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Written by Joanne Wallenstein

Published: 28 March 2020

Created: 28 March 2020

Last Updated: 28 March 2020

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Sean Cohen, Bob Berg and Bob SelvaggioThis letter was sent to Scarsdale1058e by Robert Berg of the Voters Choice Party.
On the morning on March 24, the Voters Choice Party (VCP) published a working paper, examining the economic impact of the coronavirus, its serious ramifications on Scarsdale Village residents, and the urgent need for our Village government to revise its tentative budget for fiscal 2020-2021 to take into account the harsh new economic reality. Our paper recommends, among other things, holding an Emergency Village Budget Meeting with residents to revise the tentative budget by cutting non-property tax revenue projections by at least $5 million; implementing budget cuts to reduce the property tax for the next fiscal year; and perhaps floating a general obligations bond to cover some operating expenses and alleviate residents' property tax burden. We sent our paper to the Mayor and the Trustees and the Village Manager and his staff. That evening, the Village Board held its regular bi-weekly meeting. Originally noticed to take place with no public comment permitted, we objected, and at the last minute, the Village decided to hold the meeting via Zoom and allowed for public comment.

The original agenda for the meeting simply included a resolution placing the tentative fiscal 2020-2021 budget, which had been filed on March 20, 2020, up for a public hearing on April 14, 2020. By law, New York Villages are required to file their final budgets by May 1 of the calendar year for a fiscal year that runs from June 1 to May 31 of the following year. Notably, although the coronavirus pandemic had been tightening the noose on public activity in the Scarsdale Village area for several weeks, the tentative budget filed last Friday made no modifications from the draft budget last discussed publicly several weeks earlier. No changes had been made to reflect the fact that the world's economy had stopped in its tracks and that Scarsdale residents' jobs, businesses, and savings have been ravaged.

At the March 24, 2020 Board meeting, the Mayor did address the Village Budget. The Mayor acknowledged that the tentative budget "was based on assumptions that may no longer be accurate given the pace of change of the economic impact of COVID-19." He explained that the Village Manager and the Village Treasurer last week reviewed the current year's budget (which ends in two months on May 31, 2020) and that it is sufficiently funded. Hence, despite the severe and rapidly evolving economic effects of the pandemic, the current budget will not run a deficit. While that's a bright spot in an otherwise dark sky, given that only two months remain in the fiscal year, 99% of residents paid their Village property tax bills which were due last July 31, and the Village budget enjoys a substantial fund balance (a rainy day fund), a deficit this fiscal year would have been unthinkable.

So, with a little bit of financial engineering, the Village Manager and Treasurer have hedged against a shortfall in the next two months' revenues and the rise of expenses due to the COVID-19 crisis. Village managers have reallocated $300,000 from certain capital projects and $40,000 from the Central Garage Internal Service Fund in the 2020-21 budget into a COVID-19 contingency account. From this year’s budget they have allocated $1.25mm in existing but unspent funds into this COVID-19 contingency account, for a total of about $1.6 million. Furthermore, the Village Manager has directed Department Heads to restrict spending to essential items required for the operation of the Village and for their response to the current pandemic.

But the next fiscal year is terrifying, and the Village's approach to the next fiscal year's budget is equally scary. In his prepared remarks (available on scarsdale.com), the Mayor said: "Our approach to the budget will remain to be: (i) be [sic] fiscally responsible; (ii) base budget adjustments, if any, on facts and on our best available information; and (iii) utilize the flexibility inherent in the Village's budget authority to adjust the budget after it is adopted, as is likely to be required."

So what's wrong with this picture? Everything. We are smack in the epicenter of the worst pandemic in one hundred years. Last Sunday, James Bullard, the President of the St. Louis Fed, predicted that we will see 30 percent unemployment this summer, with gross domestic product possibly dropping by an astonishing 50 percent next quarter. Today's shocking unemployment numbers -- a record 3.28 million new claims filed last week, immolated the prior record of 695,000, dating back to 1982. These are economic collapses unseen since the Great Depression, if not worse. Scarsdale's residents are not immune from this economic meltdown. Our residents will suffer from massive unemployment. Business owners will be lucky if their businesses survive; many will go bankrupt. Our residents' savings have been crushed. Many of our residents are retired, and must survive on fixed incomes or their depleted investments. Even optimistically, if we are on an upswing in four months, the economic devastation to date is vast, the destruction over the next several months will be worse, and only then do we begin to dig out from the rubble.

When you have the opportunity to set a budget now -- which requires taxpayer funding for the upcoming year that they must fully pay by July 31 -- you need to cut that budget substantially while you still can to keep monies in taxpayers' pockets. There are no mid-year tax givebacks if folks need the money over the course of the next year.

The Mayor's approach, which Trustee Arest echoed at great length, aims to be reactive and deliberative, watching and waiting to see how the pandemic and the economy play out over a period of months. Bad! As Trustee Arest, one of the architects of the Freightway Redevelopment Project, which we helped “pause,” stated at the Board meeting:

"We have four hurdles before us that make immediately reevaluating the entire budget infeasible. First, we are in the middle of a public health crisis and state of emergency. Our priority has been and needs to continue to be the health and safety of our community. And that leads me to the second hurdle, availability of staff. Our department heads and their teams along with the Village Manager’s Office are working considerable hours ensuring that we can keep essential services running, and that the men and women that perform these services are able to do so safely and hopefully remain healthy. Third, NY State law requires us to hold a public hearing on the tentative budget on or before April 15 and we must have our budget approved prior to May 1. Lastly, we face unprecedented uncertainty. And as uncertainty mounts, so do the number of permutations of possible impacts to our budget."

