The mayor and the village board is scheduled to vote on a budget for the 2003-2004 fiscal year at a village meeting on Wednesday at Mineola Village Hall, 155 Washington Avenue. There is scheduled to be a work session at 6 p.m. and then a public meeting at 7:30 p.m., during which the budget will be discussed. The budget is likely to pass by a 3-2 majority with Mayor Jack M. Martins and trustees Larry Werther and Steve Franzini voting to pass the budget.

The two negative votes are likely to come from trustees Linda Fairgrieve and Lou Santosus, who have publicly opposed the proposed 13.8 percent tax increase on village taxes and have questioned some items in the budget, such as increasing the line in the budget for tax certiorari payments, converting all of the village's short-term debt to long-term debt and funding the Sewer Department with tax dollars instead of water rates, that have caused the increase.

"He's [Mayor Martins] making it like a drop in the bucket. For me, I'm upset with it but it's not going to break me, but there are people who don't come to the meetings that it could affect, especially with everything going on," said Fairgrieve, adding that with a decrease in state aid for the schools and the economy not being healthy, this year is not a good time for a double digit tax increase. "There are some things the mayor couldn't control but there are other things he could."

"It's nice to be able to put your hands in your pocket and pay for everything cash, and that's what he [Mayor Martins] wants to do, if you have the money and you're a rich person, but most people don't have that kind of money," said Santosus.

Mayor Martins said he too doesn't like the tax increase but that it is necessary to fix the mismanagement of the previous village administration and put the village back on solid financial footing.

The mayor said the village's spending levels actually went down as $370,000 was cut from the budget. "We've cut this budget and we've done it responsibly," Mayor Martins said, adding that his administration has not cut any of the services village residents are accustomed to receiving.

The mayor said he is frustrated that two of the trustees believe the tax increase is too high and have portrayed the increase as his increase. Mayor Martins said the village has actually cut spending but must raise taxes to pay for what the previous administration borrowed. Mayor Martins said it would have been very easy to present a budget with a 5 percent budget increase. But that budget would rely on more borrowing and the village's financial picture would never improve. Mayor Martins is against borrowing more money for non-capital expenses such as tax certiorari payments and borrowing to make sure the Water Fund doesn't have a shortfall. The mayor emphasized that the budget that will be voted on Wednesday does not rely on borrowing and addresses the borrowing done by prior administrations.

"Our spending is not going up. We're not increasing taxes because we've increased our spending. The reason that we have to have this tax increase is because past administrations have relied on borrowing to balance the budget. If we're going to do away with this cycle of borrowing to make things work in order to pay for everyday expenses, putting heavier burdens on future generations, then we have to come to terms with the fact that we have to pay for things as we incur them. That means we cannot bond for certioraris; we can't bond for maintenance items and we can't sell off village property and expect to use that money to pay off our expenses in our General Fund," said Mayor Martins. "We have to restore the fiscal stability in our budget. If we know that when we pass our budget, we're going to have to borrow a million dollars in order to make things work, then we're doing everybody a disservice."

At the village's budget work session on April 9, April 10 and again on April 22, Fairgrieve and Santosus raised concerns that a 13.8 percent tax increase may greatly impact some senior citizens as well as other families who may be struggling during these difficult economic times. But Mayor Martins believes the tax increase will address a number of economic problems in the village that were created by the prior administrations. "The previous administrations have relied on gimmicks and slight of hand in order to try to preserve the tax rate as low as possible. But what they did is they overburdened our Water Fund and they relied on borrowing," Mayor Martins said.

The mayor believes the previous administration overburdened future administrations by relying too much on borrowing to balance the budget and overburdening the Water Fund by removing the Sewer Department from the General Fund and putting it in the Water Fund to reduce what would have been a 14.95 percent increase in the 1999-2000 budget to an 11.81 percent increase.

