Few speak at Franklin County budget hearing

SARANAC LAKE – Few people turned out Wednesday for the first of two public hearings to discuss overriding the tax cap in the 2014 Franklin County budget.

At the Harrietstown Town Hall, county Manager Tom Leitz explained that the county is considering exceeding the state-mandated tax cap and borrowing $1 million to balance next year’s $103.6 million budget. Last year the county borrowed $4 million to pay its bills.

The tentative budget by Leitz released last month carried an 8.76 percent tax levy. Leitz has since whittled that number down to 2.99 percent, which would put the county $7,000 below the tax cap.

At a recent special budget meeting, legislators Paul Maroun, R-Tupper Lake, and Tim Lashomb, R-Malone, both said they would feel safer with a tax levy increase of 4 percent because it would provide a little extra cushion. Neither was present at Wednesday’s meeting.

Attendees at Wednesday’s meeting included newly elected county legislator Barb Rice, D-Saranac Lake.

Everyone present seemed to be OK with the county exceeding the tax cap and borrowing money to balance the budget. Even at Leitz’s original proposed tax levy increase of 8.76 percent, the average tax increase for a home valued at $100,000 would be $35.28.

One resident suggested suing the state, but the legislators said the county cannot afford to do that.

Saranac Lake resident Richard Shapiro asked if it’s true that 90 percent of the county’s budget is beholden to state mandates.

Leitz said that is true and added there are only two things that are purely discretionary: highways and the Office of the Aging.

“We can choose to not maintain roads and bridges,” Leitz said. “We also fund the senior centers throughout the county, and we can zero that out. So the nice senior center that’s down the street is pretty dependent upon county dollars to operate. Is it discretionary? In a legal sense, yes. Is it truly discretionary? That’s a completely different argument. Very little is truly discretionary.”

Chairman Billy Jones, D-Chateaugay, added that the county jail is not mandated but it also accounts for a large chunk of the budget.

“You have to lock bad people and criminals up,” Jones said. “That is a huge chunk, to nobody’s fault but the systems fault or the people who do it. That is not necessarily considered a mandate, but it’s more than $7 million in our county expenses.”

The proposed budget includes borrowing $1 million from the fund balance of the county’s State Retirement System account. Leitz said legislators could safely add $250,000 to that and repay it by borrowing $1.25 million at 3.75 percent interest next year, which could be paid back across 12 years.

“I cannot today find you $1 million in savings in the budget,” Leitz said. “Using rough math, that’d be about $100,000 in principal interest we’d pay off next year. Give me 12 months, and I could easily find that $100,000, and a bunch more.”

Legislator Tim Burpoe, D-Saranac Lake, added that the borrowed money would be due in a year, so the county could find a better deal while it waits on some revenue boosts it’s counting on.

“We either have to be creative and find that money next year and pay that off with some other revenue source, or we can offset $1 million of capital expense and bond for it at a much lower interest rate,” Burpoe said. “One way of offsetting this cost is to borrow $1 million at 3.75 percent or wait for a time during the year before that payment is made and increase revenues. Revenue is in the pipeline, but we just don’t know if we have it yet.”

Legislators hope to receive $1.8 million in January in state compact money from the Akwesasne Mohawk Casino Resort and $1.7 million from future county land auctions.

Burpoe added that the proposed Hotel Saranac renovation in Saranac Lake should bring extra revenue into the county. The legislators also hope to enact a bed tax to spend on marketing for tourism, which, if successful, could boost sales tax revenue.

Counties across the state have reported difficulty in meeting the state tax cap.

“Essex County is saying they have a 15 percent tax increase, and it appears they’re going to move forward with it,” Leitz said. “If we can finance that ($1 million) portion, I believe we can live with lower taxes, so the net cost to the taxpayer would be a little bit of interest, but I think that interest is worth it.”

Leitz said he expects savings in Medicaid expenses next year, but he doesn’t want to count on that until it happens.

The county currently pays $200,000 a week for Medicaid. Leitz said that yearly figure could drop 3 to 5 percent if the Affordable Care Act is implemented smoothly.

“The feds are taking on an additional portion of the cost, and the state has committed to passing that to us after lobbying by the association of counties,” Leitz said. “However, I can’t budget for that in 2014. I might well come back to this board April 1, after the state budget is hopefully done, and say our weekly Medicaid bill of $200,000 is now $195,000. We don’t have hard data to back that yet. Some counties I think are desperate and have actually assumed that they’re going to get that savings, but we haven’t. I think that’s highly risky.”

New York is one of only a few states where local governments pay a portion of the Medicaid costs, and no state requires them to pay as much as New York does: 25 percent of acute-care services and 9 percent of long-term care..

“In every other state it’s 50 percent shared by the state and 50 percent shared by the feds,” Leitz said. “There are certain Medicaid programs that are not part of the basic programs, and the state can take on those costs themselves. In New York state we have every one of them.”

Leitz said that selling the county nursing home should make future budgets easier to balance.

“Long term, our prospects are better because we’re getting out of the nursing home business,” Leitz said. “That’s a very costly business to be in. It’s labor intensive, and with the labor costs comes the pension costs. There can be some relief on the horizon.”

Contact Shaun Kittle at 891-2600 ext. 25 or skittle@adirondackdailyenterprise.com.