After a months-long process of sifting through budget numbers and searching for consensus, the Common Council of the City of Kingston entered its final stretch of budget deliberations for the new year at a December 2 caucus. The Finance and Audit Committee had convened six budget meetings in November alone.
They came up with by far the biggest budget in Kingston’s history. The 2025 budget projects an increase of $7.625 million, with an 8.9-percent-higher tax levy expected to generate an additional $1.5 million in tax revenues.
The Department of Public Works wanted a new pump for the wastewater treatment plant. “How often do those need replacing?” Committee chair Rennie Scott Childress asked. “Whenever they burn up” was the answer.
The Fire Department’s ambulances had already been bought, but contractual increases in pay would be coming down the road.
The city clerk’s office recommended a $7,000 boost to their own payroll while the Police Department wanted a $779,950 increase to divide among pay for the rank and file. Attracting and retaining quality law enforcement isn’t cheap.
In all departments, retirement benefits and medical expenses accounted for the highest expenditures. Retirement benefits for police officers, for instance amount to $2.27 million, hospital and medical costs $1.78 million. The police requested more in both categories.
Well over the tax cap
The council caucus engaged in a last-minute discussion of whether to override the state tax cap, a decision for which a local law had already been written up and a public reading already performed. Scott-Childress was in support, first-term councilmember Michael Tierney opposed.
Scott-Childress said things like: “If we don’t pass this, then we don’t have a budget, and that’s going to be a crisis,” “If there is a downturn in the coming year, we don’t have enough money to take care of ourselves,” and finally “The question is, who are we going to fire?”
Tierney thought the $600,000 overage being used to justify the overriding of the tax cap could be dealt with differently. “I think we can actually make $600,000 worth of changes to this budget,” he said. “I think there are still cuts that can be made or increases in revenue as well.”
The proposed budget, as it stands, is $612,000 over the tax cap.
The state tax-cap law establishes a limit on the annual growth of property taxes at two percent or the rate of inflation, whichever is less. The tax levy cannot exceed the cap unless 60 percent of the total voting power of a governing body approves the increase.
Teryl Mickens and Michele Hirsch both were on the fence, which presented a problem. In order for the tax cap override to pass at the common council a supermajority would be required.
“Why now? Like several of you who’ve heard from constituents [that an 8.9 percent increase in taxes],” said Mickens, “is a lot at a time when we’re trying to attract people to the city and retain the population we have. All of this is going to be passed on to our constituents.”
Jeanne Edwards, who had worked for the city for years, made an impassioned speech in defense of the workers of the DPW.
“I remember when we were able to blacktop our own roads,” she said. “And when were able to put grass down on South Wall Street. We don’t even have those machines any more. And we don’t have the people to work them. We don’t have the machines. How far are we gonna go? And the people in this town need jobs and they need steady jobs. We can’t lose people. And that’s what it’s gonna end up coming because of insurance, because of salary. The services will be really crappy, I see it from years ago until now. We’ve gone from 130 men down to 80, [Ed Norman] said. Those people doing the garbage, you know, patching roads, dealing with trees — when the storms come and the plows can’t get through. Our taxes are gonna go up, but that’s inevitable.”
Willing to override
The navigation through those 15 minutes wasn’t graceful, but the majority of the council did come out the other side, willing, it seemed, to vote for overriding the tax cap.
“This is a conversation that needs to be happening in July,” observed Hirsch.
In the years ahead, it is possible that the decision to jettison the tax cap will be a pro-forma exercise.
Comptroller John Tuey recommended the tax cap should be overridden each year as a matter of set policy. “Based upon the large amount of fund balance we’re using to balance our budget, we have to be cautious with our revenue estimates in that budget, as well as our revenues,” said Tuey. “ We’re using a larger amount of fund balance than we ever have in the past.”
According to Tuey, the main ‘pro’ of using fund balance as part of budget balancing is that it keeps fund balance at a reasonable level by utilizing prior budgetary surpluses to meet future expenses before resorting to tax increases
The downside is that it can lead to declining fund balance over time, particularly when the amount of fund balance used is more than the “normal” surplus generated annually. When fund balance levels get too low, it can create cash flow issues.
The homestead option
Homeowners in Kingston are under the mistaken impression that taxes have been on the rise over the last decade, say city alders. A state publication explains that the homestead tax law passed in 1981 offered municipalities a way to establish a lower tax rate for residential properties than for non-residential properties. Primarily introduced to insulate residential property owners from the full brunt of their tax burden, the two-tiered tax rate also encouraged honest assessments. Prior to adoption of the homestead-tax option, the state had witnessed a trend of municipal governments delaying assessments of residential taxpayers rather than risking the voter wrath which would result from an honest accounting.
This tax option allows the percentage paid by residential taxpayers to be artificially depressed because the difference in the tax bill is spread out and absorbed among commercial and industrial property owners.
Kingston, having opted in to the homestead tax system in 1989, currently sees residential properties responsible for 44.2 percent of the property tax base and non-homestead paying the other 55.8 percent.
Tuey said that the mayor has been endeavoring to right-size the proportion of taxes being paid by homeowners.
“For the 2025 budget you’re looking at 56.7 percent of the taxes being paid by homestead [up from 55.8 percent] and 43.2 percent paid by non-homestead [down from 44.2 percent],” said Tuey. Without the homestead tax system, residential taxpayers account for 66.7 percent of the tax rolls. “So homesteads are still paying ten percent less taxes than their assessment.”
Shifting “a little more tax” from the non-homestead properties to the homestead properties is more in line with their assessment, he claimed.
“Going back to 2009 … the gap was 20 percent,” said Tuey, “so we’ve closed that gap significantly. It’s been very gradual … less than a percent a year.”
Property owners in Kingston in 2025 pay $8.98 per $1000 of assessed value for homestead properties and $15.10 per $1000 of assessed value for non-homestead properties.
No raise for the politicos
By the end of the caucus, it looked as though raises for the common council or the raise the mayor had requested for himself would be passed over in next year’s budget.
“I don’t disagree that the mayor deserves a raise,” Tierney said, “but we are approving the largest tax increase in city history, and I don’t understand how any of us or the mayor could look anybody in the eye and say, ‘you got your taxes raised but I got a raise that will cover my tax increase’.”
“It’s appropriate to hold off this year,” opined alderperson-at-large Andrea Shaut. “If we’re going to sit here and try to shake out pennies and dimes, adding this stuff in seems counterintuitive.”
The 2025 City of Kingston budget
$59,847,749 in expenditures anticipated for the general fund balance, up from $52,222,123.
$19,562,582 in taxes expected to be raised in 2025, up from $17,966,969 in 2024.
Homestead property tax remains flat at $8.98 per $1000 of assessed value
Non-homestead property tax will rises $1 to $15.10 per $1000 of assessed value
New base proportion ratio adopted for homestead and non-homestead tax levies:
Homestead will be set at 56.77057 percent, up from 55.8195 percent
Non-homestead will be set at 43.22943 percent, down from 44.1805 percent
$1,871,000 bonding authorized as per the 2025 capital plan
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