Dutchess County Reports Strong 2021 Financial Year End
Strong Fund Balance Provides for Historic Tax Relief,
Reduced Debt and Future Fiscal Stability
Poughkeepsie… Dutchess County Government’s 2021 year-end financial report, which highlights the County’s solid fiscal foundation in the wake of the COVID-19 pandemic, has been submitted to the New York State Office of the Comptroller. The County’s continued responsible and conservative fiscal management, including proactive steps to mitigate negative fiscal impacts resulting from the pandemic while enhancing and expanding services for residents, resulted in closing out 2021 with very strong unassigned general fund balance of $119.5 million, an increase of $59.5 million over 2020. This strong fund balance number follows historic tax relief for Dutchess County residents, both in property tax and sales tax as well as reduction in county indebtedness. The strong fund balance will also help ensure Dutchess County is able to adjust for any changes in the economy as inflation continues to rise and creates uncertainty about future economic stability.
County Executive Marc Molinaro said, “Thanks to our unwavering commitment to conservative fiscal policies, we have seen a complete turnaround in this County’s fiscal position since the beginning of my Administration. I took office with nearly all fund balance appropriated in the 2012 budget. Today, we have built a $119.5 million fund balance that will help ensure Dutchess County can weather any future fiscal challenges and we have kept our promises of delivering tax relief to our residents and businesses with historic cuts in both property and sales taxes, while making smart investments in safety, health and parks projects that improve the quality of life for all.”
Highlights of the 2021 Annual Financial Report include:
- 2021 revenues totaled $562.2 million, creating a surplus as expenses totaled $499.4 million.
- Revenue increases included:
- Dramatic increase in sales tax receipts, which were up $50.3 million over 2021. It is estimated $13 million of the sales tax increase resulted from legislation requiring sales tax paid on all third-party internet sales platforms.
- American Rescue Plan (ARP) funding increased 2021 revenue by $5 million.
- Hotel/motel tax was up $1.3 million over 2020.
- County Clerk/DMV fees were nearly $1 million over 2020 when the state closed motor vehicle offices.
- Though expenses increased by a total of $7.3 million over 2020, this was primarily due to sales tax revenue sharing with local municipalities, which went up $9.2 million from 2020 to a total of $40.5 million shared with municipalities in 2021. This sales tax sharing is reflected as an expense in the annual budget and financial statements. Separate from the sales tax sharing, overall expenses declined $1.9 million as there were multiple offsets to many of the 2021 expenses. Expenses and offsets include:
- $2 million increase in Public Health, Behavioral Health and Early Intervention and Pre-School Special Education services
- $3 million increase in Home and Community spending related to ARP investments in the community. This included the Learn, Play, Create grants aimed at helping not-for-profit youth organizations, which missed out on fundraising opportunities due to the pandemic, to provide greater opportunities to get youth back in action.
- $1 million increase in Municipal Innovation Grant (MIG) program funding to assist local municipalities fund one-time project costs.
- $4.9 million in callable debt was paid off in 2021, saving $470K in interest fees.
These expense increases were offset by more than $12 million in expense reductions in the area of Economic Assistance:
- The cost for the State’s Medicaid program was down by $5 million as the result of a higher Federal reimbursement rate related to the pandemic.
- Juvenile secure detention costs were down $1.5 million.
- Department of Community & Family Services personnel costs were down $2 million due to labor shortage.
- $1 million reduction in child institution and foster care costs as preventive service programming that have been implemented have increased program outcomes. Additionally, slower court procedures during the pandemic reduced overall expenses.
The 2021 fiscal year ended with $119.5 million in general fund unassigned fund balance, an increase of $59.5 million over 2020. This put the County’s fund balance well above its target range of 1-2 months of operating expenses ($38 to $72 million). In accordance with the County’s fund balance policy, fund balance dollars above the desired target range are to be utilized to pay down or avoid indebtedness and/or provide property tax relief. County Executive Molinaro has already directed multiple tax relief and debt paydown initiatives including:
- Provided historic tax relief in the 2022 Adopted Budget including:
- Largest property tax levy reduction ($5.5 million) in County history
- 10% property tax rate cut
- Elimination of sales tax on clothing and shoes costing under $110 per item.
- In 2021, appropriated $2.65 million to purchase vehicles and fund County match on capital projects at Dutchess Community College instead of bonding, saving $438K in interest.
- Also in 2021, early payoff of 2012 / 2013 callable debt in 2021 totaling almost $5 million, saving $470K in interest.
- In 2022, to date, more than $12 million has been appropriated to fund critical projects rather than bonding, saving a projected $5 million in interest costs. Projects include:
- Emergency Response vehicles including new Mobile Command Center and Fire Investigation Division vehicle.
- Emergency response interoperability 2-way radio project
- Purchase of Camp Nooteeming property
- Replacement of County roofs and improvements to the County’s public transit facility
- Also in 2022, early pay off of nearly $8.6 million in 2014 callable debt, providing more than $1.5 million in interest savings.
- In April, Dutchess County was the first county in New York State to cap the sales tax on retail fuel at $2/gallon or 8 cents per gallon, projected to save residents $4 million in 2022.
Similar efforts will continue in 2022 to pay down debt when possible and avoid bonding for projects to benefit county residents. County Executive Molinaro will be forwarding a resolution to the County Legislature to utilize fund balance for the Urban Trail project, as bid estimates have come in higher than originally projected as construction and supply costs remain high.
It will be necessary for the County to preserve and maintain a healthy fund balance to be able to adjust as needed to economic changes. Sales tax revenue accounts for 45% of the County’s total revenue. Although sales tax receipts have been strong, it is critical to ensure there is a strong fund balance to help offset any downturn in this economically sensitive revenue. With inflation currently driving up costs and interest rates on the rise, consumer consumption may decline as their buying power decreases.
In their memo to the County Legislature accompanying the Annual report, Budget Director Jessica White and Commissioner of Finance Heidi Seelbach also outlined the impacts of the recently adopted New York State budget. County Executive Molinaro, in partnership with the New York State Association of Counties (NYSAC), successfully advocated for numerous changes with positive impacts for counties including:
- An end to local sales tax revenue being diverted to support the State’s Aid to Municipalities (AIM) program and the Distressed Hospital Reserve. State revenues will now be utilized to fund these state programs. This change will return $2.5 million annually to Dutchess County.
- Increase in reimbursement to counties for public health services, projected to increase revenue for the Department of Behavioral & Community Health by $1.6 million in 2022.
- Increases in the State’s road and bridge funding to Counties through four programs – the Consolidated Local Street and Highway Improvement Program (CHIPS), Extreme Winter Recovery program (EWR), PAVE-NY, and new this year the Pave our Potholes Program – will provide $1.7 million more than last year for highway and bridge improvement and maintenance.
Other changes in the New York State budget will come with increased costs for counties including possible increases in pre-school special education provider rates, additional Safety Net financial assistance costs, and other administration changes.
The full 2021 Annual Financial Report and accompanying fiscal update memo are available on the County’s website at dutchessny.gov.