The city of Cortland may borrow up to $2.5 million to pay bills early next year after it projected losing $1.5 million in revenue because of the coronavirus pandemic, the city’s administration and finance manager said Monday.
Mack Cook said that if the city must borrow the money, it would need to be repaid in 2021, which could raise the property tax levy.
The 2020 levy is about $9 million, so an additional $2.5 million would be a 27.8% increase, reduced by other income or reduced spending.
However, Cook said he’s not sure the city would need the money.
The city expects to receive $3 million Jan. 1, but also faces nearly $3 million in payments.
The money would help pay for pensions, liability insurance, workers’ compensation, and winter labor and supply costs.
Pensions cost about $2 million a year, workers’ compensation is $365,000, liability insurance is $225,000 and the city budgets $385,000 for the winter months.
With the sales tax revenue down 13% in July and 33% in August – along with a 20% anticipated cut in overall state funding — Cook said borrowing money could be used as backup due to January being a “difficult month payment wise.”
The city is expected to lose $1.1 million in sales tax revenue and $400,000 in state aid, Cook said.
“These are very rare times,” he said. “With the fallout of sales tax and cuts in state aid, I don’t want to be at the end of the line. I want this to be in place just in case we have to borrow the money.”
Mayor Brian Tobin said many other municipalities face the same problem.
“This is not a normal situation for the city,” he said.
“I’d rather prepare for this now than scramble months from now,” Alderman Bruce Tytler (D-3rd Ward) said. “I don’t like the idea of borrowing money, but at the same time the way Mack has figured out how to offset the costs it’s a good step forward.”
Alderman Troy Beckwith (D-7th Ward) wonders whether $2.5 million will be enough.
“I don’t see the sales tax revenue coming in as projected,” he said. “A lot of people are struggling so people will be paying less for services.”