SARATOGA SPRINGS, NY – At the last Saratoga Springs City Council meeting, Finance Commissioner Minita Sanghvi presented highlights of the city’s preliminary financial report for the fiscal year ending December 31, 2021.
Sanghvi noted that the city is currently operating with a surplus.
“As one can imagine, 2021 was much better than 2020. In 2021, we ended with a surplus of approximately $9 million and an excess fund balance of approximately $1.9 million,” said Sanghvi remarks about the year-over-year gap.
Yet Sanghvi also warned that a good portion of these revenue boosters were one-time deals that were unlikely to be seen in the near future.
“So while 2021 has been a robust year and our total revenue has never been higher, part of that is due to one-off events,” Sanghvi said.
“One is $3.9 million in federal funding that we got because of COVID, which we won’t get next year, plus a one-time sale of a city property that has generated approximately $2 million in revenue. So around $6 million is really a one-time bargain,” Sanghvi explained.
The finance commissioner also detailed other expenses outlined in the city’s funds.
“In 2021, we ended with a fund balance of $7.6 million restricted, restricted or unspendable and $15.4 million in unrestricted and unrestricted amounts,” Sanghvi said.
“So you have a restricted fund balance that totals $1.79 million that includes the pension reserve, the insurance reserve, the capital reserve, the tax stabilization reserve, and those are governed by the New York State Law Allocations total $2.6 million, include nonprofits, prior year tax refund, recycling, IT initiatives, police reform, sick leave, personnel cost adjustments and these are governed by the city council,” Sanghvi noted.
“The charges total $2.6 million, which represent expenses incurred up to 2021 but are paid thereafter. Non-expendable property totals $1.18 million, representing amounts that cannot be spent. And an unrestricted and unrestricted total of $15.4 million,” Sanghvi continued.
“Our fund balance policy limits the fund balance to 10. Currently our fund balance is 28.49%, which means we will consider reducing our fund balance to meet our policy requirements,” said Sanghvi added.
Additionally, Sanghvi gave an overview of the city’s revenue, noting that some revenue was higher in 2020 but lower than budgeted.
“Some of the revenue from 2021, we also have a very strong sales tax year, that was a 35% year-over-year increase from 2020. Our hotel occupancy tax was up 120 % compared to 2020. Our mortgage tax increased by 34% compared to 2020 with around $2 million,” Sanghvi said.
“Our 2021 expenses, we had expenses higher than 2020 but under budget. For example, our health insurance was approximately $7.2 million, a 1% increase from 2020, but $373,000 less than expected. Health insurance accounts for 16% of our general expenses, so it is quite significant,” Sanghvi explained of the costs.
“Another expense to note is our overtime which was almost $1 million or $912,000. This is a 15% increase from our 2020 numbers and definitely something we can work on,” Sanghvi noted.
“Our total general fund expenses were essentially $1 million higher than 2020, but $3.7 million lower than the revised budget, which does not include expenses. Our cash balances at the end of 2021 are $4.86 million lower than 2020. This is due to the full repayment of loans and tax anticipation notes used to cover cash shortfalls during periods peak of the 2020 pandemic. Reserve balances also declined, but have since been largely replenished,” Sanghvi added.
Sanghvi concluded with an upbeat note on the city’s finances, including an expected strong summer tourist season.
“I am optimistic about the financial health of our city, but I also recommend a more moderate approach. We must not forget that the success of 2021 was largely due to one-time sources of revenue, as I explained city property and federal funds, which leave a void in the general fund budget that we will need to fill in 2022 and 2023,” Sanghvi remarked as he ensured the city maintained its AA+ bond rating.
“Our focus right now, especially in the finance department, is to restore financial stability to our city. We are still seeing waves of COVID raging through our community, we have a third EMS fire station to build, we need to fund the hiring of firefighters, and our capital reserve is currently half of what it was in 2018” , Sanghvi explained.
“Our city is gearing up for a strong summer and there is excitement, optimism and energy in the air. Like it should be. We have a lot to be happy about,” Sanghvi added.
The preliminary financial report provides a summary of the city’s 2021 annual financial report update document that will be reviewed by city auditors in the coming months, with audited financial statements due for release in late September.