County of Ulster, NY


2023 Proposed Budget Analysis & Review

Executive Summary

Read CMA’s Printed Report

View 2023 Proposed Budget


Ulster County (the “County”) commissioned Capital Markets Advisors, LLC’s Strategic Consulting Group (“CMA”) to develop this review (the “Review”) to analyze the County’s proposed budget for its fiscal year ending December 31, 2023 (the “2023 Proposed Budget”). This marks CMA’s third, consecutive year reviewing the County’s budget.  Members of CMA’s Strategic Consulting Group conducted an evaluation of the County budget and key departments during September through November 2022, with continual review expected through the adoption of the 2023 Budget.
Timing Constraints And Objectives Associated With The Review
As part of process, CMA elected to interview various key departments of the County.  This Review details the findings associated with CMA’s analysis.  As a result, the County may elect to conduct additional analysis to further explore efficiencies within its operations.  The findings by CMA were based on its review and may be subject to change and adjustment as additional investigations are requested by CMA or the County.
Approach and Methodology

CMA focused on a series of targeted key departments, agencies or functions of the County.  Such targets either constituted a large percentage of the services provided by the County or were deemed important for review by CMA, the County or both.  The Review and recommendations concentrate on the 2023 Proposed Budget. 

During the evaluation period, CMA conducted several videoconference interviews with County officials, performed a comprehensive review of available financial documents, accumulated data on comparable municipalities for the benchmarking of financial and personnel matters and participated in conversations with various industry professionals. 

In a typical year, fiscal trend analyses would serve as both the starting point and foundation for conducting the various reviews associated with the 2023 Proposed Budget. However, the ongoing effects associated with the COVID-19 pandemic in conjunction with a forecasted recessionary economic period continue to complicate the “traditional” forecasting process.  As such, fiscal trending alone will not provide for an adequate measure of the various forms of risks and uncertainties associated with the upcoming 2023 fiscal year. Current and projected economic conditions must be considered.  For the purposes of this review, trend analyses are being considered along with peer benchmarks and budgetary variance analyses to assist in identifying key areas of risk.

The findings in the Review were based on assumptions deemed to be reasonable and customary.  Nevertheless, any associated cost savings or revenue generation resulting from each initiative should be considered approximate and subject to revision, as necessary.  Furthermore, although quantified, the findings do not necessarily include execution plans.  In certain instances, additional planning and analysis would be required.

Baseline details relative to the demographic and socioeconomic environment of the County are also provided in Appendix B of the Review.  Appendix B provides a foundation for understanding the County’s local economy. 

Summary of Findings

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1. Replace Payroll Checks with Electronic Deposits
CMA believes this recommendation is still valid and should be pursued by the County which could save between $2.50 and $10.00 per check, with potential, annual savings of several hundred thousand dollars.
2. External Shared Services Opportunities
CMA believes the County should continue to seek shared services opportunities.
3. Consolidation of the Central Garage and the Highway Garage
Consolidating these facilities could save the County $170,000 annually through space/lease savings and the elimination of duplicative staff positions.
4. Contract an Energy Consultant
CMA understands there is presently a Request for Proposals outstanding to identify a qualified energy consultant. This has saved $600,000 annually for other counties and should be implemented during 2023.
5. Continued Enhancement of Information Technology
he County’s Information Services (IS) staff is highly skilled and has recently pursued projects that enhance County operations. The IS staff members should continue their efforts to identify technology solutions that will improve County services, mitigate various forms of cyber related risk and reduce costs.
6. Centralization of Grant Oversight
The centralized grant function would ensure the County has the opportunity to compete for all eligible funding in the most efficient and timely manner.
7. Increase Hotel Tax and Motel Occupancy Tax
CMA found that the County hotel and motel occupancy tax rates are half the market rate charged by other counties. Adjusting the rate from 4% to 4.5% market rate levels could generate an additional $2 million in annual revenue for the County.  The current rate is 2%
8. Adopt a Local Law to Allow Tax Levy Cap to be Exceeded
The County Legislature should consider adopting a local law to exceed the cap, even if the tax cap is not pierced. 
9. Glossary of Terms
A glossary of terms, which CMA recommended last year, should be included in the budget document.
10. Statistical Information of Budget Document(s)
The 2023 Proposed Budget document should be revised to include meaningful demographic and socioeconomic information.
11. Design of Budget Document(s)
The 2023 Proposed Budget document incorporates an online version. Although this was an excellent addition, the 600 page PDF version lacks hyperlinks.
12. Year-to-Date Info
CMA believes the budget document would be stronger and more useful if the charts included a column for year-to-date spending (which is available in the County’s electronic information system in the Budget Performance Report-Fiscal Year to Date-Including Rollup Account and Rollup to Object).
13. Highlights of Budget Document(s)
Clearer summary charts at the departmental level for total staffing and spending, inclusive of both wages and benefits, would improve the 2023 Proposed Budget.
14. Economic Forecast
Inflation, which currently exists, and will probably continue into 2023; and unemployment and recession, which may occur due to Federal Reserve actions to reduce inflation, must be considered in formulating the 2023 Proposed Budget.
15. ARPA Revenue Loss Calculation
Under current American Rescue Plan Act guidelines, local jurisdictions may calculate their revenue loss at four (4) distinct points in time. The use of revenue loss funds provides for greater flexibility and significantly streamlines reporting requirements.  Although the County has completed its first revenue loss calculation, a second-year calculation should be completed.
16. Sales Tax
When considering current economic conditions and Federal policies of high interest rates which may lead to more unemployment and lower inflation, and the belief by many that such actions will lead to a recession, the County should consider projecting sales tax at a level not above what will be collected this year (CMA projected $163.8 million).
17. Real Property Taxes
A levy below the 2% tax cap is considered to be both conservative and appropriate for 2022.
18. State Aid

When considering current economic conditions and Federal policies of high interest rates which may lead to more unemployment and lower inflation, and the belief by many that such actions will lead to a recession, the County should consider projecting sales tax at a level not above what will be collected this year (CMA projected $163.8 million).  

