Year-End Surplus Doesn’t Mean City Doesn’t Have Structural Financial Problems

If only Jamestown’s 2018 year-end surplus of $416,222 was a real surplus.

The surplus doesn’t show real fiscal strength. It doesn’t show that the city has restored any semblance of sanity to its budget or that it can consistently provide the services people need for a price people can afford. The surplus doesn’t mean the city is financially healthy.

The surplus is a paper surplus that looks good on the city’s books but is not at all indicative of the city’s financial health. It’s a paper surplus that we hope doesn’t lessen the sense of urgency City Council members, the city’s next mayor or the city’s current administration should feel to do all they can to restore balance to the city’s finances.

It’s a paper surplus because the city was fortunate that health and dental insurance came in $1.1 million less than estimated, that the state retirement system payment was less than budgeted and that the city received more sales tax than it had anticipated. Despite all of that good luck, the city wouldn’t have had a surplus if not for Gov. Andrew Cuomo and the $1 million in additional state aid the governor steered toward Jamestown. Take that aid away and the city’s best-case financial scenario for 2018 would have still resulted in a deficit of around $600,000. It’s good the city is getting the additional state aid now, but that money — and the good fiscal luck the city saw in 2018 — is not guaranteed forever.

The city’s good luck and the governor’s generosity won’t be enough to overcome escalating salary costs. If the city doesn’t appeal the state Supreme Court’s decision dismissing the city’s challenge of the binding arbitration agreement between the city and the Kendall Club Police Benevolent Association, the city’s current $2,257,197 surplus will drop to $1,650,520.03 when the agreement’s awards for 2016, 2017 and 2018 are paid. The agreement will cost another $232,855 from the 2019 budget, so the surplus will shrink to $1,417,665.

That doesn’t seem so bad, but taxpayers shouldn’t forget that the city’s firefighters are also working without a contract and have the option to go to binding arbitration. If the Kendall Club’s binding arbitration award stands, the fire department will likely receive a similar award from an arbitration panel. Assuming a roughly $600,000 payment to settle those costs, the city’s surplus shrinks to about $820,000 — far less than the $6 million surplus recommended by the state comptroller.

Now factor in the millions of dollars in equipment that city departments need to do their jobs effectively and safely and Jamestown’s still-crumbling roads and bridges and you quickly realize the city is actually flat broke and busted, regardless of what the city’s audit says.

Much like the rest of us, Jamestown is living paycheck to paycheck. All it will take is one major unforeseen expense to bring the whole house of cards crumbling down.