Photo by Joanne Beck
With $1 million more in expenses, an expected flat sales tax per the state comptroller and unstable revenue sources such as video lottery terminal money, the city should consider a tax cap override this year, Manager Rachael Tabelski says.
She talked Monday evening about the juxtaposition of raising the tax cap due to increased property assessments, even though the tax rate itself is to decrease by 50 cents per $1,000 assessed value.
“I believe the city has been extremely fiscally responsible in restraining tax hikes for our citizens, but keeping up with the inflationary demands of our expenses continues to remain challenging. This year, we face a million dollars of additional expenses for health care and retirement alone, as well as a nearly flat sales tax projection, so we need to rely on more revenue from other sources, including, in this case, property tax,” Tabelski said during City Council’s conference meeting at City Hall. "Obviously, the city needs to be careful and conservative in projecting our revenue, especially the sales tax, and find a balanced approach to raise enough money to support current services with our property tax while also using reserves, unassigned fund balance and other revenue sources to keep a healthy financial position.
“Recently, the state comptroller's office was very vocal in advising municipalities to stay flat on your sales tax numbers because we didn't know what the economy was going to do with the new administration,” she said. “And it's only a few days in, and we're still finding out how quickly the economy will change and move.”
That tax cap is not absolute, she said and can be overridden by a vote of 60% of the local governing body. Because the tax cap “seldom actually equals 2%,” it's extremely hard for governments to use this formula and remain under 2% while expenses for employees, wages, health care and retirement continue to grow, she said.
“The only way that the tax cap is fair is if the tax cap actually equals the inflation rate, so therefore, it can keep up with the additional spending just to provide the same core services we do today,” she said. “Right now, inflation is three, three and a half percent. As you see, our general fund budget, as proposed at this time, increased by 2.6%, which is $600,000 over last year. Even with the override consideration, property tax owners will see a 50-cent decrease per $1,000 in their taxes this year.
“At this time, I recommend the City Council move forward to schedule the tax cap override legislation to be considered at the February business meeting, and the legislation does call for a public hearing.”
A public hearing is to be set at the next business meeting on Feb. 10. On that date, the council is also expected to set hearings for the 2025 budget and both the proposed water and sewer rate increases.
Council also had its first budget session, at which Tabelski reviewed city data numbers for the $38.8 million total proposed 2025 financial plan and the municipality. These are the numbers that tell a story of decreased population from a high of 18,210 in 1960 to 15,596, according to the latest census, with males tipping over at 52% and females at nearly 48%.
The median age in the city is 40, and healthcare and social services jobs weigh in at a hefty 4,240, with manufacturing in second at 3,488 jobs, retail at 2,080, and public administration at 1,778. Healthcare was at its peak in 2022, with more than 6,000 jobs here, which fell to 4,186 a year later.
The 64% white-collar and 35% blue-collar workers total 9,476 employees in Batavia, and more than half of the businesses — 54.96% — employ one to four people, followed by nearly 21% employing five to nine people, and the lowest of 2.36% having 100 or more employees under their roof.
At least 34% of the population has obtained a high school degree, with more than 39% going on for an associate’s degree or higher.
Demographics aside, property owners are to pay a projected $8.46 per $1,000 assessed value, or $846 for a home assessed at $100,000, and a $50 decrease from last year if assessed property values remain the same. The current rate is $8.96 per $1,000.
Tabelski arrived at that decrease by pulling revenue from several other areas, including $526,000 from the unassigned fund balance, $310,000 from retirement reserves, a $300,000 water fund transfer and $250,000 departmental income.
“You're basically saying that you're using a bunch of variety of funding sources to balance the budget so that we're not taking too much out of savings, and we're balancing it between the decrease and the reserves. So we're trying to get a little bit from everything to kind of balance it all out,” Council President Eugene Jankowski Jr. said. “Hopefully, we'll see more information in the next year, and we'll have a better prediction of how inflation is going to either level up or increase. We don't know yet, so right now, we're being cautious about funding. Correct?”
That’s right, Tabelski said, and if city officials could have raised sales tax, “we wouldn't have needed to have done the override.”
“Particularly if we could have had a flat year in health care and retirement, same thing, but those costs are essentially out of our control,” she said.
It’s about trying to “rough it out,” Jankowski said. These calculations help.
“It’s not a huge savings, but it is a big savings, “ Jankowski said. “And I think that's where we should continue to work on is trying to keep that tax rate as low as possible, and even lower, if we can do that extra with good sales tax and possible, the governor increasing the AIM aid on a permanent basis instead of throwing a little out here and there.
"I just think it’s amazing this is the lowest tax rate we’ve had in 17 years,” he said. “It’s nice to see that even though inflation is going up.”
Water rates are to increase by 1% or 6 cents to $6.52 per 1,000 gallons and sewer by 3% or 9 cents to $3.23 per 1,000 gallons. An average family of four can expect to pay about $850 to $900 a year, including meter and capital improvement fees, Tabelski said. That does depend on consumption at the property and a home with no leaks, she said.
Police and fire expenses make up 47% of the budget, Tabelski said, and with healthcare, it's more than 55%. Property taxes go toward services, including police and fire response to emergencies 24 hours a day and for similar responses from the public works department, she said. Taxes also go for repair and replacement of infrastructure, including streets, sidewalks, parks, water and sewer plant and lines, storm sewer and parking lots, and investing in economic, business, job, housing and community development, plus maintenance of street lights.
Given the close proximity that homes were built to one another at one time, Jankowski is grateful to have a paid fire department nearby, he said.
“It's important to have a fire department that can respond very quickly, or else, my house goes up when my neighbor’s house goes up and the next neighbor, but you end up in a chain reaction kind of thing. So that good response time, I think you said you're approximately three to four minutes … when I had the experience of my neighbor's house was on fire, and it was a dramatic one years ago, it's nice to have the fire department there very quickly to bring it under control and contain it,” he said. “I mean, we're an old-style city, so everything nowadays, they spread things out. But that's important. Same thing with police and fire police as well. I think a lot of people I talk to when they live in the city, kind of expect a paid fire department, a paid police department, DPW, actively involved, because it's just the nature of the business of having that many people in a small area.
“So I think it's important that that's why Council focuses on public safety, police, fire, DPW, those are our core funding. So for our tax base, that's what people want. They want their infrastructure, want their police, they want their fire,” he said. “So that's the feedback I'm getting. So that's where we've kept our focus, and we're not looking for pet projects here and there that maybe would cost a lot of money to try to stay focused on.”
The next budget session will include a review of the fire department, general government and administrative expenses. It’s set for 5 p.m. Feb. 4 at City Hall.