"If you rely on borrowing and you shift obligations out of the General Fund and put them in the Water Fund so that you create a potential shortfall in the Water Fund, then what you've really done is put the burden on people in a different way. Now, instead of them having to pay the actual amount they would have paid for a renovation or for a maintenance item or for the certioraris, they're going to have to pay interest on that money over time. But these previous boards can say they didn't raise taxes. They didn't raise taxes but they left a $34 million debt. If they would have increased the taxes slightly each year, they would have been able to address these issues and we wouldn't have to have the tax increase we're dealing with this year," Mayor Martins said.

The mayor said the proposed budget puts an end to borrowing for non-capital improvement expenses and addresses all of the village's debt, something that was accumulated during the prior administration, by converting all of the village's $20 million in short-term debt into long-term debt, locking in historically low interest rates. "It allows us to take advantage of the low interest rates that we have right now. Interest rates are not getting any lower," said Mayor Martins.

The mayor believes that interest rates should be locked in now because experts are predicting they will go up and every half point increase on the interest rate means an extra $750,000 in debt service. "It adds a certain certainty to our budget going forward because if we can lock in the interest rate for 20 years, then we know what our payments are going to be. We don't have to worry about interest rates going up and the potential impact to our taxes over the next couple of years," Mayor Martins said.

In addition, the budget calls for an increase of $250,000 in the line for tax certiorari payments for taxpayers who successfully challenge their assessments. The proposed budget contains $750,000 for tax certiorari payments, which is what the village is expected to have to pay out. Therefore, the village will not have to borrow to make tax certiorari payments, something the mayor is against.

Another major initiative in the proposed budget is the removal of the Sewer Department from the village's Water Fund. According to Mayor Martins, the Water Fund should be a self-sufficient fund paid for by water rates. Water rates, the mayor believes, should pay for items that have to do solely with the cost of producing water.

The mayor said he has been told that there could be a projected shortfall in the Water Fund at the end of the fiscal year. According Mayor Martins, the village board has three options to avoid creating a shortfall in the Water Fund. It can raise water rates. However, the mayor is set against that since water rates were recently raised. The village can also decide to borrow money to offset the shortfall. But the mayor has made it clear he will not borrow for non-capital improvement expenses. The final option is to remove the Sewer Department from the Water Fund and pay for it with tax dollars as opposed to revenues from water. This is the option Mayor Martins has decided to go with.

The mayor pointed out that prior to 1999, the Sewer Department had been funded by the General Fund of the budget. He believes it was put into the Water Fund by the prior administration to hide a tax increase since the Water Fund is not funded by tax dollars, but by water rates.

Mayor Martins is proposing taking the Sewer Department out of the Water Fund in order to make the fund solvent. However, Fairgrieve and Santosus prefer to leave the Sewer Department in the Water Fund because putting the Sewer Department into the General Fund raises taxes by three percent.

Mayor Martins argued that leaving the Sewer Department in the Water Fund would create a shortfall in the Water Fund so taxpayers would have to pay for the shortfall either by seeing their water rates increase again or by seeing the village increase its debt by borrowing to make up for the shortfall. Although putting the Sewer Department into the General Fund may increase taxes 3 percent, the mayor believes it is the responsible decision in order to preserve the fiscal health of the Water Fund.

However, Fairgrieve and Santosus argued that taxpayers can conserve their water thereby controlling the amount of money they spend on water, but they cannot control the increase in taxes they will have to pay as a result of the Sewer Department being moved back into the General Fund. "How does putting the Sewer Department in the Water Fund help the taxpayers?" Santosus questioned.

Mayor Martins believes that if the Sewer Department isn't taken out of the Water Fund, water rates will either have to go up or the village will have to borrow to make up for the shortfall in the Water Fund ending up costing the village more in the long run.

The mayor also doesn't believe conserving water is the answer because then revenues will be less than anticipated, creating a shortfall in the Water Fund. The mayor also pointed out that putting the Sewer Department in the General Fund can help senior citizens because seniors will get a tax break for the General Fund tax but will not receive a tax break on their water rates.

At the Thursday, April 10 village board work session, the village board voted on a number of resolutions having to do with components of the budget. Trustees Fairgrieve and Santosus voted to table the votes on the resolutions. However, they were overruled by the majority of the board.

