City Facing Looming Fiscal Challenges

Joseph Stieglitz, an economist who has won the Nobel Prize, was interviewed last week regarding the economic crisis precipitated by the Coronavirus.

In discussing the problematic responses of Congress and the President, he observed that one of the most glaring issues being ignored is the crisis that states and local governments are going to face.

According to estimates from the New York State Association of Counties, lost sales tax revenues could be devastating for local governments in New York. I got these numbers from a Gazette Newspaper article written by Stephen Williams :

  • Albany County could lose between $11.2 and $34 million.
  • Fulton County could lose between $1 and $3.2 million
  • Montgomery County could lose between $1 and $3.2 million
  • Saratoga County could lose between $5.9 and $24 million
  • Schenectedy County could lose between $3.6 and $11 million
  • Schoharie County could lose between $583,000.00 and $1.8 million

[JK: We are so fortunate to have Stephen Williams still covering our county. Given the retirements and turnover in newspapers, to have Mr. Williams institutional memory serving us is extremely fortunate. He has an exemplary record for fairness and accuracy. Thank you, Stephen]

Here in Saratoga Springs, where much of our city income is dependent on the hospitality industry, real estate, and retail sales, the impact is potentially devastating.

This financial threat comes on top of the potential loss of 2.3 million dollars of VLT money from the state. While this money has been restored in the NYS Assembly budget it is not in the Senate version. It remains to be seen whether it will be included in the final state budget.

The city does such an excellent job that many people are not aware of all the services the city provides. From the maintenance of our roads and water supply to fire and police protection, city employees do the work that is often taken for granted but is what makes Saratoga a safe and congenial place to live.

I spoke to Commissioner of Finance Michele Madigan. She offered the following:

“Fortunately our city is going into this turbulent time financially strong.  We have a top bond rating.  We have excellent cash flow.  We have very strong internal controls and with the new addition of Lynn Bachner as our budget officer, we have a detailed grasp of the budgetary needs of our departments.”

“Still as a country we need the Federal government to think strategically about insuring that the local services provided by our towns, villages, and cities are delivered during these difficult times.”

We have yet to see President Trump meeting with mayors or other local officials, but we regularly see him meeting with corporate executives. While we need to protect their employees, we have a history of our large corporations exploiting Washington. The airline industry was showered with tax breaks in the last tax package. Instead of establishing reserves for potential crises such as we are now experiencing, they spent literally billions buying back their own stock to inflate the value of their executive’s options. Now the taxpayer is expected to bail them out. We cannot let these airlines fail, but hopefully (and I do mean hopefully)the Federal government will insist on bailout terms to protect employees and the public interest.

I am pessimistic about what the financial “rescue” package will look like, however, once the lobbyists get done.

Reorganization In The Finance Office

In response to the looming financial challenges to the city brought on by the pandemic, Commissioner of Finance Michele Madigan received City Council approval to hire a Budget Director for the City of Saratoga Springs.

. “Our efforts to protect the health, safety, and welfare of our citizens and visitors are dependent on our ability to manage the economic impacts of the current, and rapidly changing situation,” Madigan explained. “There is no better time than now to ensure a strong finance team is available to work through the looming financial situation that will affect city revenues and expenses in the very near-term.”

Lynn Bachner has been hired to fill this new position [JK: Full disclosure, Lynn is a friend].

Lynn Bachner is an exceptional appointment. She has a Juris Doctor from University of Wisconsin Law School and Masters Degree from Johns Hopkins.
She was the Deputy Commissioner of Finance for eight years for two different Finance Commissioners during the administrations of five different Mayors. She is currently the Executive Assistant to Mayor Meg Kelly.

Ms. Bachner enjoyed the reputation of knowing every detail of the expenditures of every city department which explained her ability to craft budgets that were accepted by the other city departments. Given the potential for conflict in crafting the city budget, the respect and popularity she enjoyed at city hall reflected both her knowledge of details and sense of fairness.

Regrettably, in light of the looming challenges for city revenue, in order to hire Ms. Bachner, Commissioner Madigan had to indefinitely furlough Deirdre O’Dwyer -Ladd, her Deputy. Ms. Madigan praised Ms. O’Dwyer-Ladd in her announcement regarding the reorganization.

Ms. O’Dwyer-Ladd truly is an exceptional person. Those cynical about public employees would get a healthy education on the quality of those who work for the city if they had the good fortune of knowing her. I feel badly, not only for her but for the city, that we had to make this sacrifice.

6 thoughts on “City Facing Looming Fiscal Challenges”

  1. This would be a good time for the state not to change course on the policy of funding municipalities that host VLT operations. Our City will be facing devastating losses in revenue as the business community, the entertainment sector and tourist and travel activities grind to a halt. The City is vulnerable as are many of our local business owners and their employees.

    President Trump seems to think that the crisis will be over soon and we will all simply pick up where we left off. I am not an economist but I think that our recovery will be much more complicated and dis-jointed. I am pleased to see that Commissioner Madigan has made the tough decisions necessary to help our City weather this terrible economic storm.

    Chris Mathiesen

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  2. John,

    I have read the TU article referenced in the John D. post above. The story seems to lack content.

    Can you find out if the 50% increase in compensation for certain County official was formally authorized by resolution of the Board of Supervisors. The story notes that some members of the Board, including one of the city’s, seem to have not been fully aware. Certainly that suggests that the award was made without required legal authority.

    As you know, Saratoga in a non-charter county and is governed by NYS General County Law. So certainly only the Board of Supervisors would have the authority by formal action to grant such increases. Also, the County does not have a county executive. The siting chairman of the Board serves in the executive capacity but he can only act, as in this matter, if specifically authorized by vote of the full Board. He cannot unilaterally act.

    There is a County administrator, but he is not an executive authority and serves at the pleasure of the Board. That title was established by local law of the Board and has limited authority, certainly nothing that would permit an action that amounts to amending the County budget and compensation schedule.

    So it is inscrutable, as the story suggests, that there was no formal action.

    Can you use your contacts to clarify. Certainly officials such as the county sheriff and county administrator would not be entitled to additional compensation for performing duties in a public emergency that are inherently part of their roles. Perhaps the story is not accurate so clarification would be helpful.

    Thanks.

    Lew Benton

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    1. No one, because John Gault is a narcissistic avatar of a person that ignores everything in a society that allows it, and himself, to prosper. He doesn’t give a thought to things like public schools or national defense, and cares only about his individual rights without caring how that same school of thought can lead to excessive consumption that damns the future. John Gault, in this scenario, would have the worst possible mindset. Rather than a hero, he’d be the guy hoarding masks and hand sanitizer to sell at an obscene markup all in the name of “personal liberty” and the “free market”. This deeply flawed character isn’t surprising from Ayn Rand, a selfish hypocrite that demeaned those who used social services until she needed them herself.

      We need less John Gaults, not more.

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