County officials wary of tax cap amidst challenging 2025 budgeting process
NORWICH – Facing issues like inflation, weakened revenues, escalating costs, and a shifting financial burden of mandates from the state to the county, Chenango County officials are in the midst of the most challenging budgeting season they’ve seen in years.
The county’s annual fiscal plan consists of 65 separate budgets, submitted by 35 departments. Department heads are now combing through the details of their office budgets to be reviewed by board committee members prior to the releasing a draft county-wide budget in November.
Despite the continuation of New York State’s 2 percent property tax cap for local governments in 2025 (equating to about $800,000 for Chenango), county officials are uncertain that they can stay below that threshold.
“At this point in time, it’s very hard for me to call where it might go; but I think there is a good likelihood that we will have a hard struggle meeting the cap,” said Chenango County Treasurer Bill Craine. “We’re not quite far along enough in the process.”
Craine pointed to a number of factors driving concerns over next year’s budget, chief among them being inflation. The Chenango County Board of Supervisors passed a $112 million budget for 2024, exceeding the 2 percent state tax cap with a 3.5 percent increase over the previous year. Factoring in inflation, county supervisors are looking at a nearly $3.5 million additional needed to continue services next year.
Craine said the county’s banking on state aid to offset some of those costs; however, local taxpayers may have to shoulder some of the burden. Where the county would typically look to sales tax to help ease the strain, lackluster sales tax collections in Chenango County over the last several months haven’t helped.
“We often look to sales tax to augment that fairly substantially,” Craine said, explaining that of the 8 percent sales tax collected, 4 percent goes to the state while the remaining 4 percent goes to the county (1 percent of which is earmarked for operations at the correctional facility). “We continue to be down 2.8 percent for the year.”
The county relies heavily on the local automotive industry, including car sales, repairs, and gas sales to feed its sales tax revenue. Roughly 40 percent of Chenango’s sales collections are related to the local auto market. With sales tax collections currently in a slump, county officials may not appropriate any more money for sales tax revenues for 2025.
Additionally, the county faces a number of mandates imposed by New York State that don’t receive state aid to help balance subsequent expenses. Unfunded mandates are putting pressure on local governments, especially in areas where the state legislature once provided some assistance.
“We have limited revenue because of what’s going on with interest rates and inflation and sales tax, and at the same time we’ve had between 2023 and 2024 a number of costs borne by New York State that were shifted to us,” Craine said.
One of those unfunded mandates is a requirement that the county cover expenses for its rehabilitation and detention program. The restoration program deals with individuals with mental illness who have been charged of a crime and deemed mentally unfit to stand trial. Individuals in the program are placed in facilities overseen by the New York State Office of People with Developmental Disabilities (OPWDD) or Office of Mental Health (OMH), both of which can charge between $700 and $1,400 per day for the care of just one individual.
New York State previously reimbursed the county for restoration services at half the cost; but that funding was stripped away in 2023, leaving local taxpayers to foot 100 percent of the bill.
Other unfunded state mandates include Medicaid services which is estimated to cost the county an additional $1.2 million over the next five years; and an hourly rate for assigned counsel where there’s conflict that can’t be handled internally. Expenses increased from roughly $75 per hour for outside counsel to $159 per hour last year. The state is paying the difference.
County officials also saw a new loss of revenue this year resulting from recent changes in federal law that alter the way proceeds of tax foreclosed properties are distributed. Under the new law, the county can now auction off properties which have undergone tax foreclosure and keep only the money owed on taxes before giving residents and lienholders a chance to claim the rest.
Counties were previously permitted to sell foreclosed properties to the highest bidder without conditions of paying dues to the property owner. In 2023, the county sold off 46 properties, collecting nearly $494,000 in surplus gains and taking a $181,500 hit in net losses; however, because of changes to the tax sale law, county officials don’t know how much of those gains can be applied to the fiscal yearly budget.
Aside from mandates, revenue loss, and the result of inflation, the county treasurer’s office is dutifully managing pay raises for county employees that were put in place in 2022 and are now showing their effects. The contractual agreement between the county and the Civil Service Employees Association (CSEA) called for annual 4 percent raise and a $2 per hour increase to the base hourly wages for all Chenango County CSEA employees – a move that’s helped attract and retain employees but taken a couple years to make a notable mark on the financial books, said Craine. Other contract deals were also signed with the nurses union and Chenango Sheriff’s Employees Association.
While the county now has more teeth in a competitive job market, it also had to adjust for salary increases of 15-20 percent over the course of three years.
The county’s budgeting process is guided by six self-imposed precepts. They include: maintaining a balanced budget within reason; adhering to the state mandated tax cap (other than in exigent circumstances); maintaining a “not in fiscal stress” rating from the NY State Comptroller’s Office; Remaining debt free; keeping a $20 million unassigned general fund surplus; and limiting surplus used for the following year’s budget.
