City Council is looking at a resolution which, if passed, would allow the city to exceed the tax cap without penalty.
During Monday's City Council work session, members discussed the option of passing a local law to be used if necessary.
"There are actually 359 (municipalities) that have passed this local law thus far," said Vince DeJoy, D-Ward 4. "This doesn't mean that we necessarily have to act upon it, but just having it pass, in what hopefully will be an unlikely event that we would have to exceed that 2 percent tax cap, it just gives us the authority to do so."
Mayor Sam Teresi said the local law would empower the city to exceed the tax cap if it felt it was needed when putting the budget together.
"This in no way, shape or form commits us at this stage to do it," Teresi said.
According to Joseph Bellitto, city comptroller, if there were ever a mistake in calculating the tax cap, the local law would act as a buffer, protecting the city from penalty.
"If a municipality is found to have made a mistake in its calculation, that amount that you go over the cap, you are penalized and have to put that money into a reserve fund," Bellitto said.
City Council members will vote on the resolution during Monday's City Council meeting.
Additionally, Monday, John Trussalo, C.P.A., presented his findings from the 2011 audit. According to Bellitto, the city faced its first deficit since 2000.
"We used $420,000 of our fund balance when we put together the 2011 budget," Bellitto said. "We ended up using $350,000 of the fund balance. We actually had a positive variance for the year, of $70,000. But, the bottom line is, because we used that fund balance, we had a deficit for the year of the $350,000."
Since 2004, the city has used the fund balance in its budgeting. Every other year, it has been able to overcome the use of the fund balance and still have a surplus. However, the $420,000 was the largest amount the city has ever used.
"I think that was part of why we couldn't overcome it, so we did have a deficit," Bellitto said.
Trussalo also introduced new terminology during the audit presentation. The Governmental Accounting Standards Board - which, Bellitto explained creates the rules as to how financial statements are prepared - now categorizes fund balances amounts as non-spendable, assigned or unassigned.
"Basically, unassigned is the amount that we can use in the next year's budget, to help keep the property tax rate down," Bellitto said. "So, that amount, at the end of 2011, is $1,058,000. So, because of these new rules, less of it is unassigned. More of it is now considered non-spendable."
Also in the audit is information about increasing payments into the New York state retirement system. Additionally, Trussalo spoke about the constitutional taxing limit.
"We're at about 92 percent of our constitutional taxing limit. By this tax margin at the end of 2011, the city can only raise our property taxes by $1,089,000," Bellitto said. "We have $1 million that we could raise, obviously we prefer not to raise any, but that's kind of what we're looking at."
After hearing the 2011 audit information, Bellitto and Teresi will work to put together the city's budget. They will present a proposed budget to City Council on Oct. 9. The council will have until Dec. 1 to adopt a budget.
"All of these factors are giving us headaches as we try to prepare next year's budget," Bellitto said. "All the new rules on the fund balance, those are the major components that not only Jamestown, but especially the cities in New York state, we're all in the sinking boat together."