Thane and Barone debate water rate increase vs fund balance depletion

A discussion about Mayor Ann Thane’s budget lines at Wednesday’s budget review meeting turned into a debate about whether the raising water rates or drawing down the fund balance was the best way to balance the city budget.

“I think once we get through this process in [Controller Matt Agresta’s] office I think we will find that our fund balance is OK…there is no reason to touch fund balance, we should be building [the] fund balance.”

Alderman Ron Barone said he didn’t think that raising user fees was the right way to balance the budget. He said, “Balancing the budget with users fees when we do have a fund balance…whether it’s a billion dollars or five million dollars…”

“We don’t…,” said Thane. “If you go into your fund balance to balance your budget instead of utilizing the resource that you have to make yourself whole, you will affect your credit rating, and that’s what you don’t want to do.”

Thane’s proposed budget calls for an increase in water user fees within the city which also affects the rate for users outside the city (such as the Town of Florida and Town of Amsterdam) which is always set at 50% higher than the inside rate.

Thane cited continued growth on Route 30 in the Town of Amsterdam as proof that current water rates are fair. “We’ve had nothing but growth. We’ve had a new car wash locate on the hill. We’re not driving people away with our rates. We are at a level that is equitable with what other municipalities around us.”

Thane went on to explain that increasing the water rate would ultimately keep city property taxes down because it would spread the cost increase over a wider number of customers in the city and surrounding towns.

Barone argued that raising the fee would send a negative message to developers on Route 30. He pointed out that the city benefits from sales tax and revenue sharing deals with the Town of Amsterdam and that a rate increase could result in “empty buildings” which could dampen that revenue stream in the future.

He went on to say, “I can imagine, when we have this [public] hearing…I can see it now, [Amsterdam Town Supervisor] Tom DiMezza, standing right there, watching his jugular veins popping…we need to look to curb [the rate] a little bit or I’d like to have an explanation from all the other places…what their water rates are in comparison to Amsterdam.”

“The towns made the arrangement with the city because they understood that our water was allowing their expansion. That’s was why they agreed to what they agreed to,” said Thane. “This administration has looked at the cost of the water distribution system, and realized that city taxpayers, city property owners were paying an inordinate share of the cost of the water distribution system. What we did was we more equitably spread that cost out.”

Controller Mattew Agresta asked, “If we don’t have a transfer to the general fund from the water [fund], where are we going to get that money?”

“Fund balance,” said Barone. “Why can’t we touch fund balance? Is that a sacred cow here?”

Agresta said that once the city’s exact fund balance figure was determined, “every year that it goes down is worse for us. We want it go up.”

“I sat on a 21 million dollar fund balance at the county and we depleted it,” said Barone.

“That was a horrible move,” said Agresta.

Barone replied, “The horrible move you’re talking about was because the tax payers came up and complained in front of us every time [saying] you’re overtaxing us…and we are overtaxing people…you stay under the 2% tax cap and then you go into user fees…we’re doing it wrong.”

“We have a self-imposed cap and we stay under that cap,” said Thane in regards to the increase in user fees.

Tim Becker

Tim Becker is the owner of Anthem Websites Inc. which publishes The Compass. He serves as both editor and a writer.