November 13, 2012
DiNapoli: Schenectady's Fiscal Condition Improving
The City of Schenectady faces an unstable financial future, but increased economic development and better long-term financial planning point to signs of progress, according to an audit issued today by State Comptroller Thomas P. DiNapoli.
Similar to other cities experiencing fiscal stress, Schenectady has struggled to balance its budget, has limited resources to finance future needs and minimal cash available to pay current liabilities. On the positive side, however, recent tax base growth and commercial expansion in the city’s downtown corridor have begun to offset some of these financial issues.
“The ongoing efforts of the mayor and city officials to achieve cost savings and encourage economic growth have started Schenectady down the path to recovery,” said DiNapoli. “But the city still faces a number of challenges. Continuing sound, sensible budget management is vital to keeping city finances on the right track.”
Although the city’s population has experienced a recent uptick, the Comptroller’s report found that Schenectady’s unemployment rate remains above the statewide average for all cities; its median household income is well below the statewide median; and an increasing number of families are living below the poverty line. The city also has a higher-than-average incidence of vacant housing units and continues to suffer from unpaid property taxes.
In September, Moody’s Investors Services downgraded the city’s bond rating, citing a worsening financial position for fiscal year 2012 and beyond. Moody’s rating reflected the amount of delinquent real estate taxes and rising expenditures in the city, as well as above-average debt burden and below-average socio-economic indicators.
DiNapoli’s auditors found that city officials have adopted realistic budgets and have not exceeded budgeted spending over the last four years. Further, while the city council planned for operating deficits in each of those years, the actual operating deficits were less than budgeted.
The city is planning to achieve $2.3 million in cost savings for the upcoming 2013 fiscal year through retirement incentives ($1.3 million) and job consolidations and staff reductions ($1 million). Schenectady also intends to gain $1 million in revenue through the sale of property seized through tax foreclosures.
Other findings in the report include:
DiNapoli made a number of recommendations in the audit, including:
City officials reacted positively to the report and agreed with many of the recommendations. Their entire response is included in the audit.
For a copy of the report visit: http://www.osc.state.ny.us/localgov/audits/cities/2012/schenectady.pdf