One of the questions that keeps coming up in this county-versus-city sales tax controversy is why would County Executive Mike Hein alienate almost every local elected official in the county? One guess is that the county may be facing serious cash-flow issues in the not-too-distant future, like next year. There ain’t no more infirmaries to sell, and Hein needs the money.
A quarterly report by County Comptroller Elliott Auerbach released a week before last year’s election warned that continued use of fund balances for recurring expenses without an increase in property taxes could place the county in serious financial stress. Even Hein’s Republican opponent apparently missed that report, in which fellow Democrat Auerbach wrote, “At the close of 2015, the county will have nearly tripled (his emphasis) the level of fiscal stress from the prior year due to deficit budgeting and decreasing fund-balance levels. Further, the level of fiscal stress will continue to rise each year that fund balance is appropriated.” Auerbach called this trend “unsustainable,” a word Hein has used frequently in critiquing city and town financial practices.
There was no comment from the executive. In a non-committal letter to Auerbach dated the day before the election, county Finance Commissioner Burt Gulnick Jr., a Hein appointee, said the county would “strive to make the finances of the most fiscally stable county in our region for the second year in a row stronger than ever.” The letter did not mention fund balances.
A month into his 2016 fiscal year, the county tried to claw back $2 million from local governments. Coincidence, or cause and effect?
Mea culpa
One of the rankest oxymorons of all time is the political apology, “If you’re offended by something I said, I’m sorry.” Mike Hein’s Feb. 25 apology letter to Kingston Mayor Steve Noble for messing up some basic math on city finances falls under that heading.
To begin with, taking “full responsibility” for some one else’s “miscalculation of a single number” (by 50 percent) is a mere figure of speech. These were Hein’s budget experts, the palace guard, the people he dispatched to sell the program.
More galling was that after an off-handed reference to (just) “one number,” Hein went on to reiterate that “the overreaching fact that the remaining numbers which have been discussed are easily verifiable and signal great cause for alarm.”
Great cause for alarm? Please, allow saner voices to prevail. The mayor has proposed a renewal of the current agreement in conjunction with the appointment of a town-city-county study group on sales tax distribution. Kingston Legislator Jennifer Schwartz Berky has been the first and so far only county official to support that suggestion.
A few days after receiving the city’s formal proposal to renew the existing distribution formula, Hein countered with an offer to use the obscure executive-appointed Intermunicipal Collaboration Council to “address collaboration, shared services and government efficiency.” (The legislature already has a government efficiency committee, headed up by John Parete.) Hein’s March 1 letter also advises the mayor he could “support a short-term continuation of the sales tax formula.” As a practical matter, the continuation he speaks to is already in effect; the contract expired Feb. 29.
Hein’s latest stratagem represents movement of a sort, but one designed to buy time and seize control of a rapidly unraveling situation.
Back to the future
There was a great uproar in 2011 when Albany changed the longstanding 50-50 cost-sharing formula for Safety Net to 71 percent local and 29 percent state. The cost-shifting did have one notable effect: Ulster County, which had split Safety Net welfare program bills with local governments, took over all costs. It was the last county in the state to do so. According to the county executive’s office, Safety Net (and election costs, which account for less than 10 percent of the total) have totaled $22 million (projected through 2016) since the 2013 county phase-in. The executive branch also predicted spending in this area will increase to $32 million over the next four years. The 45 percent increase in Safety Net expenses portends a rapidly rising poverty rate, which isn’t good news for anyone.
Did the county, which reluctantly agreed to this takeover, bite off more than it could chew? And is there any other way to generate fresh revenue other than gouging local governments? How about Albany?
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