Breaking Even: Jamestown’s Budget Picture Still Unclear

There have been a lot of unknowns about the city of Jamestown’s 2017 finances since the release of Mayor Sam Teresi’s executive budget in October 2016.

Now, 10 months later, the picture still isn’t much clearer.

When Teresi released the city’s preliminary budget, there was an $878,736 deficit built into the financial plan. Following Jamestown City Council budget deliberations, the fiscal hole shrunk a little with a projected deficit of $824,926.

At the 11th hour prior to the deadline for passing an on-time budget, city officials announced the state would fund the city $1 million to assist with the deficit if they continued working on initiatives to increase revenues and cut costs.

The $1 million for the city was secured in the 2017-18 state budget, along with $1.5 million for their new health care subsidy program for Medicare-eligible retirees. However, because the state Financial Restructuring Board For Local Governments only finalized the $1.5 million in June, city officials are rolling out the health care program for Medicare-eligible retirees later than anticipated.

City officials had built a $600,000 savings into the 2017 budget based on the new subsidy program, but because it won’t be rolled out until the fourth financial quarter, the original projected cost-savings won’t be met.

When The Post-Journal asked Teresi whether the city will break even fiscally in 2017, the mayor said, “Time will tell.”

“We won’t know until we get closer to the end of the year. We still have a (fiscal) quarter and a half before us. There is a lot of ground ahead of us,” Teresi said. “Some things have worked against us and there has been some cost-savings. We’re probably not in position to get a good sense as far as breaking even until well into the fourth quarter.

“There is a lot of time before us and a lot of time for the unexpected from the stand point of both good and not so good that can happen between now and (the end of the year).”

Teresi said one positive so far this year, which was announced earlier this week, is that the city received $111,017, or 7.7 percent, more in second quarter sales tax revenue than they did last year.

The mayor, however, had a longer list of items that have worked against city officials throughout the year so far. This included the state Supreme Court awarding former Jamestown Police Department Officer Timothy Wright $172,681 in damages stemming from a 2007 Uniformed Services Employment and Reemployment Rights Act of 1994 claim. He added unforeseen retirements as another reason why the expense line in the budget has increased during the year.

In July, Joseph Bellitto, city comptroller, said costs for the Jamestown Police Department will be higher because they had six retirements already this year with buyout packages totaling more than $378,000. He added they were expecting only one retirement in the police department for 2017, which is why city officials only budgeted $80,000 for retirement buyout packages.

“You cannot accurately budget for retirements. In many instances, retirements are not known until you get into the year,” Teresi said. “For the budget, the best you can do is budget those that have been announced and have been scheduled. This year, there have been more retirements than were scheduled or anticipated.”

Teresi also said health care claims are trending higher so far this year. Last month, Bellitto said health care claims are up 6 percent, or approximately $200,000, through the first half of the year. The mayor also said sometimes weather-related incidents like snow storms can increase expenditures. Last month, Bellitto reported the city had used 92 percent of their salt budget already this year.

“These types of things you cannot accurately forecast,” Teresi said. “This is why you need a contingency line in the budget and, hopefully, enough of a fund balance to get you by during the rough spots during a budget year.”

Teresi said another budget unknown that could still impact this year’s or next year’s budget are the expired contracts they have with three employee unions. Since the end of 2015, the International Association of Firefighters Local 1772 and Kendall Club Police Benevolent Association have been working without a new contract. At the start of this year, the contract with the Jamestown City Administrative Association expired.

“We’ve got nothing in 2017 for salary increases for those bargaining units. We will continue to push for settlement consistent with what 2017 has allocated. Under state law with police and fire unions, we don’t have unilateral control because there is a system of binding arbitration. We could be under the order of an arbitration panel and potential state court for an award that is not consistent in the 2017 budget,” Teresi said. “Those are three more question marks for the budget in 2017 and as we start to put together the 2018 budget.

“Budget making and budget administration is more of an art form that is based on best available forecast. No one has built a perfect or fail safe public budget, to the best of my knowledge.

“All we can do is our best based on past experiences; current practices; best practices from other communities, seeing what is going on around us; and reading the best set of financial tea leaves you can get your hands on,” Teresi continued. “It is anything but precise, but we try to make it as precise as we can through realistic forecasting.”