COLONIE — Facing shortfall of at least $7 million this year, the town is looking to the federal government for help. If that doesn’t come, said Supervisor Paula Mahan, there will be furloughs.
The precarious financial position is largely due to a projected 20 percent decline in sales tax revenue since most retail, including malls and car dealerships, have been shut down or largely curtailed since the COVID-19-induced shutdowns in mid-March.
“We are all in desperate need of federal relief. We are all in the same boat,” Mahan said, adding other spending reductions are underway. “Without federal relief we will have to resort to furloughs.”
In this year’s $99.4 million overall budget, the town projected a 4.7 percent increase in sales tax, to about $25.9 million. Sales tax for any given year is an estimate made the year prior during the budget process. Generally, to avoid a shortfall, estimates of sales tax increases are conservatively made, but prior to the global pandemic the country’s economy was considered one of the strongest in modern times and that boon trickled down to the local level.
Four percent of sales tax goes to the state and 4 percent is split between the county and the municipalities based on a predetermined formula. While Colonie businesses generate by far the most of any other town or village in the county, it gets back about 40 percent based on the logic people living elsewhere spend money in Colonie.
Any reduction in that revenue stream, especially one as dramatic as caused by COVID-19, has a profound ripple effect on budgets across the board. Options to bridge that gap are limited: cut spending, raise property taxes or get aid from a larger level of government.
The federal government has passed three stimulus packages worth trillions of dollars to help businesses and individuals survive the crisis. Local and state governments, though, have not received any aid and Mahan, like local leaders across the nation, are hoping that will change when Washington considers a promised fourth round of funding.
The cities of Albany, Schenectady and most recently Saratoga Springs are already looking at furloughs to close multi-million gaps in their respective 2020 budgets unless federal help comes. New York state is looking at a $15 billion gap, and Gov. Andrew Cuomo has repeatedly called on the federal government to help states because, in part, they are one of the main sources of revenue for schools and other local programs. He has threatened state aid cuts of up to 20 percent should the federal government not come through with funding.
In Colonie, Mahan said she is taking other steps short of furloughs like asking departments to trim up to 10 percent from their 2020 budgets, staff reductions through attrition, restricting spending and overtime and postponing projects. While there has not been a formal announcement yet, a host of summer programs are likely cancelled since that phase of re-opening is not until the end, and there is no guarantee when that will happen or in what form.
The town did recently start leaf pick up again, and crews are working on a rotating schedule to separate employees and avoid the possibility of an infection spreading through an entire department and having to quarantine all the employees at the same time.
The paving program will kick up again next week using mainly contractors with town personnel overseeing the work.
Some town employees are working from home but public safety, police and EMS, are reporting to work every day as are sewer and water departments. While playgrounds and athletic fields are by and large closed to the public, crews still have to maintain the facilities and the grounds so they don’t become overgrown or otherwise fall into disrepair through neglect.
There are also plans in the works to make Town Hall safer for employees and the public by installing features, in accordance with Center for Disease Control guidelines, to maintain the social distancing protocol of six feet or more and still provide basic services when things return to a semblance of normalcy.
The $7 million shortfall in Colonie is as of right now, but how large it grows depends on how long the shutdown continues and, more importantly, how long it will take before people feel comfortable going out and spending money. There is little doubt the COVID-19 shutdown will have an impact on the 2021 spending plan, too.
Furloughs, though, remain a last resort in Colonie because the town is already working with skeleton crews throughout all departments, Mahan said, and having less people translates into a reduction in the quality of services the town can provide.
And, Mahan said, compounding the problem is much of the fat in town government was cut some 12 years ago when she came into office facing another fiscal nightmare, albeit on a more micro level.
“We were not able to do any projects or buy new equipment and we were basically just functioning day to day,” she said. “We have always have had to live with lean budgets because of the circumstances we came into years ago. That is the difference between now and when we first started. We have already done so many cuts. We already have a lean budget. That is how we live and operate so there is not as much there to work with.”
She said Colonie, before the pandemic, had one of the strongest local economies — with homes being built and businesses opening — in the Capital District and does expect that to return once the crisis subsides.
“I do expect the national economy, and our economy, to bounce back and we will be one of the major leaders again,” she said, while acknowledging the unprecedented territory. “Schools are closed. Seniors are isolated. So many people are at home and unemployed. The whole world has changed in such a short people of time.”
