Mount Vernon to borrow $2.5 million to reduce 2013 tax hike

City of Mount Vernon Mayor Ernie Davis reacts City of Mount Vernon Mayor Ernie Davis reacts as a resident speaks out against a proposed budget which calls for considerable tax increases during an open meeting at City Hall. (Dec. 6, 2012) Photo Credit: Xavier Mascarenas

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Faced with public backlash over a nearly double-digit property tax increase next year, Mount Vernon will borrow $2.5 million in 2013 to pay off outstanding tax challenges, a move aimed at lessening the blow to taxpayers' wallets.

On Thursday, the city's Board of Estimate and Contract -- which includes Mayor Ernie Davis, Comptroller Maureen Walker and City Council president Roberta Apuzzo, all Democrats -- signed off on a preliminary $99.4 million budget, which calls for a 6.7 percent property tax increase. The tax increase is lower than the original 9.8 percent proposal, which angered many residents.

Walker, who has clashed with Davis over the 2013 budget, voted against the spending package and criticized the mayor on Thursday for borrowing money to pay outstanding debts and for what she says are overinflated revenue projections.

"I still have serious reservations about this budget," Walker said Thursday afternoon. "We cannot keep borrowing. It's like if you have a home and need repairs and can't afford them, you have to do them a little at a time."

Davis' budget proposal, now in the hands of the city council, is about $6 million more than the 2012 budget, which he has attributed to rising pension and health care costs and declining revenues from city property taxes.

The cost of fighting tax challenges is another financial burden. Like most Westchester cities, Mount Vernon has faces tax challenges, or certioraris, from property owners who believe they're overtaxed. The city hasn't done a citywide property reassessment since the end of the Civil War, which prompts scores of tax challenges ever year that are either settled in or out of court.

Davis said the city has been paying off the cost of settling tax challenges with general fund revenue, but said borrowing the $2.5 million will allow the city to ease the property tax increase next year and avoid other painful budget cuts.

Council members, who take up the budget beginning next week, have come to the table with their own cost-cutting proposals, including cutting funding to the city's library and increasing fees for taxi medallions.

Councilman Richard Thomas, for one, said he doesn't like the mayor's proposal to borrow money to pay off tax challenges, which he called piling "debt on debt."

Walker has also questioned why Davis isn't using $4.5 million in surplus funds from the 2012 budget, money that the mayor has called "paper surplus" and argues can't be used to offset the double-digit tax increase and cuts.

"That surplus should go back to the general fund and be used to balance next year's budget," Walker said. "He's calling that paper surplus. I don't understand that. And I'm a certified public accountant."

At Thursday's meeting, Davis would not directly say what he would do with the city's $4.5 million surplus.

The proposed 6.5 percent tax increase still exceeds the state's 2 percent tax cap, but council members voted 3-2 to override the cap in November. Mount Vernon increased property taxes by 6.6 percent in 2011 and by 4 percent in 2010. Angry residents packed a meeting last week to protest hikes, many calling on the city to cut spending to lessen the blow.

The city council will consider other measures next week to possibly lower the tax increase even further, including:

• Imposing five furlough days on city employees, saving $500,000.

• Requiring city employees to contribute to health care costs to save an estimated $500,000.

One cost-cutting proposal that appears to have vanished is closing the Oak Street firehouse. At a meeting Wednesday night, several council members said they are unwilling to shutter the firehouse to close the budget gaps. That proposal was projected to save $800,000, but council members said they felt the mayor's cost savings estimate was too high.

"We were never really going to do that," Davis said after Thursday's meeting.

Police and fire personnel contribute 20 percent to health care premiums -- higher than most other cities in Westchester County -- but general employees still receive free health care.

Labor costs are expected to go up by more than $1 million in 2013 and overall account for 78 cents of every dollar the city spends every year. Police and firefighters will be getting 3 percent across-the-board pay raises in 2013.

While the $305,484 budget of the mayor's office for 2013 proposes no salary increases for Davis and his staff, it does seek to double his "office expenses" to $10,000 and travel budget to $4,000 from $2,000, according the proposed budget. The city Finance Department also is seeking more money for office expenses, from $10,000 to $20,000 in 2013.

Davis and Walker -- longtime political rivals who have run for the city's top job -- have clashed publicly over the city's finances in previous budget cycles. Several years ago, both submitted dueling budget proposals that ultimately were merged by the City Council after several rounds of contentious public hearings and council meetings.

A public hearing will be held next week, but the council hasn't decided on a day. The budget must be approved by Dec. 31.

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