ending September 30th) and updated information around our debt service, health benefits, insurance premiums, and departmental expenses that were only provided by the Comptroller’s Office after lengthy delays.

On February 3, 2021, the Board of Estimate and Contract vote to approve this estimate and send it to the city council for a public hearing. The Proposed Estimate calls for a 3.86% tax increase and uses $4,766,336 from the fund balance. This estimate is the final product of information gathered from the Comptroller; supplemented with unofficial 2020 financial records obtained from Department Heads, and feedback on our first proposal from City Councilmembers. In summary, contrary to the smoke-and-mirrors budgets of the past, crafted to disguise actual expenses and draw attention away from the unpleasantness of the financial realities of our City, this budget reflects a closer account of actual expenses for the City of Mount Vernon.

FUND BALANCE

We’ve realized that a month of payroll expenses have been expended. As so, the city will have paid by the adoption of this budget, through 2 pay periods which amounts to close to 4.76 million dollars. By her own omission the Comptroller has stated that she has used the reserve (fund balance) to pay these monies. As she has not borrowed this money, we calculated the amount in payroll as of February 2nd to be 4.76 million and added it to the fund balance. This allowed us to eliminate the furloughs and layoffs and maintain critical services on our already lean city budget. We also increased the state aid in the budget back to 90% of the original aid. We did so based on observations of city budgets around the county, this helped close another shortfall for the budget.

BUDGET HISTORY

For years, the city has historically and purposely underestimated expenses and inflated revenues to disguise budget increases and actual costs. This is evident in close examination of these budgets that prove to be illusions, the end of year departmental transfers and increased legislative funding requests, and actual expenditures that have been purposely excluded from annual estimates over the last decade.

This has been a very daunting budget season, understanding the immense challenges of 2020. We faced issues locally and nationwide caused by a worldwide pandemic and economic recession. We dealt with the lack of financial information and participation from our comptroller to produce a budget. We’ve presented a draft estimate at the end of the 2020 for discussion. Since then, we have been able to find new information, held a BOE hearing, spoke with our state representatives and other stakeholders on how to avoid this crisis. This budget has been developing, and we built it out based on what we knew.

Our staff has been through so much, and it’s unfortunate that a conversation around layoffs/furloughs had to be held, but we had to present the worst-case scenario with the information we had at the time.

INSPECTOR GENERAL

With some much conversation around waste, fraud, and abuse. We re-inserted the Inspector General at a part-time position to help investigate any of these claims within our municipal departments. We do so to help further monitor the public’s money in the upcoming year. Additionally, we also increased the tax certiorari amount from 500,000 to 750,000 which is a step closer to the realized amount that is spent. It’s our belief that this budget is fiscally responsible and takes into consideration the strength of our revenues and expenses. Yet, there are still risk and unknowns involved with this budget, but they won’t be understood until the Chief Financial Officer, the Comptroller provides access to the information within the finance department.

ASSESSED VALUATION

Since 2006, the City of Mount Vernon has lost $18,911,711 in its assessed value; that loss of valuation is growing annually and crippling our tax base. According to our Assessor, various factors contribute to the decrease: COVID-19, Decrease in Assessment & Fieldwork, Special Franchises, Seizure of Construction Sites per Governors’ Orders (Building Permits), Tax Certiorari reductions, IDA and Wholly Exempt Properties, Fires and Demolished Properties.

Con Edison Co. of New York $ 679,961

Various Special Franchises $ 31,294

Wholly Exempt and IDA properties $ 578,916

Tax Certiorari settlements $ 664,076

Fire/Demo properties $ 50,000

Total reduced assessed values $2,004,247.00

EMPLOYEE BENEFITS

We realized in the production of this budget that the 2019 expenditure reports provided by the Comptroller’s office wrongfully included only the amount paid- not the amount owed. After confirming with the New York State Health Insurance Program (NYSHIP) we realized that in years prior because the city had underbudgeted for health insurance by $3,500,000 annually and the Comptroller’s Office never paid the entire amount owed- the City now owes $7 MILLION dollars to NYSHIP. The Comptroller failed to provide this information in the last two budgets and as such the dramatic increase is reflected for the FY 2021. There is no option but to pay these premiums and the legitimate $7M debt to NYSHIP to protect the health and safety of City employees during a global pandemic. We had originally predicted a $900,000 decrease since the Comptroller’s office discontinued payment of employee benefits for the Board of Water Supply in October of 2019, but instead $3,500,000 is the realized expense that was unexpected.

FURLOUGHS VS LAYOFFS

Understanding that we’re living in unparalleled times we must make difficult decisions to ensure the fiscal viability of the City of Mount Vernon. The burden cannot just be placed on the taxpayers but must be shared by all stakeholders. A2020 survey from the US Conference of Mayors received responses from 2,400 cities showed the following:

• 88% of cities expected a revenue shortfall in 2020 as a result of COVID-19.
• For cities with populations of 50,000 to 500,000, 98% expected a shortfall.
• For that same population set, 55% reported they expect that furloughing employees will be necessary.
• 38% of these cities say they expect to lay off workers.
• 52% of all cities responding say budget cuts will impact police and public safety.

