CPA John Trussalo (left) delivers his independent 2015 audit to the Jamestown City Council during it’s Oct. 17 work session, as Jamestown Mayor Sam Teresi (right) looks on.

JAMESTOWN – The city of Jamestown’s 2015 finances have received a clean audit following an independent review.

Local CPA John Trussalo presented his independent audit for the 2015 finances during Monday night’s Jamestown City Council work session.

Trussalo said that his audit was an unmodified opinion, meaning it’s the cleanest audit that can be provided. His findings showed that the city was able to keep spending in 2015 relatively balanced with revenue, with the budget containing a $94,000 unfavorable net variance, compared to what had been projected to start that fiscal year.

The audit also showed that while the city’s constitutional taxing limit was approaching 100 percent in 2015, the city was only at about 35 percent of its constitutional borrowing limit.

Trussalo also commented on the New York State Comptroller’s Office recent audit, particularly with the recommendation the city should discontinue its use of a dedicated and separately tracked healthcare account from its general fund.  Trussalo said his conclusion was far different from the state, and that by removing the healthcare account, as directed by the comptroller’s office, the city is also removing some stability from its general fund and overall budget.

Trussalo – who’s conducted the independent audit of the city’s finances for the past several years – also said he was not interviewed by the state comptroller’s office during its review of the city finances.

At the end of September the comptroller released a report critical of the city finances – in regard to both the healthcare account, budgeting for healthcare costs, and for failing to properly document how the city does long-term financial planning.  The state audit reviewed more than four years of city financial records.

The audit, which was posted on the state comptroller’s website on Sept. 30, reviewed the City’s financial condition for the period of Jan. 1, 2012 through Aug. 19, 2016.

There were three key findings that came out of the Audit. The review found that City officials have adopted budgets that were not structurally balanced. The Audit also found that City officials have not developed a multiyear financial plan. And the Audit states that Mayor Sam Teresi, the Jamestown City Council, and Finance Director Joe Bellitto did not properly budget for, and the Mayor did not ensure that the Comptroller properly accounted for, health care expenditures.

In response to the findings, city officials offered a 12 page memo, which explained that the audit was something that was actually requested by the mayor and city council, due to the fiscal challenges the city is facing as it prepares for the 2017 budget. The response for the city also offered explanations for several of the audit’s findings, including pointing out that the city’s tenuous financial position is due primarily to state mandates and contractual obligations the city is required to honor. In addition, city officials pointed to a slow recovery from the great recession, which has had a negative impact on income.

Along with the key findings, the Audit also provided several recommendations. It said the city should adopt structurally balanced budgets that include realistic estimates and fund recurring expenditures with recurring revenues. It should also develop and regularly update a comprehensive, written multiyear financial and capital plan that includes realistic measures for rebuilding fund balance levels, addressing capital needs and restoring the City’s long-term fiscal health. And the audit said that the city should correct the accounting records to ensure health care costs and fund balance are properly recorded and reported in the general fund.

Mayor Teresi was not in his office on Tuesday when WRFA first discovered the audit on the State Comptroller’s website and so he was unavailable for immediate comment. However, Jamestown City Council president Greg Rabb told WRFA Tuesday afternoon the audit didn’t really present anything city officials didn’t already know and if anything, it reaffirmed the financial conditions they’ve been aware of for the past few years.

“All the minor stuff that they’ve said to do, we’ve agreed to do it. In fact, as the mayor likes to say, ‘It’s already been done,'” Rabb said. “But the serious financial issue that we’re facing is still hanging over our heads. So asking them to come down and talk to us was the first step. Now we need help from the state to balance our budget in 2017. I can’t talk about what the mayor’s going to say the budget is built on, because that’s his job to release [those details] next week, but we need help.”

Rabb also said that many of those recommendations are already being done by the city, including the recommendation regarding long-range planning.

“We’ve always done long range planning,” Rabb said. “If you ever look at the budgets, every single budget book has long range planning from the mayor and the city comptroller. What the state comptroller said was we didn’t fill out their long range planning form. So we said, ‘Fine, if you want us to fill out your form, we’ll fill out your form.’ But we’ve definitely been doing long-range planning.”

Teresi was unavailable for immediate comment on the audit. He will release his executive budget for 2017 next Tuesday, Oct. 11  at 3 p.m. in the mayor’s conference room on the 4th floor of city hall. The presentation is open to the public.

The mayor will also be a guest on this week’s Community Matters program (Thursday at 5 p.m. on WRFA). However the interview was conducted prior to the audit and as a result, it was not covered during the interview.

Comptroller Joe Bellitto delivers the 2015 budget summary during the March 14 city council work session.

JAMESTOWN – The final unaudited numbers for Jamestown’s 2015 budget show the city finished with a $908,000 shortfall.

Earlier this week city comptroller Joe Bellitto reviewed the final numbers with the city council, pointing out that the city spent $35,352,334.31, but brought only $34,444,516.01  – leading to a deficiency of nearly $908,000. That means the city will have to allocate additional fund balance money to balance the books for 2015.

