Village Has Payroll Tax Issue Too! Plus Trustees Unanimously Support $62.4 mm 2022-23 Village Budget

It turns out the School district is not the only Scarsdale employer with a payroll tax problem. It turns out that Scarsdale Village had an issue as well, albeit a much smaller one. According to Village Manager Rob Cole, on April 18, 2022 he learned that the Village had self-identified an error in the payment of their payroll taxes during eight weeks, or four pay periods, in early 2021.

In March 2021 the Village paid all of the money owed. Notwithstanding this, the IRS issued $41,000 in penalties and fines for the monies already paid. He said, “We are in the midst of resolving this issue with them.” Furthermore, the Village Treasurer has engaged a financial consultancy firm to do an operational review of the accounts payable, receivable and the payroll functions.” Cole added, “This initiative dovetails with an initiative to maximize interest earnings. Now that interest rates are rising, staff is working to properly invest to enhance interest income from public funds. New efforts will yield meaningful increases in interest income.”

Personnel: Ingrid Richards and Aylone Katzin Resign

At the opening of the April 26, 2022 Village Board meeting, Mayor Veron announced that both Ingrid Richards and Aylone Katzin will be leaving Scarsdale for new positions in neighboring local governments. According to Veron, “Ingrid Richards arrived in Scarsdale as Assistant Village Manager in 2015, and Aylone joined us 2.5 years ago in 2019 as Assistant to the Village Manager. Both have been wonderful partners in Village matters, and I have had the distinct pleasure of working with them directly, particularly on Village revitalization efforts. Both Ingrid and Aylone have devoted significant energies to our local municipality, and their great work was noticed by our neighbors. Both are taking on new challenges with a new role for Ingrid as Senior Advisor to the Mayor of White Plains and a new role for Aylone as Assistant Village Manager in Larchmont. We will miss you both! “

Later in the meeting, trustees approved a resolution to appoint Sara Honig as the Village’s Personnel Administrator. She has 15 years of experience in human resources.

Village Events

Trustees approved resolutions to hold two large scale village events.

The first is for an Evening Under the Stars on the front lawn of Scarsdale Library on Friday, May 20, 2022. The evening will include musical entertainment, food trucks, alcohol sales, a stage and a tent.

The second is the Scarsdale Music Festival hosted by the Scarsdale Business Alliance in Scarsdale Village on Saturday June 4, 2022.

Village Budget

The trustees unanimously passed the 2022-23 $62.4 million Village budget. Earlier in the meeting they received criticism from Bob Harrison for failing to maximize interest income, calling Village management of public funds, “malfeasance.” Several of the trustees addressed this concern in their statements of support for the budget. See below for their comments.

Trustee Jonathan Lewis said, “I have participated in the planning of budgets both for the Board of Education and the Scarsdale Board of Trustees. I was on the school board during the first year of the tax cap and the first time a school budget was defeated in 44 years.

This year I have been impressed with the dedication of staff, community volunteers and my fellow trustees. I am impressed with the new structure of governance implemented by Mayor Jane Veron…. I believe this work contributes to moving us toward the goal of being innovators and leader in municipal government. Holding ourselves to a high standard means we have to be transparent about what we are doing well and what needs improvement. Specifically I believe we need improvement in how we as a village manage public funds. I would suggest regular reporting on how we manage investment funds, investment activities and investment choices made to manage interest earned. When we earn more interest income we have a cushion. I endorse the best practices as specified by the NY S Comptroller’s Office. I encourage the Village Manager to focus on this important issue. I have confidence we are moving forward in the right direction. I am supporting this budget because of the Village Manager’s commitment to a fiscal review.”

Trustee Karen Brew said, “I have listened to those who said we could earn more interest and lower the tax rate. It is not that simple. You have to look at your opportunities and assess your threats. Yes there is an opportunity to earn more interest income and Village management is committed to looking into investment opportunities. But there are offsetting risks and threats to our budget such as our aging infrastructure, inflation, potential storms, escalating pool maintenance costs and things that happen that we never predicted. I would not feel comfortable booking in additional interest without booking in offsetting costs. Progress is a process. It doesn’t happen all at once. We are investing in our community to make sure we are a strong community today and in the future. I believe we have struck a prudent balance between keeping the tax rate low and investing in things we have put off for far too long.”

Trustee Sameer Ahuja gave his full support for the budget. He said, “Thinking back … we had arcane processes, limited transparency and chronic underinvestment. We have a transformed process. It’s just night and day. We have a revamped strategic planning process and a much better forecasting process and better investment of funds. I am very excited. Congratulations to the Village Treasurer on a well-run process.”

Trustee Randall Whitestone said, “No budget can be perfect but I regard this year’s budget as a sensible balancing act between what we know now and what we think will happen, between short-term needs and long-term responsibilities. While the increase in the tax levy may be higher than we would wish, there are some neglected longer-term needs that we must start to address before playing catch-up becomes a giant leap. I’m thinking, for example, of pressure points such as our water system and the equipment the Department of Public Works uses every day to serve the community. Infrastructure will remain much on our minds going forward.

We’ve had some better than expected and worse than expected revenue and expenditure lines, and I believe we continue to approach forward budgeting on a responsible and cautious basis. And we’ll keep working to refine our budget process for next year and, importantly. how we judiciously better utilize our balances to the benefit of taxpayers. Modernizing longstanding practices doesn’t happen in one budget cycle.