“We believe we’ll meet five of those precepts for 2025” said Craine. “We have some really hard work ahead of us.”
The county’s annual fiscal plan consists of 65 separate budgets, submitted by 35 departments. Department heads are now combing through the details of their office budgets to be reviewed by board committee members prior to the releasing a draft county-wide budget in November.
Despite the continuation of New York State’s 2 percent property tax cap for local governments in 2025 (equating to about $800,000 for Chenango), county officials are uncertain that they can stay below that threshold.
“At this point in time, it’s very hard for me to call where it might go; but I think there is a good likelihood that we will have a hard struggle meeting the cap,” said Chenango County Treasurer Bill Craine. “We’re not quite far along enough in the process.”
Craine pointed to a number of factors driving concerns over next year’s budget, chief among them being inflation. The Chenango County Board of Supervisors passed a $112 million budget for 2024, exceeding the 2 percent state tax cap with a 3.5 percent increase over the previous year. Factoring in inflation, county supervisors are looking at a nearly $3.5 million additional needed to continue services next year.
Craine said the county’s banking on state aid to offset some of those costs; however, local taxpayers may have to shoulder some of the burden. Where the county would typically look to sales tax to help ease the strain, lackluster sales tax collections in Chenango County over the last several months haven’t helped.
“We often look to sales tax to augment that fairly substantially,” Craine said, explaining that of the 8 percent sales tax collected, 4 percent goes to the state while the remaining 4 percent goes to the county (1 percent of which is earmarked for operations at the correctional facility). “We continue to be down 2.8 percent for the year.”
The county relies heavily on the local automotive industry, including car sales, repairs, and gas sales to feed its sales tax revenue. Roughly 40 percent of Chenango’s sales collections are related to the local auto market. With sales tax collections currently in a slump, county officials may not appropriate any more money for sales tax revenues for 2025.
Additionally, the county faces a number of mandates imposed by New York State that don’t receive state aid to help balance subsequent expenses. Unfunded mandates are putting pressure on local governments, especially in areas where the state legislature once provided some assistance.
“We have limited revenue because of what’s going on with interest rates and inflation and sales tax, and at the same time we’ve had between 2023 and 2024 a number of costs borne by New York State that were shifted to us,” Craine said.
One of those unfunded mandates is a requirement that the county cover expenses for its rehabilitation and detention program. The restoration program deals with individuals with mental illness who have been charged of a crime and deemed mentally unfit to stand trial. Individuals in the program are placed in facilities overseen by the New York State Office of People with Developmental Disabilities (OPWDD) or Office of Mental Health (OMH), both of which can charge between $700 and $1,400 per day for the care of just one individual.
New York State previously reimbursed the county for restoration services at half the cost; but that funding was stripped away in 2023, leaving local taxpayers to foot 100 percent of the bill.
Other unfunded state mandates include Medicaid services which is estimated to cost the county an additional $1.2 million over the next five years; and an hourly rate for assigned counsel where there’s conflict that can’t be handled internally. Expenses increased from roughly $75 per hour for outside counsel to $159 per hour last year. The state is paying the difference.
County officials also saw a new loss of revenue this year resulting from recent changes in federal law that alter the way proceeds of tax foreclosed properties are distributed. Under the new law, the county can now auction off properties which have undergone tax foreclosure and keep only the money owed on taxes before giving residents and lienholders a chance to claim the rest.
Counties were previously permitted to sell foreclosed properties to the highest bidder without conditions of paying dues to the property owner. In 2023, the county sold off 46 properties, collecting nearly $494,000 in surplus gains and taking a $181,500 hit in net losses; however, because of changes to the tax sale law, county officials don’t know how much of those gains can be applied to the fiscal yearly budget.
Aside from mandates, revenue loss, and the result of inflation, the county treasurer’s office is dutifully managing pay raises for county employees that were put in place in 2022 and are now showing their effects. The contractual agreement between the county and the Civil Service Employees Association (CSEA) called for annual 4 percent raise and a $2 per hour increase to the base hourly wages for all Chenango County CSEA employees – a move that’s helped attract and retain employees but taken a couple years to make a notable mark on the financial books, said Craine. Other contract deals were also signed with the nurses union and Chenango Sheriff’s Employees Association.
While the county now has more teeth in a competitive job market, it also had to adjust for salary increases of 15-20 percent over the course of three years.
The county’s budgeting process is guided by six self-imposed precepts. They include: maintaining a balanced budget within reason; adhering to the state mandated tax cap (other than in exigent circumstances); maintaining a “not in fiscal stress” rating from the NY State Comptroller’s Office; Remaining debt free; keeping a $20 million unassigned general fund surplus; and limiting surplus used for the following year’s budget.
“We believe we’ll meet five of those precepts for 2025” said Craine. “We have some really hard work ahead of us.”
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