Originally written March 16th, 2018
On Thursday Chemung County Executive Tom Santulli and Deputy County Executive Mike Krusen released a statement through the county’s website, blaming Elmira’s fiscal crisis on a “failure of leadership on the part of the Mayor and City Council.”
This is their statement:
What caused the 17% property tax increase in the City of Elmira? Quite simply it was a failure of leadership on the part of the Mayor and City Council. By the way, with the Sanitation fee hike, the overall increase is closer to 25%.
The seeds for this failure were planted by the previous administration of former Mayor Susan Skidmore. In 2014, the City closed its books with a $1 million loss and a year-end (fund balance) reserve of $2.2 million. This was followed by an additional loss of $2.63 million in 2015. (See NYS Comptroller report). Fiscal issues remained unresolved as the departing Skidmore administration left the incoming Mandell administration a 2016 budget that resulted in a $2.4 million loss. Within this three-year period, there were more than $6 million in losses, which eliminated City reserves and replaced it with a negative fund balance of nearly $3 million.
So where did the Mandell administration go wrong? First, County officials urged the City to develop a financial recovery plan that would involve a substantial effort for our two governments to work together (see Mandell email and prepared speech). Unfortunately, the Mayor chose a different path. Rather than be bold, as he had promised in his campaign and suggested in his email dated September 2016, he instead chose to significantly raise taxes and not move forward with any new-shared services with the County.
Before we go further let us be clear, the County’s sales tax reallocation plan DID NOT cause the City’s fiscal problems or result in the City’s 17% property tax increase. In fact, the County’s assumption of City expenses for several departments and services resulted in greater savings for the City. This has been verified by an independent third party (The NYS Division of Budget) and accepted as fact by City officials.
Most troubling is that whenever an opportunity presented financial solutions the Mayor failed to lead and those opportunities were lost. The Governor will soon announce the successful winner in the $20 million municipal consolidation competition. We strongly believe Elmira could have been the recipient of the money. At a local public event, the Governor clearly indicated because the County and the City were actively pursuing bringing both administrations together we were a top contender for these monies. Unbelievably, the Mayor and the City Council voted unanimously to not participate in this grant competition. It is unimaginable that the leadership of an insolvent city could turn down such an opportunity.
More recently, County and City leaders met again with New York State officials to explore solutions and potential sources of relief against the City’s deepening fiscal crisis. Several ideas were suggested and the City response was inaction and silence. Again, the opportunity to be bold as promised by the Mayor rang hollow.
We do not pretend to understand the motives for the Mayor’s failures to seize the numerous opportunities presented. We do however know the results, which are before you now. Certainly, an unfortunate conclusion when his campaign for Mayor argued for building a stronger and more collaborative relationship with the County centered on enhancing shared services beyond those already in place. It is important to note that no County official was advocating for the dissolution of the City. Only the citizens of Elmira can make that decision through a public vote.
In closing, it is not that County officials do not get along with City officials as implied, we simply do not like the way they conduct business. After a very devastating and likely avoidable property tax increase, where City Council literally sat on their hands, we imagine the residents of the City of Elmira do not like the way they conduct business either.
This approach is unfortunate for many reasons.
We need legitimate cooperation, not political gamesmanship.
Elmira is the center of our community, and any path forward requires us to find ways to work together in order to finally figure out how to address its issues. Elmira’s mayor and the members of its city council are like most people who run for local office. They have chosen to invest a lot of time and energy toward helping make our area a better place to live, and they don’t earn a lot of money – $10,600 for Elmira Mayor Dan Mandell, as opposed to $253,108 earned by County Executive Tom Santulli, and approximately $7,500 for councilmembers – to do it.
The decision by Tom Santulli and Mike Krusen to continue engaging in this kind of vitriolic rhetoric only results in further division between county and city government, and does nothing to help address the number one problem facing our community right now: a largely empty downtown.
Indeed, an ad-hoc group called the “Committee for Elmira” was created last year to address the lack of cooperation between the county and city, urging both entities to find ways to work together. It is made up of local leaders and retired officials including Elmira Councilmember Jim Waters, Elmira Mayor Dan Mandell, Chemung County County Legislator Marty Chalk, retired Elmira Public Works Commissioner Charlie Shaffer, retired Elmira Police Chief Scott Drake, retired Elmira Fire Chief Pat Bermingham, former City Council member Dan Royle and Marc Monichetti, owner of the Elmira Fitness Center.
The Committee issued a statement in December:
The Committee For Elmira recognizes the importance of a positive, forward-thinking relationship between the County and the City. What is missing between the two is a trusted dialogue with open communication where motives are clear and proposals are detailed. We recognize being a government official can wear on patience but patience is exactly what is needed! Often the two entities are reacting to each other rather than adopting a proactive approach; both need to recognize they are not on different sides but on the same, working toward the common goal of attracting jobs, growth, and sustainable economic vitality. None of these goals will be achieved without developing that relationship.