Trustee Fairgrieve opposed the practice of voting for individual items in the budget and preferred just to vote on the budget in its entirety. "I felt you had to vote on the total budget. I wanted to see the whole picture," she said.

However, Fairgrieve said the board proceeded to vote on the seven resolutions having to do with the budget, something she felt was unfair. "I think basically he [Mayor Martins] was having us vote on his budget piecemeal," she said. "It's like writing checks to pay your bills and not balancing your checkbook to know what the end result is."

The first resolution was to discontinue the practice of bonding for tax certiorari payments and fund the budget line for tax certiorari payments an additional $250,000 for a total of $750,000. The resolution was passed by Mayor Martins, trustee Larry Werther and trustee Steve Franzini. Trustees Fairgrieve and Santosus abstained from the vote.

Instead of going from $450,000 to $750,000 for the tax certiorari line, Fairgrieve said she preferred to go to $500,000 or $550,000. Because the economy is not healthy and the village's tax increase is high, she would prefer not to completely fund the line since each $94,000 the line is funded translates to a 1 percent tax increase. Fairgrieve said if the tax increase was minimal, she would favor fully funding the tax certiorari line. "If he [Mayor Martins] presented a budget with a 3 percent tax increase, I'd have the full $750,000," she said. "My philosophy as far as increasing it [the tax cert line in the budget] depends on the total picture of the budget. If we're not going to be hit with a big tax increase, put a little more in there. But I don't think this is the year to do that."

"Should you make the new residents coming into the village pay for the tax certs? We felt that [funding some of the tax cert payments through bond anticipation notes] would have been prudent," Santosus said.

Mayor Martins argues that if the line is not fully funded, the village would end up having to borrow to make tax certiorari payments and borrowing is what got the village into its current fiscal dilemma.

The second resolution was to convert all of the village's short-term debt, which amounts to approximately $20 million, into long-term debt, locking in low interest rates for serial bonds. This resolution passed 3-2 with Fairgrieve and Santosus casting the negative votes.

Fairgrieve said the village can't be sure the interest rates are historically low and would prefer more evidence that the rates are historically low. "I was just given one person's report at the time of the vote," she said.

She also maintains that if the village was faced with a low tax increase, she would be more inclined to roll over a little more of the required $5 million from short-term debt to long-term debt, but not all of the $20 million, and see how the trend goes. "I would put more in my contingency and wait for the trend. I can't put that much more in contingency if he's [Mayor Martins] is giving a double digit tax increase. I would wait and see the trend. The experts have been wrong lately as far as a turnaround in the economy," she said.

Santosus said the village shouldn't have been in any great hurry to convert all of its short-term debt to long-term debt since the village is receiving a lower interest rate on the short-term debt. "We know we have $5 million due but we felt that we should hold off [on the rest of the short-term debt]," he said, adding that the interest rates would not be going up that dramatically so the village should not burden its taxpayers with converting all of its short-term debt to long-term debt now. "We're putting the taxpayer in a situation where they're going to have to pay up front, we're taking it out of their pocket now."

The third resolution called for moving the Sewer Department out of the Water Fund and back into the General Fund to prevent the insolvency of the Water Fund. Again, the resolution passed by a 3-2 margin.

Fairgrieve said she would prefer to keep the Sewer Department in the Water Fund. She argued that if people want to conserve water they can so residents have some control over how much they pay for water. But putting the Sewer Department into the General Fund accounts for an immediate 3 percent tax increase. "For people who have it tight, they have to pay what you say their taxes are. But if they want to conserve water, they can. If they want to let their grass turn brown in the summer and green in the fall, they can if they're having such a hard time making it. It's a way for them to cut. If it's in the taxes, they have to pay it," she said.

