Peekskill City Manager Matt Alexander won approval from the Common Council last year to bust the 2% state property tax cap and raise city taxes by 3.5%.
When he proposed that 2024 budget, Alexander hoped to make 3.5% the limit to annual increases for the next few years and then return to a 2% increase when the city’s finances were in better shape.
Now, in the budget he’s proposed for 2025, that plan is out the window.
Seeking to raise $4.59 million in additional revenue to bring 2025 spending to $55.62 million, Alexander is asking the Council this year to raise the city property tax by 4.65%, with similar additional increases possible in the following years.
“With this increase, we believe the City can add services desperately needed in all sectors of the City AND pay for employee benefits,” he wrote in his proposed budget.
The City Manager presented his tentative 2025 budget to the Common Council at their work session on Oct. 1. Presentations from individual city departments will continue through the next two months, with a final budget vote from the Common Council due on Dec. 1.
Health insurance costs keep rising, new hires proposed
Alexander cites a potential $2.8 million hike in hospitalization insurance costs and $1 million in new spending to bring on board 13 additional employees as the primary cause for needing more revenue from Peekskill residents.
“In years past, we have left many positions unfilled. This year, we intend on bringing more employees on so we can serve a City with the fastest school district growth rate in Westchester County and the second fastest in the entire Mid-Hudson region.” [School taxes are separate from city taxes, are set by the school district, and typically make up two-thirds of a property owner’s total tax bill].
Last year the city tried to negotiate a change in its health insurance coverage with its four labor unions but failed to reach a deal. An effort to try again will be undertaken this year, Alexander wrote in his budget.
“The self-insurance proposes to keep premiums flat in 2025,” he wrote in his proposed budget. “… we believe that the offer will not only save the City on its $11 million per year cost of insurance but it will save employees on their $1 million per year contribution …”
The proposed 4.65% tax increase comes to $13.80 per $1,000 of assessed value and the average single-family home assessed at $9,684 would see an increase of $133.62 or $11.14 a month.
Continued focus on quality of life improvement
Citing an increase in crime at several points in his budget, Alexander points to the importance of hiring more police officers.
“We gave a good effort on Quality of Life issues but have a long way to go on the issues of downtown, crime, litter and overcrowding. We will return to these efforts stronger than ever next year.”
The Police Department has seven vacant funded officer positions worth $527,699. “It is felt that additional coverage should be budgeted for patrol to combat rising crime.” The Police Department currently has a chief, four lieutenants, nine sergeants, six detectives and 42 officers for a total of 62 uniformed personnel.
The added $1 million in employee cost will pay for 13 new staff, six of them new hires and seven filling open positions. The new hires are a parking enforcement officer, a laborer and four police officers, including a sergeant to oversee community policing efforts.
Peekskill’s labor force is 15% less than in 2012, and Alexander said the city will need to increase its fire and ambulance service and “… must find ways to combat rising crime statistics.”
Employee costs make up two-thirds of the city budget, $20.477 million for payroll and $17.65 million for employee benefits. The city has 207 full-time and 21 part-time year round staff and hires 180 to 220 part-time temporary throughout the year.
Other sources of revenue
The city still has its $2.49 million share of the federal government’s 2021 American Recovery Plan Act (ARPA) and will use that money to help pay its bills rather than spend some of it for a new firetruck and at the same time help “… restore the City’s severely damaged fund balance.”
For the first time since 2019, Peekskill will pursue tax foreclosures on property taxes past due from 2016 to 2021, hoping to raise $2.75 million in unpaid taxes and $770,000 in penalties and interest. Sales tax revenue is projected to be $7.3 million in 2024 and could increase to $7.45 million in 2025.
Alexander said he expects that the city will have additional revenue from three to six cannabis dispensaries operating in Peekskill next year, bringing in projected tax revenue of $550,000 in cannabis dispensary taxes.
The city would use $350,000 in restricted fund balance for tax stabilization and certioraris. They expect to end 2024 with unassigned fund balance of $2.4 million.
Among the many projects Alexander points to for 2025, one priority is a focus on public safety, overcrowding and poorly-maintained properties.
“In November 2023, a fire forced out over 30 people who were living in an overcrowded three-family structure. The Quality of Life committee has looked at the City’s existing nuisance legislation and begun to identify situations where properties overburden taxpayers with the cost of responding to overcrowding, or other over-use of police, building department or public works attention.
“This will work with the City’s 2022 fire inspection legislation to allow for the inspection of certain properties in the City. Last month, a full-time fire inspector was hired to boost the City building department’s fire inspection program with staff and policies aimed at bringing more buildings under regular inspection for code compliance,” Alexander wrote.
You can read the City Manager’s proposed 2025 budget here
