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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 2023 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

• Based on the results of our review of the 2023 proposed budget, we identified certain revenue and expenditure projections and other matters that should be reviewed by the Mayor and Council.
• The proposed water fund budget includes estimated revenues for metered water rents that were approximately $240,000 higher than our projections.
• The proposed water fund budget includes estimated revenues of $1.6 million for water rents assessed to the Town of Halfmoon and Water Commissioners of the Town of Waterford that, if the City realizes revenues in 2023 similar to 2021 and 2022, could be overestimated by approximately $350,000.
• The proposed general fund budget includes fire department overtime appropriations which could be underestimated by approximately $900,000.
• The City’s proposed budget’s capital plan includes unfunded equipment and vehicle purchases totaling $2,912,500.
• The City will issue debt to cover any general and refuse fund equipment and vehicle expenditures that are incurred and not financed through the proposed budget.
• Three of the City’s six collective bargaining agreements will expire on December 31, 2022. When the agreements are settled, the City faces potential increased salary and wage costs.
• The City’s proposed budget includes a tax levy of $28,015,018.

Key Recommendations

• Closely monitor water fund revenue estimates throughout 2023 and develop a plan to balance the budget in the event the revenue projections are not fully realized.
• Closely monitor fire department overtime appropriations throughout 2023 and modify the budget as necessary.
• Identify additional financing sources and to include them in the budget instead of continuing to rely on the issuance of debt to finance equipment and vehicle purchases.
• Consider the potential financial impact in the event that any of the collective bargaining agreements are settled in 2023.
• 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.