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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 2021 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

• The significant revenue and expenditure projections in the proposed budget are reasonable.
• The proposed water fund budget includes estimated revenues for metered water rents contingent on Council approval of a proposed rate increase to be fully realized.
• The proposed water fund budget includes estimated revenues of $1.7 million for water rents assessed to the Town of Halfmoon and Water Commissioners of the Town of Waterford that we project will only realize approximately $1.2 million, a potential shortfall of $700,000.
• The City’s capital plan in the proposed budget includes the purchase of equipment and/or vehicles for the general fund totaling $3,354,500. However, only $453,000 of appropriations correspond to included expenditures, resulting in $2,901,500 (86 percent) of the City's 2022 capital plan for the purchase of equipment and vehicles for the general fund remaining unfunded through the proposed budget.
• The City’s capital plan in the proposed budget includes the purchase of equipment and/or vehicles for the water fund totaling $220,000. However, although the proposed water fund budget includes appropriations for the purchase of equipment of $8,500, these appropriations do not correspond to the expenditures included in the water fund capital plan and therefore the purchase of equipment and vehicles for the water fund remains unfunded through the proposed budget.
• The City’s capital plan in the proposed budget includes the purchase of equipment and/or vehicles for the refuse fund totaling $655,000. However, the proposed refuse fund budget does not include appropriations for equipment and capital outlay and therefore the purchase of equipment and vehicles for the refuse fund remains unfunded through the proposed budget.
• The City’s capital plan outlines that any general, water and refuse fund expenditures that are incurred for the purchase of equipment and vehicles by the City in 2022 that are not currently financed through the proposed budget will be financed by issuing debt.
• The City’s proposed budget includes a tax levy of $27,732,411.

Key Recommendations

• City officials should be mindful of, and closely monitor water fund revenue estimates throughout 2022 and develop a plan to balance the budget in the event the revenue projections are not fully realized.
• City officials should identify additional financing sources and to include them in the budget instead of continuing to rely on the issuance of debt to finance these purchases.
• The City Council should 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.