We will continue to need to address longer term needs, fund balance, and, importantly our choices around funding sources, such as debt. Paying for a pool project and assessing how we might improve the village center will both be robust community discussions in the years to come. We cannot take a short-term approach without being cognizant of the impact on future years. And I do think we’ll gain greater clarity as behaviors achieve some equilibrium as Covid hopefully recedes.

So again, while no budget is perfect, I believe this budget achieves a responsible balance amid continued uncertainty and meaningful future long-term needs.”

Trustee Ken Mazer said “As a new board member I come to this process with fresh eyes. I have been impressed with the negotiations and discussions, the mayor’s leadership, the professional staff and the residents’ of this town who make this a better place to live in. Thank you to all. I convey my full support for the budget.”

Trustee Jeremy Gans said, “Though I was not a part of the planning process, I attended every work session at which the budget was discussed …. I was impressed with the thoughtfulness and care with which the budget was created ….. I think the Village has significant infrastructure needs moving forward and I believe that our residents have ever increasing expectations regarding Village services and facilities. I think our budget process will grow even more complex moving forward. I think the 2022-23 fiscal year budget provides the proper balance of meeting the Village’s immediate needs, making necessary improvements for the future while taking an overall conservative approach given continued uncertainty, inflation, interest rates and the supply chain issue.”

Finally Mayor Jane Veron said, “I am in favor of the 2022-2023 proposed budget and will vote for its approval. One year ago, we established an integrated strategic and financial planning framework to guide Scarsdale into the future. We articulated the pillars of government that standing together ensure Scarsdale residents have a safe, secure, and wonderful place to live. With this new approach to planning came the need to reengineer the budget process. We hoped for a more dynamic approach where priorities could be evaluated both within and across departments, anchored in the goals and objectives of the community. The time was now to move Scarsdale toward a model of 21st century government excellence.

In the fall, Board and staff embarked on a new budget process. We asked department heads to build budgets that reflected their operational realities and to make clear what would be required to deliver for residents. We asked staff to move from paper to digital, from hardcoding to dynamic. We increased transparency, dispensing with full day in-person meetings and instead held multiple virtual recorded sessions toward the end of the business day. The Treasurer introduced a new comprehensive financial statement, committed dollars upfront to items such as roads that were traditionally funded out of surplus, initiated the reclassification of expenses to reflect GFOA standards, calculated fully loaded personnel costs, and freed up dollars sitting unclaimed in assigned fund balance accounts. Board and staff also kicked off studies to plan for long term capital expenditures, including the water system and fleet, and started to reexamine our investment strategy. We held countless meetings and public sessions, iterating, digging deeper, and bringing in third party experts. And all of this took place while staff continued to keep the Village running.

After these months and months and months of study, analysis, debate, and public input, we have produced a responsible budget for Scarsdale Village. The 3.7% tax increase strikes the right balance between investment and fiscal prudence. This budget underscores our commitment not only to the Scarsdale of today but also to the Scarsdale of tomorrow.

Over the past many years, we had been underinvesting in our infrastructure and deferring necessary expenditures, causing service disruptions and costly repairs. We had also postponed complex conversations on important policy issues such as fund balance and use of debt. As stewards of this Village, this Board along with our recently retired colleagues, worked to reverse these trends. At the same time, we always keep front and center our residents strong desire to keep taxes as low as reasonably possible.

I am immensely grateful to staff for partnering with us on this journey. A lot was asked of our department heads in a relatively short period of time. They rose to the challenge and will continue to work with us to streamline and improve the process. I also have enormous respect and appreciation for our residents who have deeply engaged in the budget process with special thanks to the League of Women Voters, the Scarsdale Forum and our loyal residents who actively participate in our meetings. We listen, and your feedback informs decision making.

Change is never easy, and we still have more to do. Throughout this budget cycle, we tested new approaches and learned tremendously. We tried to make information more readily available and easily digestible. Yet, there is always room to improve, and we will keep getting better. As we said at the outset, this year would be one of transition as we build toward a best-in-class GFOA-certified budget, the gold standard in budgeting.

The budget we proposed, after careful and extensive thought, feedback, and consideration, reflects our best thinking over a set period of time. It goes without saying, though, that in a rapidly changing, uncertain global economic and political environment, assumptions made today will be tested. I am eager to adopt the new investment policy outlined by our Village Manager to take advantage of the favorable interest rate environment and look forward to regular reporting.

So, the budget process never truly ends. We monitor our revenues and expenses, and if and when circumstances warrant, we will have open conversations about adjustments in approach. We expect nothing less of staff, and the community expects nothing less of us.”

On April 18 Village Manager Rob Cole learned that the village had self-identified an error in the payment of their payroll taxes during eight weeks, or four pay periods in early 2021. In March 2021 the Village paid all of the money owed. Notwithstanding this, the IRS issued $41,000 in penalties and fines for the money already paid. We are in the midst of resolving this issue with them. The Village Treasurer has engaged a financial consultancy firm to do an operational review of the accounts payable, receivable and the payroll functions. This initiative dovetails with maximizing interest earnings. Now that interest rates are rising, staff is working to properly invest to enhance our interest income. New efforts will yield meaningful increases in interest income.