Executive Budget Message

City of Olean 2009/2010 Budget

April 7, 2009

Members of the City of Olean Common Council

It is my privilege to present to you the budget for the City of Olean for the fiscal year ending 2010. Pursuant to New York State Chapter 331 of the Laws of 2007, Section 5, the New York State Office of the State Comptroller has reviewed this budget and issued report number B1-9-1 in connection with this review. It was the responsibility of this Council to take the recommendations generated from this review, and make modifications to the budget. Any review item that is not incorporated into the budget document needed to be explained in writing to the New York State Office of the State Comptroller no later than five days prior to the adoption of the budget.

Tax Levy and Rates: The tax levy for the 2009/2010 fiscal year is $6,621,354. The tax rate for the year is $170.98/ $1,000 of Assessed Valuation; this is an increase of $7.86/ $1,000 of Assessed Valuation over fiscal year 2008/2009. The average homeowner has an assessed value of approximately $6,000, and would pay roughly $1,075 in City real property tax in 2009. This is the final year the City will utilize the old appraisal values. In the next budget year, we will use the new assessment figures.

General Fund: The spending level in the General Fund is $15,532,122. This represents an increase of $631,788 or 4.2%, from the 2008/2009 budget/Some reasons tor this increase include an increase in the Contingency Fund and employee raises negotiated in the various Union Contracts.

The General Fund budget is projected to be balanced, meaning that expected revenues cover expected expenditures. This is achieved through the tax rate increase previously mentioned. In order for the City to establish fiscal health, all future budgets must be balanced. There are two factors at play when balancing a budget. The first is to raise revenues {i.e. Real Property Taxes.) The other is to reduce costs. The City of Olean must continue to assess both sides of the income statement in the years to come to assure our fiscal recovery and stability.

Water Fund: The 2008/2009 Water Fund budget is $3,450,926. This represents an increase in appropriations of $49,164, or 1.5%, over the 2008/2009 budget. The water rate was increased on March 31, 2009 by $1.00/1000 cubic feet to $58.00. A customer using an average of 2500 cubic feet per quarter would pay about $145 per quarter, an increase of about $10 per year.

The Water Fund is projected to stay self sufficient into the future with rate increases necessitated by increased costs associated with utilities, chemicals, and various operation and maintenance incidentals. Rates will also have to be increased to offset bonding debt service to replace the many miles of aged water distribution lines that are beyond their useful life and undersized to provide appropriate fire flows.

Sewer Fund: The spending level in the Sewer Fund is $3,176,322. This represents an increase in appropriations of $500,071, or 18.7%, over the 2008/2009 budget. $336,794 of this increase is related to the increased debt service associated with capital projects. The sewer rate was increased on March 31, 2009 by $8.20/1000 cubic feet to $50.50. A customer using an average of 2500 cubic feet per quarter would pay about $126.25 per quarter, an increase of about $82 per year.

The Sewer Fund is also projected to be self sufficient into the future with rate increases necessitated by increased costs and debt service due to projects that are mandated by NYS DEC through its Consent Order. These projects entail upgrades to the Sewage Treatment Facility as well as replacement projects for the collection system.

Debt Service Fund: Debt service for the 2009/2010 budget year totals $2,002,583. To meet these requirements, the City plans to transfer $595,990 from the General Fund, $866,361 from the Water Fund, and $485,232 from the Sewer fund. The City also plans to use $55,000 of Debt Service Fund Balance in the current year. This Fund Balance is created when Capital Projects come in under budget, and the balances are transferred to the Debt Service Funds for repayment of debt issued to complete the projects.

Acknowledgements: I would like to extend my gratitude and thanks to the City taxpayers for giving me the opportunity to lead this City. The past few years have been very challenging, but I am confident the City is headed in the right direction. I would also like to thank the Department Heads and City Employees, without them this City could not operate.

Respectfully submitted,

David J. Carucci
City of Olean, Mayor