City Of Norwich Opts To Tap Reserves Instead Of Risk Breaking Tax Cap
Published: October 20th, 2022
By: Tyler Murphy

City of Norwich opts to tap reserves instead of risk breaking tax cap Ward 6 Alderman Robert Jeffrey, Ward 5 Alderman David Zieno, Ward 4 Alderman William Loomis, Ward 3 Alderwoman Nancy Allaire, Ward 2 Alderman Fred Gee, and Ward 1 Alderman Eric Warren at the common council meeting on Tuesday, October 18. (Photo by Tyler Murphy)

NORWICH – Concerned they might actually have to go through with it, the City of Norwich Common Council backed away from a measure that would authorize them to override the state's two percent tax levy limit should they need to while planning the 2023 budget.

A proposed budget has not been released but there are concerns, keenly relating to inflation, staffing and energy costs, that the city may need to raise taxes above the two percent levy this year. The options are: make cuts, raise taxes or tap reserves, and now Norwich seems to be leaning towards using its savings.

The proposed measure has been contested since it was proposed, and following a public hearing and comments on Tuesday, October 18, the City of Norwich Common Council voted down the proposal to authorize the city to raise taxes above the two precent tax cap law.

Some members stressed they just wanted to pass the override as a “just in case,” while also indicating they wouldn't go over it. In a vote of four against and two in favor, the board opted away from the temptation and is now looking at reserves to fill the gaps.

Alderman Robert Jeffrey said about $30,000 represented one percent of the tax levy, indicating the city's reserves could absorb any expected amount needed beyond the two percent levy.

The law restricts municipalities not to exceed a set increase every year, though by passing legislation municipalities are allowed to override the restrictions.

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At the end of the meeting Ward 1 Alderman Eric Warren, Ward 5 Alderman David Zieno, Ward 4 Alderman William Loomis, and Ward 6 Alderman Robert Jeffrey voted against the proposal.

Ward 2 Alderman Fred Gee and Ward 3 Alderwoman Nancy Allaire voted to approve the proposal.

Council members said they received a lot of feedback in recent weeks and some residents spoke at Tuesday's hearing.

Concerned Norwich residents

“Everybody here is experiencing inflation, with high gas prices, high energy, high goods and services,” said one older Norwich resident who read about the potential tax hike and became concerned, explaining he lived on a fixed budget.

“Everybody is trying to make do with what they got. I don't think there is anybody in this room that hasn't said they haven't had to cut back somewhere with their family, whether it is going out to dinner, or a trip, or whatever. The main reason I am here is to address the proposed law to override the tax levy limit in the City of Norwich which was in discussion at the last city council meeting.”

The resident engaged in a conversation with the City of Norwich Director of Finance Dee DuFour and the board.

“So when you do a budget, right? As it is right now, do you do it so it's two percent or less and then send it to the comptroller, do you know what the tax increase is going to be when you are writing up the budget?”

DuFour said, “The New York State Comptroller’s Office says you cannot go over a two percent tax cap. But, when you are doing the budget, until the budget is done, you don't really know. I mean, if we can't really meet the tax cap that's up to the council on how to make cuts or whatever to make that tax cap. That's the decision that's got to be made.”

He then said, “So as I understand it, the new law would allow you to override that two percent cap, send it to the comptroller, he couldn't approve that.” DuFour interrupted, “The comptroller doesn't approve our budget.” The man asked, “Okay, so who approves it?” DuFour, “The council approves the budget.”

The man asked. “Okay so you could approve a budget of, say, 2.3 percent?” DuFour said, “Only if we override the law.”

“And would that take us out of our STAR rebate?”

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“No, the STAR program has nothing to do with the city's budget, that only has to do with school taxes. It has nothing to do with city taxes.”

Officials said any relief gained from the STAR program would not change even if municipal taxes increase.

The local resident discussed concerns about the potential changes to the STAR tax relief program if the council exceeded the two percent tax cap levy. Council members discussed possible impacts to residents and the program if they exceeded the tax cap levy in September. The Evening Sun reported on the issue in the following days.

In mid-October officials clarified there had been a misunderstanding. They said the STAR program applied to schools taxes, and would not be impacted by changes in municipal property taxes.

Mayor Doliver added, “I think after that meeting, and some more research, we did find out.”

Former city mayor Christine Carnrike said the article she read in the newspaper discussed the need for the public hearing on the potential tax increases, and at Tuesday's meeting she shared her thoughts.

Carnrike said, “I am concerned what we as taxpayers will receive for the potential increase. The cost of everything has gone up and I believe it is imperative that our local governments do what they can to streamline and cut costs, just like the taxpayers are doing every day to make ends meet.”

She asked, “So if the proposed budget for 2023 is at or exceeds two percent what value will we receive for that increase?” She said people were worried about food and heat. She said the city should review salaries, expenses and personnel.

She cautioned against spending savings. “Once the money is gone it will be very difficult to build it back up,” she said.