The city of Cortland expects to lose 20% of its state aid through the rest of the year, the city’s finance director says. That’s about $400,000, and combined with an expected $280,000 drop in sales tax revenue, means a lot of pain for city budgetmakers, and taxpayers.
The state notified 12 cities Tuesday that their Aid and Incentives for Municipalities payments will see a 20 percent cut, a $400,000 chunk of the city’s $19 million budget, said Mack Cook, the city’s director of administration and finance.
Cook said that it “certainly means the remaining cities should expect at least the same,” including Cortland.
Cortland County sales tax revenue dropped nearly 32% in April and May compared with the same period in 2019, a loss of $731,000 for the county, Mack reported. That means a loss to the city, too, and is mirrored in communities across the state.
The sales tax revenue is 25 percent of the city’s revenue, a projected $5.05 million this year. “Any drop in sales tax revenue affects the city’s revenue,” Cook said, and less state aid, the next big source of city income is the property tax.
The property tax levy is $9.02 million. Making up the lost state aid and sales tax revenue would increase the levy 7.5% if sales tax revenue were to rebound immediately, which Cook told aldermen is unlikely.
However, Cook expects the state-imposed property tax cap to be less than 2%, perhaps as low as 1.5%, or $135,000, because it’s based on the consumer price index and the recession has kept prices down.
The city has taken steps, including laying off 18 full-time workers until July 31, to save more than $900,000. Another 15 part-time crossing guards were also laid off, Cook said, but would not be working in the summer, anyhow.
The city’s common council will discuss the budget and the revenue at its July 21 meeting.
Alderwoman Kathryn Silliman (D-2nd Ward) hopes to bring back all the furloughed employees.
“Ideally, we would like to get everybody back,” she said. “We also want to restore all of the services. They’re really missing their people. We want to keep providing the services we’re providing”.
Alderman William Carpenter (D-6th Ward) doesn’t want to see the furloughed workers permanently cut, either.
“I don’t want any cuts. We can’t reduce services,” he said. “Economically, we have to do certain things, but we want (the furloughed staff members) to come back so they don’t lose their jobs.”
Much of the lost sales tax income is because of low gasoline prices and car sales, Cook said.
“Both of those significantly fell off,” he said. “Most of the sales tax revenue comes from gas prices and consumption.”
The sales tax revenue numbers in April and May come after solid numbers between January and March, Cook said, but the early increase was more than offset by the drop.
“In 2020, county-wide sales taxes are $591,473 below the same period in 2019, or 8.56 percent,” Cook said. “Collections through May have since 2016 accounted for 39 percent of the total annual collections.”
Despite the city of Cortland and the county about to start Phase 4 of the re-opening process, Cook said getting the revenue to where it should be “is going to take some time.”
Depending on how the rest of the months pan out this year, Cook said 2021 is in line to be “a difficult year financially” for the city and the county, but he emphasized that it “remains to be seen.”
“I’m just letting this all sink in and writing letters to legislators to advocate for support at the state and national levels,” Silliman said.