Does Ancram have the Midas touch?

Town ponders tax cut versus bigger rainy day fund
ANCRAM—At a time when some towns are desperate to raise taxes higher than the state property tax cap allows to make ends meet and the State Comptroller is instituting a early warning system to let towns know when they are about to go under fiscally, the Town of Ancram’s 2013 budget might be a monetary miracle.
The Town finds itself so financially fit that the Town Board is considering how much to reduce taxes next year.
The 2013 tentative budget–the subject of a September 20 public hearing–showed the total amount to be raised by taxes next year will go down by $4,452, or 0.53%, from $839,675 this year to $835,223. The town will get an unforeseen $26,000 settlement this year from the manufacturer of the new siding on the town highway garage because the product shrank, though Town Supervisor Art Bassin says the windfall will have no effect on taxes next year.
What might make for a more significant tax reduction is if the Town Board opts to cut in half the $80,000 allocation for contingencies next year and instead put $40,000 toward a reduction in taxes.
The contingency fund is the money the town sets aside to pay for things it didn’t expect to have to pay for. “Assuming nothing bad happens, [at the end of the year] the money goes into an account that increases the town’s unallocated reserves or fund balance,” Supervisor Bassin said in a phone interview Wednesday. By the end of this year, the town expects to have $575,000 in that account.
Asked if that amount is excessive, Mr. Bassin said he has never heard a recommendation for what amount to have in reserve at any of the state comptroller’s budget programs he has attended. Instead, they “leave it up to every town board to decide based on their circumstances,” he said.
He has also heard from other town supervisors that “you can never have too much money in reserve” and that the worst that could happen is that the comptroller would criticize him.
During the public hearing on the tentative budget, resident Emile Racenet told the board, “I think if the town gets money back [from the siding] it should be put toward lowering taxes. It makes good sense to do that.”
Resident Donna Hoyt questioned how much of the settlement money would have to be used to repair the shrinkage problem.
Mr. Bassin said it is the consensus of the garage committee that the siding would not have to be totally replaced, but to fix the gaps in five or six places will cost between $5,000 and $6,000. The town’s architect inspected the siding and found the shrinkage to be “cosmetic, not structural.”
Councilman Chris Thomas agreed that the town should lower taxes. “The economy sucks. We’ve done a lot over the years, it’s the right thing to do at the right time,” he said.
What might the give-back to the taxpayers be? asked Town Justice Bob Wilcox. Using the figure of $50,000 shared proportionally according to valuation among the 1,271 taxable parcels, Mr. Wilcox wondered whether the cut would be a token gesture. “I think the value to the individual homeowner is so small it would not offset the value to the town of having a better, bigger cushion of cash for the future.”
“What if the unforeseen never happens?” countered Mr. Thomas. “Residents who don’t want a tax break can send in a check” for the difference, said the councilman.
Supervisor Bassin calculated based on a 2.65% tax rate, that a 5% reduction would amount to $25 on a $100,000 property, while at the “high end” taxes on a $1 million property would be reduced by $400 or $500.
“Is the reduction in the contingency worth that? I think not,” said Judge Wilcox.
Asked about the amount the town keeps in its savings account, Mr. Bassin said the town has been keeping it “on the high side” in light of uncertainty about the town’s swimming pool, the renovation/addition to the highway garage and to catch up on road repairs.
In 2007 to 2009 taxes went up sharply, Mr. Bassin noted, a situation the current board hopes to avoid.
In more recent years, the savings account has varied between $450,000 and $850,000, but with the town no longer incurring those kinds of expenses for highway facilities or equipment, Mr. Bassin said the balance would likely be something less. 
Resident Mike Citrin noted that the town has replaced all the highway equipment and is “in much better shape than we were.”
Councilman Hugh Clark wondered what effect making a $40,000 payment versus an $80,000 payment on the highway garage loan would have.
Councilman Thomas noted that the board’s previous logic was that the cost of borrowing the money for the garage, 2.99%, was so cheap, there was no need to pay it down quicker.
Councilwoman Madeleine Israel said she would be in favor of reducing taxes as long as the small property owner “sees something substantial, bigger homeowners do not need it.”
Discussion ensued about a 1.5% increase in the town’s payment for ambulance services next year to $89,000 and an increase from $3,500 to $5,000 in the town’s donation to the Roe Jan Community Library, a move not everyone supported. Raises for town departments that have not received them in recent years are also on the table.
Town Board effectiveness in controlling expenses, in communicating to staff to learn to do more with the same amount of money, the town having more money in savings despite increases in necessary spending has “symbolism,” said Sue Bassin, who noted that the tax reduction should be given and residents should know the reason for it is because of the town’s good money management. “I think that’s worth a reduction in the contingency,” she said.
Mr. Bassin said by phone that the board had reviewed the budget and trimmed spending in areas that are not critical.
Town salaries are also among the lowest in the county, so the town doesn’t pay as much for services and is careful about spending money, while revenues—sales tax and mortgage tax have remained steady. Shifting the payment of the rescue squad from the town budget to the county last year, resulted in a reduction in town taxes, though it caused an increase in taxes at the county level, “a wash for the taxpayer,” said the supervisor.
Also, the supervisor praised the Town Highway Superintendent James MacArthur for being on top of his department’s spending, which represents about $900,000 of the town’s total $1.3 million budget.
Mr. MacArthur’s purchase of newer used trucks for $15,000 or $25,000, then investing another $30,000 in bringing them up to snuff, has allowed the town to have virtually new trucks that would have otherwise cost the town $250,000 apiece.
The town’s budget process is simple, said the supervisor. Department heads are challenged to keep expenditures flat and then asked, can you do it? So far, everybody has been sensitive to that, he said.
To contact Diane Valden email dvalden @columbiapaper.com.

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