SECTION MAYOR’S BUDGET MESSAGE‘To the Members of the Albany Common Cou Our challenge each year is to present a budget that assures the very best public safety and quality of life services without placing an undue burden on our taxpayers. That challenge has become increasingly difficult as the economy has generally continued to worsen and pressures inherent in managing an over 300+-yeat-old City continue to grow. In preparing our 2011 budget, you will remember, we faced a budget shortfall of neatly $23 million, and we were forced to take some painful actions. We reduced departmental expenses and programs; we cut dozens of City employees; we sold City property and ‘we used a significant portion of ous fund balance to close the gap. Many of the steps taken during 2011 continue to have a recurring benefit to the bottom line of this budget. For example, we moved our retirees ¢o a less expensive health cate plan and saved over $1.7 million, without compromising the quality of their health covetage. We have also continued to hold the line on discretionary expenses, reducing again where possible. Unfortunately, certain mandated payments such as employee pensions and workers compensation costs have risen significantly. Last year we commissioned an independent audit to make recommendations on cost savings in our major departments, and we have mostly implemented those recommendations. That report also focused on the inequitable State AIM funding Albany receives vis-a-vis compatable major cities in the State. The report also noted that Albany provides the State with significant uncompensated services attributable to our status as the Capital City. Furthermore, the report highlighted the fact that a significant portion of Albany’s real property is tax-exempt, largely due to State ownership. ‘The report was signiGcant because it came at a time when Albany's scheduled payment from New York State on the Empire State Plaza, out 19-2 payment as it is known, was statutorily scheduled to be reduced during 2011 from $22,850,000 to $15 million per year thereafter. As you know, I have vigorously lobbied our State government to amend the statutory payment schedule to assure, at least for the next five years, that payments remain at $22,850,000. It has been my argument that during this five-yeat petiod, the State should address the larger issue of its inequitable AIM payments to our City. Toward that goai, I am pleased to report that the State Budget Director has advised me that Governor Cuomo’s administration recognizes that the reduction in State payments contained in Section 19-a will cteate significant financial challenges for the City and that it is their intent to advance a proposal fot consideration in the 2012 legislative session that would increase the State’s 2012 Payment from $15 million back to $22.85 million, while making offsetting adjustments in the remaining years of the schedule. As a result of this commitment, we have included this increase in 19-a payments in out tevenue projections for this budget. u