East Aurora is at a financial crossroads.
Village officials must decide whether to raise taxes and borrow $1.6 million to reconstruct Warren Drive in next year's budget. At the same time, they want to stop dipping into a dwindling surplus and refrain from mounting further debt.
Village Administrator Patrick Richey is asking the Village Board to think about its overall priorities -- in the face of $12.5 million in total debt and a shrinking fund balance that the village has been dipping into to help offset tax increases.
"We're at a point now where we're taking on more than we're paying off," Richey told the board last week. "That's a trend the last few years."
For 1999-2000, the village's $4.83 million general fund budget increased the tax rate by less than a quarter of 1 percent and reduced spending by 1.6 percent. The current tax rate is $12.82 per $1,000 of assessed valuation. To help accomplish that, the village used $620,000 from what had been a $1.2 million surplus balance to help offset the tax impact.
The village's tax rates have remained stable for the past few years.
While Richey said the village remains in "decent financial shape" and still is below the state's debt ceiling, he also stressed that trustees need to determine their priorities and the impact on taxes.
"The trend of $12 million to $13 million debt over the last five years shows no signs of decreasing," said Richey, noting that $8.5 million of that debt is directly tied to sewer expenses.
That compares with $4.5 million in village debt about 10 years ago, although the village did not own the sewage-treatment plant at that time. The village repurchased the facility in 1995.
Each year, the village has been retiring about $800,000 in principal on its debt.
"I don't mean to paint a bleak picture," Richey said. However, he noted that the village has routinely been using its surplus to help cover its annual budgets and still is left with a long-term debt load.
"What do you think the community can support? What does it expect in services?" Richey asked the board. "If no tax increase or a tax decrease are important to you, then you need to decide what you can live with and what the community can live with -- the level of services, quality of infrastructure . . ."
Trustees last year wanted a minimal tax increase or none at all.
"If I hear that again (from the board), something has got to give down the road," he said.
On top of that, residents have long complained of what they consider to be high sewer rates, Richey said. And there are significant improvements needed at the village's sewage treatment facility -- totaling at least $200,000 in work for the chemical building.
"We've been trying to hold the line on sewer rates, but I don't know how much longer I can do that, seeing the need for capital improvements," Richey said.
Mayor John Pagliaccio said: "It's like having a 20-year-old car. You can't let that (sewer) plant go to hell. You've got to keep it up . . . It's either pay now or pay later."
Pagliaccio said residents want top-notch services and are willing to pay, within reason.
"This is an upper-middle-class income community, and my sense is that people want the services they get," he said. "People have been willing to pay for the services and the increases in taxes as we've gone along."
"If we want to continue to maintain the sidewalks, streets and do the big projects, we're not going to be able to" without a tax impact, Pagliaccio said. "I think people are willing to pay the increase, so long as it's reasonable."
If the board decides to refurbish Warren Drive -- including new water and sewer lines, new drainage, a new road surface and curbs as well as redoing connecting MaryAnn and Martin drives -- the village would have to borrow $1.6 million and is leaning toward doing it in one year rather than two. If that happens, it would most likely mean the village freezes capital projects spending during the duration of that project, trustees said.
"I get a little nervous with the fund balance shrinking like it is," said Trustee Lowell Dewey."