“There are those today who say that a free economy cannot cope with inflation, and that we’ve lost our ability to act as a nation rather than as a collection of special interests. And I reply, “What kind of people do they think we are?”
Jimmy Carter, speech, 1980
Planning director Suzanne Cahill says the action is coming strong and fast these days over at Kingston’s planning department. Because the department is down a part-time employee, Cahill is looking to transfer $6000 of that ghost salary over to the overtime fund. With the landmarks, heritage and planning functions, she anticipates many long hours for the employees.
“It’s busy. Big proposals, you know,” said Cahill, speaking to the Common Council’s Finance and Audit Committee on April 13. “We’ll have The Kingstonian back in front of us. Obviously, you all know Golden Hill is in front of us. There’s a few more projects down in the Rondout that are coming. And we do have the senior complex behind the Best Western that is looking to come back as well. So, a lot of housing projects.”
Superintendent of public works Ed Norman needs a new salter, which he said the department lost during the February ice storm. Chalk up another $6500.
That’s pocket change compared to city engineer John Schultheis’ ask of $710,000 to build two new sewer lines along Court and Henry streets.
Police chief Edigio Tinti would be satisfied with $45,000 more annually to hire a full-time clerk to handle the work piling up as a result of recent changes in the discovery laws of New York State. He says he needs someone to handle the officer body-cam footage, the FOIL requests, the reports.
Requests for funds appropriation are workaday for the Finance and Audit Committee, which meets the second Wednesday of each month.
That $144,000 total sought after by departments within the city government is to cover shortfalls identified in the in the 2022 Capital Plan. Only three months ago, a projected capital budget of $1,540,500 was estimated to be an adequate sum. No longer.
A pressure on costs
Pointing to inflationary pressures beyond the control of the city as the explanation, city comptroller John Tuey provided an underlying rationale for it. Inflation is at fault. Tuey made reference to the Consumer Price Index for 2022 released by the U.S. Department of Labor. He seemed to argue that inflation in Ulster County was undercounted because of an urban bias in the CPI. Regrettably, he provided scant evidence for his hypothesis.
“We’re experiencing an 8.5 percent increase in prices across the board, before seasonal adjustment,” explained Tuey. “On top of this, we also had the ice storm back in February. So as part of that ice storm we incurred a lot of overtime and a lot of equipment costs.”
The last time an across-the-board price increase of this magnitude was recorded was in 1979, when Georgia peanut farmer cum rocket scientist turned president Jimmy Carter was about to get bounced out of office.
“Gasoline is up 48%,” says Tuey, offering supporting statistics to the committee. “Natural gas, 21.6%. Fuel oil 70%. Electricity11%.” Vehicle cost, other commodities 11.7%”
“Across the board … we are seeing a lot of pressure,” continued Tuey. “Materials, supplies, capitols, utilities, vehicle fuel .… Fuel’s a big one. We spent 21% of our vehicle fuel budget [for the year], and we’re only two months in.”
Who knew what when?
That the numbers are still accelerating is cause for concern. When combined with the costs racked up by the February ice storm, Tuey concluded, the local fiscal situation becomes more fraught.
Surely the impacts of inflation are not a new concern, The inflation rate at the time of city budget adoption last fall was only a few tenths of a percent lower than it is now. That budget included more than a dozen new positions and a reserve fund for robust wage and pension increases for the police plus raises for other employees. Wage inflation is by far the biggest contributor to overall inflation.
Alder Rennie Scott-Childress asked Tuey whether any federal emergency funds or state funds had been made available for recovery costs incurred during the ice storm, While Kingston mayor Steve Noble had reached out, Tuey explained, no state funding was available.
The discussion was taking place a few days before the state government budget was passed. State aid in a number of categories will likely be more forthcoming.
One bright torch in the gloom was that sales-tax receipts have been over performing, finishing the year for Kingston at $17.8 million. According to Tuey, the budget for the coming year was below that number at $16.25 million, leaving potential wiggle room to compensate for price increases.
Higher costs, higher revenues
A twin effect of inflation is part of the reason for the robust sales-tax numbers. First, as prices for such things as automobiles and restaurant revenues go up, so will the amount of sales tax. Secondly, the city picks up the sales taxes from a large uptick in online shopping during the pandemic. The City of Kingston receives 11.5% of total sales taxes collected by the county.
One hand giving while the other takes. Inflation is key to both rising costs and rising tax receipts.
“This summer we’ll be rolling short-term [debt over] into the long term,” said Tuey. “You know, the rates have picked up a bit, but the long-term rates are a lot more stable than short terms. Our short-term rates are still outstanding right now.”
The Bureau of Labor Statistics compiles the Consumer Price Index by studying the spending patterns of the urban population. The prices of food, clothing, shelter, fuels, transportation, doctors’ and dentists’ services, drugs, and other services which people buy for day-to-day living are collected each month from 6000 housing units and about 22,000 retail centers in 75 urban areas. That data becomes an estimate of national predictive behavior.
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