Dear Members of the Town Board,

Although FY2011 Budget plans are only in the initial stages, a recent article in the Journal News (September 3, 2010) is a cause for concern. According to State Comptroller Di Napoli, costs for state and local pensions are expected to rise significantly in 2012. The expected contributions from municipalities that fund the Employee Retirement System will grow from 11.9% of a municipality's total salary figure to 16.3% in 2012, about 37%. The average contribution for the Police and Fire Retirement System will increase from 18.2% to 21.6%, or about 18.6%. The article states "Because the rate of return on pension investments is likely lower and the contribution rates are rising, town, city, and county governments will have to choose between cutting back on services or raising property taxes in order to pay for the higher premiums."

As budget deliberations progress, somewhere in them there needs to be a consideration of the impact of these 2012 pension changes. Taxpayers have seen the result of what poor planning and padded revenue projections have done to Harrison's fiscal health. In 2010, residents saw property tax increases and reductions in services. You have seemed reluctant to make the fiscal decisions that need to be made, especially when confronted with the current economic crisis. Economic growth is most assuredly sluggish at best. Contrary to what some suggest, this sluggishness cannot be attributed to a business cycle. No economist would support that claim. Although a budget is comprised of many accounts, employee wages and benefits, especially health care and pensions, are by far the greatest municipal expenditure. Contracts notwithstanding, you must deal with a new reality.

Harrison taxpayers cannot survive another double-digit tax increase in 2011 or beyond. Every economic indicator clearly shows that economic recovery is not going to accelerate in the near term. It is unrealistic to suggest that. Corporations, like those headquartered in Harrison, are holding cash, and not investing in expansion. It is bad business to add capacity to create inventories of goods or increase payroll if there is no demand. They are happy to pay dividends to their shareholders and bank the cash. Increased tax revenue from them will just not be forthcoming. They will relocate out of New York State before that happens. Local businesses cannot survive if the banks do not start lending. That affects local business owners and their families. Most banks do not have the funds to start lending while large banks, like corporations, hold onto cash rather than make it available to borrowers. Unless job growth begins to accelerate, many unemployed Harrison taxpayers will be unable to pay their taxes. As jobs remain few and real wages continue to stagnate, taxpayers will be forced to decide between paying taxes and feeding their families.

In my view, you need to be prepared to make some very unpleasant budget decisions over the next several weeks. Harrison cannot remain a benevolent entity. Shared sacrifice needs to be the basis for all decisions. Those decisions will be critical as to how Harrison will survive the recession. Rather than concerning yourselves with the use of golf carts or removal of stop signs, now is the time to be addressing the difficult budget decisions that you seem to have avoided in budget deliberations in prior years. Putting off those decisions until late December is a bad idea. Taxpayers are depending upon you to do the right thing by fulfilling your fiduciary duty to them.

[reprinted with permission]