Trustee Arest continued:

"This Board is fully aware of the hard work that will be needed. We know that many, many hours of budget meetings and revisions are to come. It is very likely that with staff, we as a Board and we as a community will need to reassess every service and every project. We will also have to reexamine how we plan to pay for them possibly using additional borrowing as well as using our fund balance. In other words, we know that substantial cuts could become necessary."

The Village Board's budget strategy for the next fiscal year is unsuitable and irresponsible to Scarsdale taxpayers. Contrary to popular myth, Scarsdale residents are not all wealthy. As our working paper explains, the median annual household income in Scarsdale is below $250,000. Of those households, the average annual income is just $146,000, which is near the top range of the middle class in New York. We have many retirees living here who depend on social security income, pensions, and their investments. We face the highest property taxes in the County, if not the entire country. In these economic shambles, our residents are in financial trouble, if not peril. No one is untouched. Even our wealthiest residents have lost fortunes. Our real estate market was exceptionally weak -- in terms of pricing -- before the coronavirus. Now it has stopped in its tracks. So how are our residents going to pay their property tax bills? Some won't be able to -- they'll have to pay for food, gasoline, and other expenses first. Others will dig deep into their savings to do so.

Under these exceptionally difficult circumstances, our Mayor and Trustees have both a fiduciary and moral duty to act first and foremost on behalf of our residents, our taxpayers, as they formulate the Village budget for 2020-2021 which begins June 1. That budget must make major cuts plain and simple. And they must make them now, while there's still time. What they should not be allowed to do is to appropriate monies out of our pockets on July 31, 2020 -- when our Village property taxes must be paid -- and then, over the course of the year, decide that certain expenditures need not be made or certain programs can be cut because of the economic circumstances. We need to keep our money in our pockets this year rather than sitting in the Village coffers.

Another thing that's very troubling to me is the refusal of the Village Board and the Village Manager to call on our Village employees to pitch in and share the economic sacrifice we are all bearing. These terrible times call for shared sacrifice. We pay our hard-working Village employees excellent salaries and benefits through thick and thin. Well, now we need their help as we move forward over the next year. Personnel costs account for about 70% of the Village budget. Village staff should agree to a reasonable pay cut this year so that layoffs can be avoided. These are hard decisions for us to recommend, but they are absolutely necessary for the Village Board to consider and to discuss with residents and Village staff.

In the same vein, yesterday, I wrote the Mayor and the Village Manager about the coming Summer recreational programs the Village is planning to offer residents, including the Summer rec day camp, the pool, specialty and sports camps, and tennis facilities. We are in "lock down" mode for the foreseeable future, and no one can know when public health conditions will improve sufficiently so that we can begin to resume "normal" activities safely. Given the situation, and the fact that the Village will soon have to incur considerable fixed costs to offer residents these activities, I asked why the Village is actively soliciting applications for seasonal employment this Summer for the pool, the day camp, parks maintenance, front desk assistants, and tennis attendants. Moreover, yesterday, the Village issued a press release notifying residents that "Our popular Day Camp programs, August specialty and sport camps, and Tennis and Pool Permit programs are still on for 2020 -- register today!" The press release goes on to tout a "no risk registration" whereby all registration fees are 100% refundable if a program is cancelled in connection with COVID-19. So what happens if we can't conduct the programs? Will we have to pay the staff we hire? Will we have to pay seasonal maintenance workers if our sports facilities are closed? Will we have to pay vendors who are contracted to provide supplies and services for our programs? To me, the chance that we will be able to go forward with any of these programs -- with the possible exception of programs beginning in August 2020 -- is fairly remote at this point. Even once the surge in infections passes, social distancing will remain in effect for a considerable period to prevent recurrences of the type that Hong Kong is now experiencing.

While we all just want this horrific virus to go away and our treasured normal Summer to return, we have to face reality. And that reality includes minimizing any costs to suffering Scarsdale residents who simply cannot afford to bear any additional costs that can be reasonably avoided at this time. Thus, unless all Summer staff are hired with the expectation that they will not be paid unless the programs actually go forward, and unless all other meaningful costs associated with these programs can be avoided fully if these programs are ultimately cancelled, the only responsible course of action at this time seems to me to put these Summer programs on indefinite hold, with the likelihood that they will not take place this Summer unless the public health emergency quickly resolves. I asked the Mayor and Village Manager to respond. I have yet to hear back.

Here's the bottom line. We need to cut the Village budget for the fiscal year starting June 1. Our residents need financial help, not another property tax increase. The Village can make changes to the proposed budget until May 1 when it must be filed as a final budget pursuant to New York law. The current Mayor and Trustees don't want to make any tough decisions. They want to wait, see how economic conditions develop over the course of the year -- after taking the dollars that you need out of your pockets in July -- and then decide if they need to spend it all. They haven't even bothered to schedule the next Village Board meeting to discuss the Village budget until April 14, 2020 -- which will be the date they will conduct a public hearing on the tentative budget. That's much too late to engage in meaningful community discussion. That budget will be a fait accompli -- with a property tax increase for you.

Unfortunately, the Village election has been postponed by the Governor until April 28, 2020 because of the public health emergency. So even if you elect the three VCP candidates to the Village Board, we won't take office until after the Village budget becomes final. You must tell the Mayor, the Trustees, and the Village Manager that you need property tax relief. You need the tentative budget to be cut. Please speak up right now, before it is too late! Stay safe and be well.

Bob Berg