New Castle Facing $1.6M Budget Deficit in Early Projections

Early projections show the Town of New Castle could face a $1.6 million budget deficit by the end of the year, although the municipality is in a strong position because of its robust reserves.

In his presentation of the municipality’s first quarter financial report during a live-streamed work session Tuesday night, Town Comptroller Robert Deary said a projected $2.8 million shortfall in revenues would be partially offset by a $1.2 million reduction in expenditures.

While there are many unknowns, Deary told the Town Board that he tried to paint the bleakest plausible outlook. In his estimates, he slashed most major revenue categories by 25 to 50 percent.

“I’m kind of taking this as what I feel is a very pessimistic, almost worst-case scenario to realistic,” Deary said. “I don’t feel like any of these numbers I’m presenting is on the optimistic side.”

The town is buoyed by an $8.2 million fund balance, which will cover the shortfall if needed, he said.

One of the largest anticipated losses is sales tax. Deary estimated that could come in about $750,000 below the budgeted $3.3 million. Although economic activity began shutting down in mid-March, a very strong economy in January and February put the first quarter sales tax revenues on target with the budget, he said.

Deary said he is estimating a 40 percent hit for the second quarter and a 25 percent shortfall for each of the final two quarters.

Another significant shortage is likely to occur in mortgage tax. He has penciled in the town receiving about 75 percent of the $725,000 budgeted revenue, partially because there will be some people who will be looking to move from the city or other more crowded areas.

If the town is unable to hold its summer camp this year that will be additional lost revenue along with another $70,000 in other recreation programs during the spring and summer, Deary said. He is hoping that the fall and winter programs can be salvaged later in the year.

Deary also forecast that the town would lose about 25 percent of its building department revenue. The department is still issuing permits and conducting inspections, which should prevent revenue from declining by a greater percentage.

The town collected $71,000 in fines for the first quarter, but Deary believes that a 50 percent reduction is likely for the remainder of the year.

He is assuming that with the state’s fiscal woes the town will not see any $86,000 in state aid and more than $200,000 in paving money.

With declining interest rates, another $20,000 in interest revenue is likely to be lost.

“Fortunately, I see some offsets on the expenditure side,” Deary said. “A lot of these estimates, if the town if not running some of these programs, then we’re not incurring some of these expenses.”

Among the largest offsets would be for the summer camp and recreation programs that would be scuttled, he said. The town can also choose not to fill open positions or hire at a lower salary. Police overtime is also estimated to bel lower by about $27,000.

There are also several discretionary spending items and $150,000 in the contingency line.

“In spite of the town facing some difficulty and the town’s management will do everything we can to reduce costs and look at any cost savings we can find, I think the town is in a fortunate position of being able to weather this storm,” Deary said.

Supervisor Ivy Pool said the board will need to rebuild the budget and look at the town’s finances on a line-by-line basis. Holding next year’s taxes at or near zero will be critical, she said.

“Because to the extent that we are able to hold taxes flat for people in this municipality this year, I think that’s a challenge we need to be able to rise to,” Pool said.

Parking Permits Extended

The town has decided to postpone the start of its 12-month parking passes for commuters at the train station until Nov. 1.

Since commuting to the city has slowed to a trickle and many people might have difficult paying, officials have decided to put off permit renewals from the summer. Current permits will remain valid through October.

In the event there is less demand for the passes by the fall, the town could open up the lottery to additional non-residents. Currently, New Castle residents pay $500 a year for the permits while it costs non-residents $1,300.