Local governments are facing increased fiscal pressures due to a combination of the end of federal pandemic aid, higher inflation, rising operating costs and moderating sales tax revenue growth. Local officials should be pragmatic when planning future budgets, and I encourage them to use the FSMS [Fiscal Stress Monitoring System] information and tools we provide to help them make prudent financial decisions.
This week, the Board of Estimate and Apportionment (BEA), made up of the mayor, the Common Council president, and the treasurer, begins the task of crafting the city budget for 2027. It is a process that is scheduled to continue into November. Here is the full schedule:
- Monday, September 28
- 2:30 p.m.--Clerk, Council, Records Management, Animal Control
- 3:30 p.m.--Code Enforcement
- Wednesday, September 30
- 2:30 p.m.--Legal
- 2:45 p.m.--Housing
- 3:00 p.m.--Mayor
- 3:30 p.m.--Assessor
- Monday, October 5
- 2:30 p.m.--Public Works
- 3:30 p.m.--Conservation Advisory Council
- 3:45 p.m.--Planning Board
- Wednesday, October 14
- 2:45 p.m.--Treasurer
- 3:00 p.m.--Senior Center
- 3:15 p.m.--Police and Parking
- Friday, October 16
- 2:30 p.m.--Cemetery, Water and Sewer
- 3:30 p.m.--Sidewalk Improvement District
- Monday, October 19
- 2:30 p.m.--Fire
- 3:15 p.m.--Youth
- Wednesday, October 21
- 2:30 p.m.--Nondepartmental/Revenues
- Friday, October 23
- 2:30 p.m.--Revenues
- Monday, November 2
- 2:30 p.m.--Overall Budget Review
- Wednesday, November 4
- 2:30 p.m.--Overall Budget Review
- Friday, November 6
- 2:30 p.m.--Overall Budget Review
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Will this be the year Hudson's annual budget exceeds $20m... for a City of ~5,500, with 18 elected positions?
ReplyDeleteIt will be interesting to see what the focus is on when the BEA begins its work this year.
ReplyDeleteThe City is going broke and no one seems to be talking meaningfully about revenues. Yes, and thankfully, Heather Campbell is, as always, the voice of reasoned analysis. But her focus is on performance, not policy. One really has to look at the publicly available numbers to conclude that the State Comptroller's office has a pretty sanguine view of municipalities living from what amounts to paycheck to paycheck. Perhaps that tells us something fundamental about NYS muni finances generally. I don't know.
The Council has to come to grips with its responsibility to address the City's revenue needs in a meaningful way. Will the budget shrink in the future? Maybe? Probably? No? It does seem likely that there will be some level of austerity since there are at least a few adults in the room now compared to recent prior councils. But non-fixed costs -- personnel, payroll and benefits, insurance, fuel, maintenance. . . . they don't get less expensive over time.
The simplest and most fundamentally fair thing is to first do a reval of the city's inventory of taxable real estate. Yes, the Council of course hates this idea, preferring to raise parking fines. The problem is that parking fines are regressive perforce and suffer particularly from the law of diminishing returns. In short, that ain't going to fix the problem and, likely, will exacerbate it as compliance increases in the face of higher fines, collections go down while the costs of administration and collection continue to increase in real numbers as well as a percentage of gross fines. I believe a bit of research by an alderperson might reveal this.
While lodging taxes have little to no elastic effect on demand, it's irresponsible to rely on a single industry (and then just a sector of it) to balance the books. Besides, "little to no" is not "none whatsoever." And, as much as it might seem that adding a City sales tax on prepared food and beverages would also have an inelastic effect on demand for those goods, it turns out that's not the case. In fact, prepared food and beverage sales are highly elastic as to taxes: everyone sees the bill every time they pay for their meal or cocktail. So a percentage increase in applicable sales taxes will result in a concomitant drop in sales tax collections from that sector. Not a good outcome for the City or the city.
The elected council and mayor face a severe and important test: will they watch as we sink in to bankruptcy or will they rise to the occasion? The lodging tax was first studied and the original bill drafted by the Council Finance Committee in response to a challenge to "find" a half-million dollars a year. We didn't get that right away but we're pretty close now, I believe. Unfortunately, lodging taxes in a NYS city are about as low-hanging as fiscal fruit can get. But neither lodging taxes nor parking fines are the limit when it comes to municipal revenue. Yes, home rule in NYS is about non-existent but that again only underscores the need to start the work as soon as possible, looping in our state reps and doing the hard work of creative fundraising (i.e. raising City revenues without taxing the locals ;) ).
I hope the BEA and the council can do something meaningfully valuable to get us on the way a sound fiscal position.
Indeed, John.
ReplyDelete> On the revenue side:
- Can the five (5) paid Hudson Supervisors work together to try to get a bigger slice of the Columbia County Sales Tax Revenue for the City of Hudson?
After all, Hudson (and Greenport) likely generate proportionally a lot more than what we get in return?
- Will we change the parking revenue structure (introduce resident parking, charge non-residents more on weekends?) to maximize revenue?
> On the cost side:
- Will the next election be the first one where candidates run on cutting services and taxes? (Previously verboten)
- Has anyone done the math to see the increase in municipal cost (without matching tax revenue) to Hudson taxpayers if Bliss & Mill Street (in their proposed scale) continue?
There are obviously so many efficiency gains that can be made with basic transparency.
For example, why does the Youth Center manage its own physical facilities and IT, unlike any other City Department... ? Can the City of Hudson car fleet be consolidated or leased...
Who knows (and is the BEA tracking) what the total taxable real-estate market value is?
How many full tax parcels?
What is the plan to increase tax parcels vs. lose tax parcels (e.g. 11 Warren St)?
Has the city never imposed its own sales tax? And if not, why not start now?
ReplyDeleteThe current system is:
County sales tax: 4%
County keeps: 70%
County allocates: 90.5% of the remaining revenue to towns based on population and 9.5% to Hudson (which is close enough to how the city would fare under the population allocation anyway)
Automobile and gasoline sales tend to be two of the largest sales tax revenue sources. I don’t know how many dealerships or gas stations operate within the Hudson city limits, but the answer is probably “not many”.
There are 18 cities in the state that charge their own sales tax. Why not us?
We do charge sales tax. 4% on regular sales and then another 5(?)% on lodging. The county adds 4% to everything. We don't increase it on prepared food and beverages at restaurants which, as a city, we can likely do (with Albany's blessing) (but shouldn't).
DeleteThe state imposes 4.0% and the County another 4.0%. I have found no source that indicates Hudson has its own municipal sales tax rate and several that indicate that it does not.
ReplyDeleteHere is DTF’s list of local tax rates for the entire state as of March 1, 2025. Those municipalities with their own sales tax are listed. Hudson is not included.
https://www.tax.ny.gov/pdf/publications/sales/pub718.pdf
Tax policy is not my forte but it seems like the current structure plays out like this:
$100 purchase
an additional $4 goes to NYS (4.0% state sales tax)
an additional $4 goes to the County (4.0% County rate)
The County keeps 70% and allocates 9.5% of the remaining 30% to the city.
From this one transaction, Hudson receives ($4.00 x .3) x .095. That works out to 11.4 cents.
If Hudson detached itself from the County and imposed its own 4.0%, that $100 transaction would yield $4 in municipal revenue.
If this is all correct (and it very well may not be), for the current arrangement to be more beneficial to Hudson than adopting its own local rate, the rest of the county would need to generate 35x the total taxable sales amount in Hudson. It’s possible that it does, but it seems like it’s worth finding out.