[Lew Benton (the picture is not of Lew) has done a tremendous service to our community in analyzing Saratoga Springs Finance Commissioner Minita Sanghvi’s budgets during her tenure in office. Lew documents how Sanghvi’s arbitrary numbers have “baked in” deficits into the city’s finances and have left the city in a deep financial hole for others to try to dig out of. His assessment? She has routinely violated her fiduciary obligations.]
From Lew Benton
The “Participatory Budgeting” process was ill-conceived from the start, but in the final analysis, its impact on the city’s fiscal health was insignificant when compared to the structural deficits built into the spending plans of the last few years.
With the advent of the Sanghvi administration four years ago, the city began preparing and adopting operating budgets with baked-in deficits. This was not unique, but each successive budgeting cycle since 2023 has consistently and increasingly underestimated expenditures and overestimated revenues.
The 2023 and 2024 budgets even included a non-existent $250,000 cannabis tax revenue. But finance’s biggest budgeting sin has been underestimating major operating costs. Initially, in the preparation of the 2023 budget, a council majority made up of new members, including the budget officer, could be given some empathy. But in preparing the 2024 budget, the finance commissioner failed to reverse course.
No doubt, the lack of institutional knowledge and limited understanding of how this government functions among a council composed of first-term members could temper the inadequacies in the 2023 budget. But failure to recognize and correct them going forward was unacceptable and violatedher fiduciary responsibility.
And that failure was aggravated by her inexplicable decision to present the then-proposed 2024 budget in a form wholly inconsistent with the requirements of the City Charter.
Rather than, as outlined in the Charter, follow a standardized budget format that employs “ … the most feasible combination of expenditure classifications by funds, organization unit, program, purpose, or activity and object,” all proposed expenditure lines were lumped together, not disaggregated by function.
Attempting to understand and compare the commissioner’s proposed amended 2024 budget with previous spending plans was as perplexing as Alan Turing’s early efforts to crack the Enigma Code.
The Charter requires a budget presentation that is transparent, relatively simple, and allows and encourages understanding. The commissioner’s amended budget format was opaque.
For example, several “department” expenditure lines under the auspices of the mayor were simply thrown together, co-mingled. The reviewer was left to divine which line items are part of which of the mayor’s several department budgets: i.e., City Attorney, Planning, Building, Human Resources, etc.
The same was true for Finance, Accounts, Public Safety, and Public Works. In the latter two, Public Safety and Public Works, the task of meaningful, comprehensive review of the budgets of discrete functions: i.e., fire services, policing, EMS, etc., required substantial investment in time and enough working knowledge to assign each line item to its respective agency.
In the mayor’s proposed budget, there were at least seven expenditure lines labeled “Professional Services,” but the only way to determine which department each line applied to required a time-consuming, tedious matching of account numbers.
Why finance elected to abandon a budget format that had always been relatively easy to read and understand, in favor of one significantly more difficult to puzzle out, is itself a conundrum.
The 2024 City Comprehensive Budget would eventually require significant amendments to avoid operating deficits, at the expense of the City’s fund balance.
First and foremost, it included unfavorable budget variances in both major revenue and expenditure accounts.
That all came on the heels of a 2023 budget that preordained the 2024 proposal’s many overstated anticipated revenues and, in some cases, grossly underfunded expenditure lines.
Attempting to transfer blame to those who had no hand in the adoption of the 2023 budget or the preparation of the 2024 plan, citing recent high inflation and the dearth of new revenue streams for the city’s fiscal difficulties, rang hollow.
All local governments are faced with the same headwinds. It might be more honest to acknowledge that hiring additional non-essential employees was not prudent, that budgeting non-existent revenues and deliberately low-balling major expenditures invites deficit spending.
The following are examples of the unfavorable variances in the 2024 operating budget.
Revenues
In Finance, $850,000 in Hotel Occupancy Tax revenue was proposed for 2024. This is over $100,000 more than was actually realized in FY 2022 and over $600,000 more than has been received to date in 2023.
The 2023 budget included a non-existent ‘Cannabis Tax’ revenue of $250,000. The proposed 2024 budget carries that same amount forward. Potential first-time revenues, such as this one, do not usually meet expectations. And prematurely including the revenue in the 2023 budget only added to a negative revenue variance
The proposed Mortgage Tax revenue for 2024 was $1.5 million compared to the $933,400 collected to date in 2023. The $933,400 was far below the $2.05 million budgeted.
The mayor’s budget was ripe with unfavorable 2024 revenue variances. The Building Permit account carried a proposed $700,000 revenue even in the face of a major decline in permit revenues in 2023.
Likewise, Planning Board fees were unrealistically overstated. Actual 2022 Planning Board revenue was $122,820. Still, this revenue line was increased to $200,000 in the adopted 2023 budget, but Finance projected it would fall $35,000 short.
The Public Safety revenue budget included a $300,000 increase in Ambulance Transportation charges over the $2 million projected to be realized by the end of FY-23, and is over $500,000 more than actually collected in 2022.
Parking Enforcement revenue was anticipated to be $462,0000 this in 2023, down almost $80,000 from the $540,000 budgeted and $38,000 less than the $500,000 in the 2024 proposal.
Operating Expenditures
The operating budget also includes many likely unfavorable variances. Just as overestimating revenues in the actual 2023 and 2024 budgets contributed to the city’s present fiscal dilemma, so have what appear to be unfavorable variances in the operating budgets.
In the 2023 Public Safety operating budget, the City Council included $190,000 for Fire Fighter Overtime, but finance projected that by the end of the fiscal year, $533,500 would be spent, which was an astronomical increase of $343,500 over the amount budgeted.
Similarly, the Firefighter Compensation Time budget was anticipated to be overspent. Only $190,000 was earmarked for this line in the 2023 budget but $563,000 was anticipated to be spent by year’s end, a $373.000 overage.
So too is the proposed 2024 Police Overtime and Compensation Time lines grossly underfunded. Finance proposed to appropriate the rather odd amount of $263,637 for Compensation Time vis-à-vis the $483,570 spent in 2022 and the projected $450,000 in 2023. The 2024 OT line is set at $325,000, compared with the $507,505 expended in 2022 and the then-estimated $450,000 in 2024.
In the aggregate, Finance is proposing 2024 Police and Fire Fighter OT and Comp Time expenditures totaling $1,338,637, although corresponding 2022 costs were $1,498,271, and projected 2023 expenditures were $1,981,000.
This pattern has only continued in the course of preparing and adopting the 2025 and now the 2026 budgets. I do not envy the challenges faced by the 2026 council.
Saratoga Springs Politics 