Most cities and counties in the country are struggling financially; Elmira/Chemung isn’t singular in that regard. Often the answer to the fiscal issues is to systematically get more money from the taxpayer by increasing fees and taxes. Aside from being the worst solution (and certainly not the most popular) it should be the last option, not the first. Rather the city and county should look for methods to run cost-effective government. Is that by combining services? Probably but not certainly! This committee has not studied whether shared services is the answer; no one has, to our knowledge. Have there been groups assigned to examine the best and most effective solutions for developing shared services and which ones should be shared? For example, has a group or committee been established to assess a county-wide police department and if doing so is cost effective enough to justify the change? Is it more efficient? Would it provide the same level of service or better? Would doing so save taxpayer dollars rather than increase costs? Or have no impact? Or be better for the employees? This committee does not have those answers but believe there are people who can easily do so; and should. Who and how? Representatives of the very people impacted by a consolidation: the department heads, city/town, village leaders, business leaders, and most importantly, the employees. A working group with delegates from each segment should be established to look at the feasibility of shared services. If it can be done, they should be the people providing the direction. There is no need to waste dollars on studies from outside groups; this would never be viewed as objective and would only serve to build mistrust and skepticism. Moreover, there must be involvement and input from the people who are affected by these changes for said changes to occur. This is the only way to eliminate suspicion and ensure the interests and concerns of all are equally weighed. We urge the city and county to focus on these issues, assign personnel to be responsible for getting things done and set a completion date with follow up to insure a conclusion.
Additionally, we strongly encourage the county and the city to make plans for regular, scheduled meetings to hash out any differences and develop clear strategies for problem-solving, rather than stoop to name-calling and reactive tactics. There will be times of varied opinions and discourse but surely less so if both sides communicate their intentions, motives, plans, and their purposes with the taxpayers and employees in mind. The city and country have the same goals – the best way to achieve them goal is together.
I also addressed this issue in an Op-Ed published by the Star Gazette in January entitled Cooperation is Key to Solving Elmira’s Fiscal Crisis, wherein I argued that “any meaningful remedy to Elmira’s fiscal crisis is going to require genuine cooperation and creative problem solving to discover a new way of doing business.”
We expect our elected leaders to be able to find ways to work together, particularly in times of crisis. Unfortunately, the statement released yesterday by Chemung County’s top administrators is yet another step in the wrong direction.
Sales tax redistribution has undoubtedly harmed the City of Elmira.
Chemung County faces a tough economic climate. Mandates from Albany are heavy, and upstate areas have struggled to rebound from major losses over the past several decades in the manufacturing sector.
It makes sense that some of the county’s financial burden trickles down to the city, town and villages – but there is no reason for Elmira to be treated in such a harsh manner.
Two key factors are critical to this discussion:
*38 percent of properties in Elmira, including large entities such as Elmira College, Arnot Ogden Medical Center, St. Joseph’s Hospital, Elmira Correctional Facility, the Elmira Psychiatric Center, numerous churches and schools and all of the Chemung County’s administrative buildings and courthouses, are exempt from taxation.
*Even though Elmira does not receive any revenue stream in return for its services, it is required to provide police and fire protection to these properties. This means that 62 percent of Elmira’s property owners pay for 100 percent of the services it provides.
In other words, Elmira not only gives up a huge portion of its property tax base in order to provide medical, educational, correctional and other services to Chemung County – something helps bring huge numbers of people and jobs to our community – but it also has to pay a tremendous amount of money to to keep these tax-exempt properties safe.
Chemung County Executive Tom Santulli and Deputy County Executive Mike Krusen continue to argue that that sales tax redistribution did not harm Elmira because any losses to the city were made up by increased shared service agreements with the county.
This logic is flawed, as shared service agreements could have been reached without forcing the City to give up such a large portion of sales tax revenue.
As I stated in my Op-Ed referenced above, Elmira was able to overcome a similar financial crisis approximately a decade ago. Between 2008 and 2013, Elmira moved from the brink of bankruptcy to a healthy and stable fiscal position, with an average yearly property tax increase of just 1.86 percent.
However, in his overview of the 2013 budget, John Burin, Elmira’s city manager at the time, warned of difficulties to come, stating that “the state tax cap legislation, static aid to municipalities, excessive employer pension contributions as well as legislation restricting a city’s ability to receive revenue for services rendered on a variety of not-for-profit organizations will overtime deplete reserves and bankrupt cities.”
Later that year, the Chemung County Legislature passed a financial restructuring plan that changed the way sales tax revenue is distributed among Elmira and its local towns and villages, adding to Elmira’s mounting financial obstacles. As a result of the restructuring plan, Elmira’s share of sales tax revenue dropped from a little over 12 percent in 2014 to about 9 percent in 2018.
Although the combination of shared-service agreements and sales tax redistribution works for some areas that are not burdened by tax-exempt properties and public safety obligations, it is clearly not working for Elmira. We must find a new path forward.
Strangling the City of Elmira makes no economic sense.
The two greatest sources of revenue for Chemung County are property tax and sales tax, accounting for most of the county’s operational budget.
The decision to take a greater share of sales tax revenue from the City of Elmira and other municipalities has allowed Chemung County to go thirteen years without raising property taxes. This is ostensibly a good thing, as the last thing upstate New York residents need is a bigger tax bill.
However, that metric is just the start of the analysis.
First, the City of Elmira is not the only municipality to struggle after the sales tax redistribution plan was passed in 2013. Facing economic stress, both the Village and Town of Horseheads levied taxes in 2017 for the first time in more than 30 years, the Village of Van Etten voted in December to dissolve, the Town of Southport reports increased challenges impacting its ability to provide basic services, and most other local municipalities face critical decisions of how to continue to cope with dwindling resources.
Second, and arguably more importantly, investing in Elmira is critical to generating more sales tax revenue. Every dollar people spend in our community is one less dollar we need to raise through property taxes in order to fund local government. Having a vibrant, bustling downtown would encourage people from outside of the county to come here and spend money. By contrast, creating an economic structure that results in city officials needing to either raise property taxes by 17% or take a 20 million dollar state bailout is a great way to scare potential investors away.
Forward thinking on this issue is a must. We have great infrastructure in downtown Elmira, and infinite potential to turn its fiscal picture around. However, doing so will take full buy-in and cooperation from all levels of government. We simply cannot allow this division to deepen any further.