19. Federal Aid

The amount of Federal aid in the 2023 Proposed Budget was deemed appropriate, however, the County should explore additional Federal grant and aid opportunities.

20. Occupancy Tax

Due to the possibility of recession, higher unemployment, and high interest rates that impact credit charges, the County should reevaluate current year occupancy tax receipts right up until a final decision is required to finalize the 2023 Budget to ensure 2022 fourth quarter receipts are not trending downward.

21. Departmental Revenues

After reviewing all revenue lines CMA has concluded that the County has been careful and conservative in developing departmental income projections.

22. Aggregate Departmental Spending

Overall, departmental spending in the aggregate was found to be conservative.

23. Fuel

Overall, the 2023 Proposed Budget properly accounts for auto fuel costs.

24. Power

Some lines for larger buildings are expected to see substantial increases, but other lines show no increase or actual decreases

25. Personnel Increases

The 2023 Proposed Budget’s proposed increase in personnel appear appropriate to deal with public demand for services, including demand related to a recessionary economic environment with potential job loss.

26. Formalize Procedures Relating to Future Hiring Freezes

In practice, the County has certain internal practices in place relating to hiring freezes.  Nevertheless, CMA understands these procedures have not been formalized.  Since a hiring freeze is perhaps the most strategic option to appropriately control expenditures and reduce the risk of structurally unbalanced finances, the County should adopt formalized procedures which would also enhance fiscal transparency.

27.Purchase Orders

CMA’s review of encumbrance use in monitoring and administering the 2022 adopted/amended budget indicates that purchase orders and encumbrances could be used more often and improve the budget monitoring process.

28. Monitor State Legislation Relating to Workers Compensation

There is presently pending State legislation relating to workers compensation that if signed by the Governor would impact related expenses in the 2023 Budget. This should be monitored closely and if signed before the adoption the Budget should be amended accordingly.

29. Personnel
The 2023 Proposed Budget’s proposed increase in personnel appear appropriate to deal with public demand for services, including demand related to a recessionary economic environment with potential job loss.  CMA recommends that the County review these positions as they are created and filled to ensure they are adequate to address issues that might arise related to unemployment and the effects of recession
30. Personnel

The State provides flexibility to reclassify positions. Nevertheless, the County could improve controls relating to changes in non-union management positions. Practices relating to these changes should be reviewed and internal controls should be developed. 

31. Purchase Orders
The County should review its use of POs and encumbrances to ensure that year-to-date information is available and accurate.
32. Contingency Lines

In uncertain economic times, where many things like the potential for rising costs of fuel and supplies, increased demand for municipal services due to the potential of recession and unemployment, shortfalls in certain revenues and aid, among other impacts, are possible, the Contingency line should be funded adequately to ensure greater than expected costs and shortfalls in revenue, if they occur, can be properly addressed.  The County should consider increasing the contingency line.

33. Contingency Plan or Budget Strategy
In light of revenues and expenditures being negatively impacted by a recession during 2023, a contingency plan or a budget strategy to prioritize expenses and gracefully reduce the budget based on explicit criteria if needed is recommended. 
34. Revenue Analysis
The revenue variance analysis suggests that several sources of revenue in the governmental funds are historically underbudgeted.
35. Expenditure Analysis
There appears to be disproportionate positive expenditure variances, suggesting excessive padding in the budget.
36. Fund Balance Policy
More detailed fund balance guidelines are needed.  The policy should also address both unassigned and unrestricted funds.  As per GFOA best practices “in some cases, governments can find themselves in a position with an amount of unrestricted fund balance in the general fund over their formal policy reserve requirement even after taking into account potential financial risks in the foreseeable future.  Amounts over the formal policy may reflect a structural trend, in which case governments should consider a policy as to how this would be addressed.”
37. Appropriated Fund Balance

Incorporating the information on the dollar amounts being assigned, reserved, appropriated, and the remaining unassigned amount of fund balance will make the chart on page 31 of the 2023 Proposed Budget more informative and useful.

38. Tax Stabilization Reserve Fund

Surplus funds correlating to positive budgetary variances in 2022 should be considered for deposit into the Tax Stabilization Reserve Fund or into a Legislative contingency account. This is a practice of other counties in the State and would assist the County to hedge or mitigate potential economic risk in 2023.

39. Debt Management Policy
Although in process, the development and adoption of a debt management policy is recommended.
40. November Debt

Since the November 2022 debt issuance will be sold prior to the adoption of the budget, the Legislature should confirm with the Commissioner of Finance that the debt service appropriations have been revised to reflect payments correlating to the issuance of debt in 2022.

41. Authorized but Unissued Debt
By eliminating (or at least considering eliminating) authorized but unfunded projects, the County will have a more accurate and current picture of demand for debt.
42. 2023 Capital Improvement Plan
The 2023 Proposed Budget message should include summaries of the Capital Improvement Program.
43. Capital Improvement Plan Process
The County would benefit from a more formalized capital planning process.  The process and the presentation of the plan should follow industry accepted best practices, such as those identified by the GFOA.
44. Bus Charging Stations

The Capital Plan includes four electric fleet charging stations and four community stations.  Electric buses purchased last year presently travel a large distance to charge.  Completing this project would reduce related travel maintenance costs for the buses.