Bellitto explained the main reason for the shortfall was health insurance costs for employees and retirees, with the city paying $558,000 more than budgeted.

Bellitto also said that with the deficit, the city will face several financial challenges for this year, as well as next year. Those challenges include using a large portion of the city’s health insurance reserve for this year’s budget, as well as another significant increase in health care costs for next year.

Following the presentation, City council finance chair Tony Dolce said the council will do what it can to identify ways to address the budget challenges the city will likely face for the rest of this year and into next year.

WRFA Public Affairs Director Jason Sample talks with Jamestown Mayor Sam Teresi to get an update on the 2016 budget process as well as discuss the challenges facing the city in regard to the 2015 budget.

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Plus the mayor offers his thoughts on the recent groundbreaking that took place for the next phase in the Greater Jamestown Riverwalk project.

Jamestown Mayor Sam Teresi

• READ 2016 BUDGET PRESENTATION [PDF]
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On Wednesday afternoon the four-term mayor presented a $35,120,412 budget that increases spending by just .3 percent over the 2015 city budget.

Jamestown Mayor Sam Teresi (left) presents his Fiscal Year 2016 Executive Operating Budget on Wednesday. City Comptroller Joe Bellitto (second from left), Ward VI Councilman Tom Nelson, and Ward III Councilman Alfonso Pagan also appear in the photo. (Photo from JamestownNY.net)

However, due to a depleted fund balances along with lower revenue from other funding sources, the proposed budget is calling for an increase in property taxes by $1.27 per $1000 assessed value, bringing the new proposed tax rate to $23.94 per $1000, equating to a 5.6 percent tax rate increase.

The total proposed property tax levy is $15,923,550, $700,000 over the NYS tax cap for the city.

Teresi said that he’s aware the proposed tax increase is significantly high, and expects that it will be reduced in the coming weeks once the city council begins budget deliberations.

“The council members and I are going to be looking at things both on the longer-term basis, but we’re also going to continue to look at things within this budget that I didn’t feel comfortable with at this juncture, bringing forth unilaterally, but I am going to be bringing forth discussion to the council members, other things that can be done on a short-term basis within the confines of this budget.”

CONTRACTUALLY OBLIGATED SALARIES, BENEFITS DRIVE COSTS

According to the mayor, salaries and benefits for city employees continue to be the primary expenses for the city, comprising 77 percent of total spending in the budget. And the mayor said that the vast majority of those salaries involve the city police, fire and DPW workers, who the city is contractually obligated to pay.

Mayor Sam Teresi during Wednesday’s budget presentation.

“The only salary increases that will be in this budget are those that the Triborough Amendment of the NYS Taylor Law protects for salary step increases for employees that are not already at the stop of their salary schedules,” Teresi said. “No management employee, no council member, no mayor, no employee of the city – that is not Triborough Protected – do we have any money in this budget for salary increases for 2016.”

The mayor also said that due to state law, the city is not able to change what it is contractually obligated to pay its workforce, adding that much of the healthcare and retirement benefits employees now receive are the result of lock-in agreements that were made 30 years ago.

“Quite frankly it’s panned out that some of the decisions that have been made, have been suicide,” Teresi said. “They’ve hurt us in the long run. What seemed like what made a lot of sense in 1986 and 1987 doesn’t make a heck of a lot of sense in 2015 and 2016, and is basically the lion’s share of what is dragging this budget down.”

The mayor also noted that cutting the workforce isn’t an option, because it is already as low as it can possibly go without the city having to pay a large Impact penalty and overtime that would drive up costs even further.

PROPERTY TAX LEVY REACHES CONSTITUTIONAL TAX

The 2016 proposed city budget also creates a problem for future spending plans, with the tax increase bringing the city to 99.9 percent of its constitutional taxing limit, meaning that state law prevents the city from raising taxes any higher, even if it wanted to. That’s not only an issue in 2016, but also an issue in future years as well. Unless the city is able to bring in new taxable properties or the overall assessed taxable property value goes up, the tax rate won’t climb any higher than where it is in the proposed 2016 budget.

Other highlights of the proposed budget includes:

• No increase in fees or fines;
• A Nearly 50 percent decrease in the profit dividend payment from the Jamestown Board of Public Utilities (the city used $482,000 in 2015, but the executive budget calls for a dividend payment $250,000 for 2016);
• The complete use of the city’s remaining undesignated fund balance ($409,753), meaning the so called “rainy day” fund will be completely depleted after 2016;
• A projected 2 percent increase in projected sales tax revenue ($5,875,000 in 2015 to $5,990,000 for 2016).

The mayor said there may be a silver lining to the budget situation and he will be rolling out several recommendations for structural changes in city government to address the challenges the city will face in the coming years, adding that he’s confident some of them will be implemented. But he added it won’t be in time for 2016, making it a crisis budget year for the city.

The city council will review the budget in the coming weeks with all department heads to try and identify additional savings. A copy of the budget presentation can be found online at JamestownNY.net. Line by line copies of the budget can also be found in the city treasurers office at city hall as well as at the Prendergast library.

During Monday night’s city council work session, city comptroller Joe Bellitto went over the final, unaudited numbers for 2014, which showed the city finished the year with $630,000 more in expenses than revenue.

