The tax levy – the total amount the city collects in property taxes – would increase by 3.2% between 2024 and 2025, instead of the 6% originally planned by Mayor John White.

City officials declined to say what the tax increase would mean for homeowners’ tax bills. However, based on city financial data, The Buffalo News estimates that the typical homeowner would pay about $150 more in city property taxes in 2025.

The Council’s reluctance to exceed the state’s tax cap has made developing that financial plan more difficult, White said in his budget message, especially given how much of Tonawanda’s spending goes toward personnel costs.

The mayor said he used money from the city’s fund balance that had been set aside — but not spent — in previous budget years to help balance the proposed 2025 budget. But he continues to emphasize the need for Tonawanda to spur new developments that would generate additional tax revenue.

“I can’t do this every year because it’s not going to happen every year,” White said in an interview. “Now the revenue has to come in. That’s the most important thing. I’m a small town. I don’t have room for growth. So revenue is a very difficult thing.”

This is the third budget White has worked on as Tonawanda mayor.

He noted that his first two financial plans, for 2023 and 2024, both managed to keep the increase in tax levies within the state’s cap by turning to fund balances to make up the shortfall.

The 2025 budget faced even greater challenges because, White said, the cost of labor, building materials and other necessities is skyrocketing.

White said he is keeping his spending in various city departments at 2024 levels, or lower. But it was a challenge because at least three-quarters of Tonawanda’s budget, he said, “is made up of fixed costs or negotiated contractual agreements that cannot be changed.”

White and City Treasurer Adam McNeill initially crafted a budget that would have increased the tax levy by about 6 percent.

However, this requires a Common Council vote to exceed the state’s tax cap. The Council did not schedule a priority vote until October 1, when members chose to table the resolution.

This didn’t surprise White and McNeill. The mayor’s budget message, included in the October 1 Council meeting minutes, refers to “the directive expressed by Common Council members to stay under the tax cap.”

White said he is holding spending steady or cutting it by as much as 5% across various city departments. Tonawanda has about 130 full-time employees and the mayor’s proposed budget would eliminate eight jobs — a mix of filled and unfilled positions, according to McNeill.

Overall spending would increase between 2024 and 2025 by just $334,000, or just under 1.2%, to $29.2 million. In comparison, spending increased by 7.9%, or $2.1 million, in the 2024 budget.

In addition to limiting spending, White would allocate $2 million of the city’s fund balance to the budget.

That fund balance stood at about $15 million as of Dec. 31, 2023, after better-than-expected conditions in 2022 and 2023 allowed the city to retain much of the fund balance it had prepared for to spend during these budget years.

That left the city $5 million more than expected in its fund balance, which essentially serves as Tonawanda’s savings account. The city must keep a minimum amount in that fund, to prepare for a bad budget year, but keeping too much money in that fund means the city is overtaxing its residents, White said.

“We had a surplus amount in our general fund. And I asked myself why keep that kind of money and do a 6% increase when I can help my citizens in the city and keep taxes below the tax cap and reduce the general fund?” he said. “That’s what I did.”

However, White, in his budget message, warned that the city cannot continue to rely on that reserve of money to balance its budget. The city has already allocated $2.7 million of its fund balance to the 2024 budget.

“The fund balance will be depleted in future years if the budget is not balanced through increased taxes or service cuts,” the mayor said.

Councilmember Sean Rautenstrauch, who represents the 3rd District, said he supports holding a vote to bypass the state’s tax cap. He said no one likes paying higher taxes, but he believes it is more prudent to collect additional tax revenue now, if needed, instead of keeping the tax levy artificially low for 2025 while risking an increase stronger, by double digits, in the 2026 budget.

“I think it would be an easier pill to swallow if you did it gradually, sort of spreading it out over a few years, instead of doing it all at once,” said Rautenstrauch, who also said concerned about keeping enough money in the fund balance.

Councilmember Chris Fisher, for his part, said he had pushed all year for the city to keep any tax levy increases within the state cap. He said he has no problem letting the project go because the city’s fund balance remains above the required minimum.

“By taking this money out of the general fund, the mayor is able to balance his budget, without having to make drastic cuts and he doesn’t have to pass that cost on to the taxpayers,” Fisher said. “And that’s what I’ve been fighting for since the beginning.”

What would a 3.2% tax increase mean for homeowners’ tax bills?

The city has not released an estimated tax rate as part of its proposed 2025 budget. When asked by the Buffalo News to provide a rate, White and McNeill said they would not because it could be misinterpreted and could change by the time the budget is finalized next month.

Rautenstrauch and Fisher said they have no problem with the city withholding tax rate information at withholding until the estimated rate is set in its final form.

However, taking the proposed 2025 tax levy and the total assessed value in the city yields an estimated tax rate of $13.30 per $1,000 of assessed value.

The owner of an average home in Tonawanda, with an assessed value of $180,000, would pay $2,394 in city taxes next year.

That’s an increase of $149, or 6.6 percent, from the $2,246 this homeowner paid in 2024. The News shared those calculations with White and McNeill but did not receive a response Wednesday.

One factor driving the tax rate increase is the fact that, unlike growing communities like Amherst, the total assessed value in Tonawanda actually decreased slightly between 2023 and 2024.

That’s why the reuse of the former Spaulding Fiber property and the proposed housing development at the former Riverview Elementary School, among other projects, are key to producing new revenue for the city, officials said.

Tonawanda is also looking forward to the impact of the $10 million downtown revitalization grant the city received from the state this year.

“It’s a ripple effect,” Fisher said.