While this proposed budget does not include Furloughs/Layoffs there is still a potential risk that we may have to consider the need in the 2021–22 budget year.

GRANTS

The City aggressively seeks outside revenue streams year-round, in the form of state, federal, and private grants to offset the financial burden on taxpayers and facilitate many of our human service (youth, recreation, veteran) programming and fund infrastructure, equipment, and training for our public safety departments (police, fire, public works). Since 2018 there have been grants awarded to the City that have been unusable by departments due the Comptroller’s refusal to provide access to the funds. One example is 3 years’ of ignored requests for access to over $80,000 in Veteran State Aid that is crucial in a department with an annual budget of $5,500 (this includes the State-funded Gold Star Mothers Statue). These restrictions have prevented the attaining of mandated results, compliance with grant contracts, and accountability of funding, and as a result, the City is having trouble in competing for and being awarded funding because we cannot comply with expenditure mandates.

DEPARTMENT OF JUSTICE/EPA

The City of Mount Vernon is under a DOJ Consent Decree to stop pollution seeping from our storm sewers into the Hutchinson and Bronx Rivers. There are mandated repairs and necessary equipment that must be accounted for in this budget to comply with the decree and reduce the risk of state and federal fines. We have repeated the inclusion of a DPW allocation of $500,000 in “Sewer Repairs” to subsidize the $1.6 Million dollars in grant funding and meet the rigorous and strict guidelines placed on the City during the previous Administration. Last year, our Public Works received the same allocation to help alleviate this and the Comptroller refused to provide access to those funds (which should be reflected in a $500,000 transfer to the fund balance) evidence of this action is referenced in a Department of Justice memo. We are under a tight deadline, and while the Comptroller has refused to provide access to the funding, accounting of the funding, and financial information to the US Department of Justice and Environmental Protection Agency, our departments are still working tirelessly to come into compliance and institute the repairs needed.

REVENUES

Sales and Use Tax ($22,200,000) –Based upon the State Comptroller report on sales tax collection as of November 2020, we are on track to hit this target. This is a conservative estimate as our sales tax projections are still on track despite a global pandemic that shut down Mount Vernon and New York for nearly two months. A new report showed, that Mount Vernon’s sales tax revenue outpaced the adopted figure by $450,000. Showing that Mount Vernon’s economy is stronger than anticipated.

State Revenue Sharing ($ 6,440,122) — Reduced by 10%, based upon notification from state agencies that administer our state aid that we will experience a reduction in state funding. Though we’re hopeful that it will be restored through federal or state bailouts, we must be prepared and operate based on the current information.

Parking Meter and Permit Fees ($3,150,000) — Reduced by $350,000 based on the research conducted by the administration this amount is closer to the actual amount collected over the last two years. This information is reflective of unofficial records from the Department as the Comptroller has refused to provide an official accounting. It seems that previous projections have been floated at fictitious levels for several years.

Real Property Transfer Tax ($2,900,000) — Increased by $200,000 based on market trends which have shown that home sales are on the rise in Mount Vernon. The budget assumption is that Comptroller will collect these funds and deposit them correctly and, in a time-sensitive manner.

Fines and Forfeited Criminal Court Fines ($2,500,000) — Reduced by $850,000 due to revenue reports which showed a downward trend in fines and criminal court fines.

Sales of Real Property ($2,300,000) — Increased by $800,000 due to legitimate offers on City-owned properties. This projection is accurate if the sale of these properties were accepted and finalized this year. As stated above, we intend to be aggressive in the sale of city-owned properties to place them back on the tax rolls and reduce the blight, safety hazards, and liability inherent in their ownership. We cannot continue to hold properties and keep them off of the tax rolls. The City Council and Real Estate Committee must act and vote to sell these properties.

Gain on Sale of tax acquired property ($1,400,000) –Mount Vernon should not be a landlord-now more than ever- with limited staff and financial resources. We believe this projection is accurate if a fair, transparent, public auction of these properties is held this year. This is a mutualistic endeavor giving residents a chance to purchase a new home or property while reducing maintenance costs to the City and returning the properties to the tax rolls as a legitimate source of revenue.

NYS Other (CHIPS Grant) ($1,000,000)- Due to fiscal ineptitude by the Comptroller, we have not been able to pave our roads since 2018. This is due in part to a reimbursable bill from a vendor not being paid. This one action has held up nearly $3 million dollars’ worth of paving issued to the City of Mount Vernon. This money represents the reimbursable portion from the State, it is matched by $1,000,000 appropriation in DPW — Highway Maintenance & Repair (A5110.433). This is further evidenced by the half-paved roads throughout the City (i.e. S.10th Avenue, N 6th Avenue, and others) where the City was unable to compliment the paving done by Con Edison and repave the streets at the same time due to non-payment by the Comptroller.