Bellitto said there were a couple of major contributors to the deficiency, most notably health insurance – which was $522,000 more than what city officials had initially budgeted when they finalized the budget in December 2013.

Both Bellitto and Jamestown Mayor Sam Teresi noted that the increase in health insurance was something the city has no control over, because of the city’s collective bargaining agreements with its unions states the city must cover additional healthcare costs for its employees, even if it exceeds the projected, or budgeted amount. And both the comptroller and the mayor said that 2014 was tougher year – healthwise – for employees and their families, compared to other recent years.

Teresi said that due to state law, the city can’t change the current benefit structure, unless the collective bargaining units agree to the changes. He added that that city officials have also looked at any and all insurance providers to ensure they are going with the cheapest one possible.

“People will ask, ‘have you gone out and tested the market place to see if [the current healthcare package] can be replicated [by another provider]?’ and the answer is ‘Yes, we have and we do periodically,'” Teresi explained. “Our industry advisers have repeatedly said to us that with what we have to provide under the collective bargaining agreements, the structure that we have – the self administered plan – over a period of time has been the best choice and continues to be the best option available to us.

“To put it bluntly,” Teresi continued, “there is just not plans out there of a commercial nature that replicate the benefits that we are contractually obligated to provide.”

Other items that came in higher than expected were outside legal claims – which were $208,000 over budget and the cost of road salt – which was $64,000 over the original budget. In addition, the city had to use a significant amount of its fund balance to complete the 2014 budget, meaning that it has just$160,000 remaining in its unassigned fund balance for the 2016 fiscal year.

City councilman Tony Dolce, who also chairs the city finance committee, said the news obviously poses some major challenges.

“We’re getting dangerously low in our fund balance. We haven’t started a year this far in a deficit in a long, long time so we’re already behind the 8-ball,” Dolce said. “Many of those things are out of our control. We go through each line item with a fine-tooth comb and we can do all the homework we want – cut here or there and do this and that. But when you have a couple of those items that just blow up in your face that you have little or no control over, those are obviously huge concerns and you just have to sit back, cross your fingers and hope for the best in those areas.”

There could be some budget relief for the city prior to 2016. Dolce said that the mayor’s Joint Task Force on Efficiency and Cost Reduction will have a couple of major recommendations on how to reduce some expenses and they will be presented later this month.

In addition, Mayor Teresi said its important the city keep pressure on Albany and try to convince lawmakers to seriously consider significant mandate relief that can help Jamestown and other local governments deal with rising expenses, many of which they have no control over.

Both men provided council members with details of their budget requests, compared with what Jamestown Mayor Sam Teresi had settled on in his final executive budget.

Overtime and equipment continue to be the two biggest concerns for both departments. Snellings said that an increase amount of drug trafficking in the city continues to keep local police busy but he believes they are making an impact. However, he said that obviously more resources directed to the police department would result in more success in he fight against drug traf

Harvey said that the fire department is facility issues, with Engine House 5 on Fairmount Ave. in need of roof repair. The fire department also needs to have its SUV vehicle replaced – which is used to respond to emergency calls throughout the city which average about 2000 calls per year.

So far the council has met with the Public Safety, Public Facilities and Parks and Rec departments.

Jamestown City Council President Greg Rabb said based on what he’s heard so far, it’s obviously going to once again be an issue of what the city needs vs. what it can afford – especially when it comes to public safety.

“Nothing is more important than public safety,” Rabb said. “The council, the mayor – we all agree that we are dealing with some serious problems and we’re actually finally making progress out there. And so these departments are really important to us to keep the bad activities out of town and put a stop to it once and for all.”

Earlier this month, Jamestown Mayor Sam Teresi presented a budget that calls for $34.7 million in spending and includes a tax rate increase of 2.86 percent. However, because that increase is below the tax cap, the state would provide a rebate to all residential property owners during October 2015.

The city council will continue meeting with department heads next Monday night, Nov. 3. After that, they will begin budget deliberations. A public hearing on the budget is scheduled for 6 p.m. Nov. 17. The council has until Dec. 1 to finalize and approve the spending plan.

The hearing involved the council meeting with department heads, which included DPW director Jeff Lehman and Parks Department director John Willliams. Both explained that Mayor Sam Teresi’s executive budget contains significantly less money for their operations than what had initially been requested. Lehman was especially concerned about a reduction in the overtime budget – along with a reduction in the budget for equipment and supplies.

No changes to the budget were suggested during last night’s meeting. The council will continue budget reviews next Monday night, prior to the city’s weekly voting session.

Earlier this month, Jamestown Mayor Sam teresi presented a $34.7 million budget that calls for a 2.86 percent increase in the property tax rate. But because the tax increase is below the state tax cap, residents would receive property tax rebate checks that would cover the difference between the 2014 and 2015 tax payment.

Tonight, city council members will review the spending plan for the Department of Public Works, Parks and Youth Services. The budget deliberations will begin at 6:30 p.m. in the mayor’s conference room on the fourth floor of city hall. It is open to the public.