Troubled economy could make it tough for city budget

With stock markets reeling, the housing market on the ropes and commerce sputtering, city government is bound to feel a strain as residents and businesses struggle to cough up the cash that City Hall needs to keep operating smoothly.
“I’m sure it’s not going to help us that much,” city Finance Chairman Rich Miecznikowski said Tuesday.
He said, though, that the stock market turmoil this week is part of the normal turn of events. “Everybody kind of panics, Miecznikowski said, and the impact mushrooms.
But, he said, the Federal Reserve’s decision to drop the prime rate sharply Tuesday morning proved “kind of a blood transfusion” and bought time for the markets to straighten out the mess created in the mortgage sector.
“It’s certainly not a panic time,” Miecznikowski said, but officials are “going to have watch carefully” as they prepare the next municipal budget during the next few months, particularly the rising cost of energy.
Last fall, at the urging of former Mayor William Stortz, many department heads took a look at the possible impact of an economic downturn.
Not surprisingly, the city would feel the pinch along with most everyone else.
Tax Collector Mildred Parks said in her memorandum to Stortz that tax collections are suffering because of the slack economy.
Though real estate tax collections were down a bit, she said her greater concern is getting taxes due on motor vehicles and personal property.
“The larger businesses remain loyal with payments, but the smaller businesses are finding it more difficult to stay profitable, resulting in closures and therefore uncollectible taxes,” Parks said.
She said that motor vehicle taxes were down 1.3 percent in the first quarter of the fiscal year, which she called “dramatic and a good indicator of a lagging economy.”
Parks pointed out, too, that efforts to collect motor vehicle taxes amount to applying lots of investment to get the smallest return in taxes.
City Comptroller Glenn Klocko said in his memorandum to the mayor that a widening credit crunch “could negatively affect local housing starts.”
Combined with rising costs for construction materials, fewer homes would lead to lower fees and conveyance taxes, officials said.
The city’s Board of Finance plans a series of budget hearings over the next couple of months to review departmental spending plans. Ward has asked supervisors to hold down their spending requests as much as possible, though officials said that larger departments are going to have a hard time holding the line with so many expenses rising.

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Contact Steve Collins at scollins@bristolpress.com