Collection Fees on Delinquent School Taxes ($0) — Zeroed this revenue line because the City no longer serves as Tax Collector for the MVCSD. Due to the Comptroller refusing to pay school taxes out to the school district, we have lost a guaranteed $500,000 in revenue we used to collect from school taxes.

Building and Alteration Permit ($900,000) — Reduced by $100,000 based on the report provided by the Comptroller in 2019.

Transfer from Water Fund — Net Earnings ($850,000) — Reduced by $600,000 based on unaudited transfers from 2016, 2017, 2018.

Rental of Real Property ($750,000) — Increased by $220,000 based upon actual revenue collected through the City, as per the Comptroller’s 3Q 2019 revenue. The trends dictate that this increase is important.

Transfer from Other Funds — Community Development ($483,611)- New projected revenue associated with the grant funding for new HUD positions and the NYS Attorney General’s Office in the Planning Department. These monies fully cover the salaries and fringe benefits for these new positions.

Emergency Tenant Protection Charges ($120,000) — Increased by $50,000 based on a mandatory charge on the City by the state. The fee was nearly doubled, but the profit is cancelled out by the increase in expense for the Emergency Tenant Protection Act (ETPA).

Electrical Permits ($55,000), Safety Inspection Fees — Building Department ($150,000) — Reduced revenues down by 22,000 and $50,000 respectively which matches 2019 budgeted revenues and predicted COVID-19 restrictions.

REVENUE SUMMARY

We are estimating $ 56,444,172 in revenue this year, which is a decrease from the 2020 adopted revenue projections $57,229,615. This shortfall has resulted in the cuts in positions, part-time salaries, and appropriations, while continuing to fund mandatory step increases, and other mandates.

APPROPRIATIONS

We made 25–50% reductions in office, travel, and equipment expenses across the budget considering COVID-19. Additionally, we also made some necessary increases in technology upgrades in Management Services, the Police Department, and several other departments. There is more money allocated for overtime in our Police and Fire Departments as they continue to deal with the frontline effects of COVID- and the staffing impact of mandatory quarantines and absences resulting from increased exposure. We made tweaks to the Public Works department appropriations by adding dumping costs, (due to more garbage) and reducing fuel expenses (due to lower projected fuel prices). To “close our books” (finalize the financial information and create reports after an accounting period has ended), we budgeted $300,000 to pay auditors to close the numerous city audits that remain open. This is crucial to restoring our credit/bond rating. We also built in mandatory step increases because of the Administration assuming a responsibility that has historically been done by the Comptroller’s office but has been abandoned since 2018.

STAFFING POSITIONS ADDED/REMOVED

In our budget, we eliminated 33 positions from the budget that were previously allocated but remained vacant. For much of 2020, through the height of the pandemic and the remainder of the year we operated with less staff; often it required the use of overtime as COVID sidelined personnel for weeks at a time. The total number of employees in every department (Fire/Police/DPW/Clerical/Appointed) is well below the 710 budgeted employees in 2020. Across the board, salary expenditures for the City of Mount Vernon dropped by 1.12% or $676,552. Within the big three departments (Police, Fire, and DPW) there is a nearly 3% decrease in salary expenditures. While there is a 64% increase in salary expenditures in the Planning Department, that money is completely offset by grants and cost the taxpayers nothing. It’s no secret that there’s been increases to some professional salaries, these increases are necessary for the City to attract and retain the talent and skills required to move the City forward and remedy our historical challenges. Additionally, these wages are not arbitrary figures but are based on verifiable labor market information, required competencies, expertise, levels of responsibility and are commensurate with the results of this professionals occupying those positions.

BUDGET MANAGEMENT COMMISSION

I am creating a budget management commission that will include members of various departments to closely monitor the budget and to provide updates to myself and the council throughout the year for any potential budgeting adjustments. It is our assumption that there will be additional funds and aid from the State and Federal government to help boost our city and replenish the monies used from the beginning of the year. There is still a potential risk that we may have to consider the need to furlough/layoffs in the 2021–22 budget year.

CONCLUSION

We are in the middle of the worst global economic crisis in decades. We believe, that based on the numbers and subjective, piecemeal information that has been provided to us by the Comptroller that this budget is the best estimate we can put forth. It is impossible to predict the financial direction of our City without the critical financial reports that have been denied to our Administration and all City residents (as evidenced by the lack of any financial reports over the last 3 years). Although the proposed budget has a 3.86% tax increase, it has kept salaries expenditures to a minimum, and addressed the unfunded mandates from the State of New York. Our lowered assessed values and the reduction of state aid by $2 Million is a tough hill to overcome, but we will continue to do the work to deliver the best services we can to residents.

The final thought. We must work together to meet the optimal collaboration of revenues and expenses; this proposed budget is the first step toward that goal. It is a work in progress. My Administration is committed to working collaboratively to move Mt. Vernon FORWARD TOGETHER; our stakeholders deserve and should expect no less.

In Service,

Shawyn Patterson- Howard, MPA
Mayor