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Purpose of Budget Review

The purpose of our budget review was to determine whether the significant revenue and expenditure projections in the City’s proposed budget for the 2021 fiscal year are reasonable.

Background

The City of Troy, located in Rensselaer County, is authorized to issue debt not to exceed $24,706,000 to liquidate cumulative deficits in the City’s general fund for the years ending December 31, 1993, 1994 and 1995. New York State Local Finance Law requires all municipalities that have been authorized to issue obligations to fund operating deficits to submit their proposed budgets for the next fiscal year to the State Comptroller for review while the deficit obligations are outstanding.

Key Findings

• The significant revenue and expenditure projections in the proposed budget are reasonable.
• The proposed budgeted revenues for State AIM funding and traffic and parking ticket fines may not be fully realized.
• City officials project the general fund having an unassigned fund balance of approximately $3 million at the end of 2020 or the same amount as the recorded unassigned fund balance at the end of 2019. However, the 2019 amount of unassigned fund balance has not been verified.
• The proposed refuse fund budget includes a change to the revenue model that the City has not previously assessed and the potential realization of this revenue is contingent upon the Council’s authorization and approval of the new fees.
• The minimal contingency appropriation in the proposed refuse fund budget provides the City with a limited amount of flexibility in the event of unforeseen circumstances that may require additional funds.
• Two of the City’s six collective bargaining agreements (CBA) have expired and another CBA is set to expire at the end of 2020 which could result in potential increased salary and wage costs in the event that the CBAs are settled in 2021.
• The City’s proposed budget includes a tax levy of $26,922,132.

Key Recommendations

• City officials should closely monitor the revenue estimates for State AIM funding and traffic and parking ticket fines throughout 2021 and develop a plan to balance the budget in the event these revenue projections are not fully realized.
• City officials should closely monitor the general fund’s results of operations for the remainder of 2020 to ensure that the amount of appropriated fund balance included in the 2021 proposed budget is available to finance the general fund’s operations in 2021.
• The Council should make the appropriate modifications to the City Code prior to adopting the budget if it decides to implement the new refuse fees.
• City officials should closely monitor the refuse fund through 2021 and make modifications as necessary.
• City officials should consider the potential financial impact in the event that any of the CBAs are settled in 2021.
• The City Council should be mindful of the legal requirement to maintain the tax levy increase to no more than the tax levy limit as permitted by law, unless it properly overrides the tax levy limit.