Santosus pointed out that the sewer system in Mineola is from 1928. If there is a breakdown and the sewer system needs repair, Santosus prefers funding the repairs with bond anticipation notes (BANS) out of the Water Fund since the Water Fund has a revenue source to back up the BANS. Santosus' point is that if the village were to borrow money out of the General Fund through BANS, the village would have to convert those BANS to long-term debt at a higher interest rate within five years. However, if the village were to borrow money through BANS out of the Water Fund, it would not have to convert them to long-term debt within five years because the Water Fund has a dedicated revenue source. Also, BANS out of the Water Fund tend to have a lower interest rate than BANS out of the General Fund.

Santosus also said that if there was an emergency situation, the village could also possibly raise water rates slightly to pay for it.

The two trustees are also not certain that there will in fact be a shortfall in the Water Fund.

The fourth resolution called for discontinuing the practice of selling village property and utilizing the proceeds from the sale for operational expenses. In last year's budget, the village had revenues of $134,000 from the sale of a piece of property to the MTA. Fairgrieve recalled that the property was small, useless and could have been condemned so the village decided to use it to reduce residents' taxes.

However, the village will not have that revenue this year so the village will have to make up for that revenue through taxes.

This resolution was passed, although Santosus and Fairgrieve abstained. Fairgrieve and Santosus both said they are against selling village property, but didn't feel the resolution is something that should require a vote. Fairgrieve believed the mayor was just trying to make a point that the village will not have the $134,000 it had in last year's budget, which is something that could have just been put in a budget message to the taxpayers.

The fifth resolution was to recognize the loss in $122,000 of revenue as a result of the decline in the village's assessed valuation. Again, Santosus and Fairgrieve abstained.

The sixth resolution was to recognize the increase of $200,000 in the budget was due to labor cost expenses. Again, Santosus and Fairgreive abstained.

The final resolution was to recognize the village's additional contribution to the New York State Retirement System in the amount of $160,000. Again, Santosus and Fairgrieve abstained.

Fairgrieve felt the board should not be voting on the fifth, sixth and seventh resolutions because they are requirements of the budget. Fairgrieve believes that the mayor should formulate a budget message to the taxpayers explaining these increases.

Santosus also objected to voting on separate resolutions having to do with the budget. "You can't vote on a budget piecemeal. That was totally ridiculous," he said. "There were some things that were common sense items that you should not have motions on. What he's [Mayor Martins] trying to do is make us vote on motions so that we have to pass the budget based on his motions, which is totally ludicrous."

Trustee Santosus questioned the legal fee costs to the village's attorney. According to a 1099 for 2002, the village paid out $497,000 of legal fee costs to the law firm of Spellman, Walsh, Rice, Schure and Markus. The 2003-2004 budget also calls for a raise in Mr. Spellman's salary from $30,000 to $35,000.

Trustee Santosus believes that with a double-digit tax increase, the village should look for ways to save money. He suggested looking into an in-house village attorney.

Santosus said Spellman has done a good job for the village, but the village may not be able to afford a big firm like Spellman, Walsh, Rice, Schure and Markus.

"In good times, it was okay. We had to spend a lot of money on legal fees and we did spend a lot of money on legal fees and Mr. Spellman made a lot on any capital projects we had done. There were legal fees involved with that. In good times, you can afford to pay higher prices and have an attorney with a big staff on hand," Santosus said.

The trustee added that over the years, the village board would discuss 3 to 5 percent tax increases, but now with a double-digit tax increase, the village should look to cut back on its legal fees. "I don't really think we can afford to put that kind of money out on legal fees," Santosus said.

Mayor Martins said the village would look into whether it is feasible to have an in-house attorney but that study would take time. The village therefore could not have an in-house attorney for this 2003-2004 budget.

Last year, then trustee Martins voted against the 2002-2003 budget. One reason is because he didn't feel the interfund transfer of $300,000 from the Water Fund to the General Fund accurately reflected the amount of money that is used from the General Fund to help pay the costs of producing water. Martins believes the number is closer to $200,000. However, the $300,000 interfund transfer is again present in this 2003-2004 budget.

Trustee Santosus said that according to an outside accountant, the interfund transfer should be $300,000. "We had an outside accountant do it. He came up with these numbers and we felt they were fair," he said.