Month: August 2024

What Municipalities Can Do to Prepare for the 2025 Budget Season

With budget season around the corner, the following are some strategies and changes you may want to consider.

Rethinking How You Budget

While line-item budgets for municipalities served their purpose for a long time, in 2022 the International City/County Management Association (ICMA), the Government Finance Officers Association (GFOA), and the National League of Cities (NLC) came together to explore modernizing local government budgeting to be more responsive to community needs, reflect today’s technological capabilities, and better align with the way the world works via their Rethinking Budgeting Initiative.

At the heart of the initiative is the transition from line-item budgets to priority- and program-based budgeting.

Priority-based budgeting puts community needs and requirements at the forefront of the municipality budget planning process. This approach offers the added benefits of having a budget that serves as a strategic plan and decision-making tool to ensure a community’s top priorities – for example, having a safe community where residents, workers, and businesses can thrive – are resourced appropriately.

Program-based budgeting defines the programs and services a municipality provides in a manner that’s more understandable and useful to residents. For example, showing the budget for police patrols is a lot more meaningful to residents than embedding those costs into line items for salaries, benefits, contractual services, etc.

At a time when inflation is stretching residents’ and municipality budgets, while demands for services and mandates increase, taking a new approach to budgeting may help promote community understanding, trust, and support when you need it most.

Minimum Wage and Exempt Threshold Changes

Pivoting from the strategic to tactical, we just want to provide a friendly reminder that 2025 wage and pay-related-benefit budgets will need to reflect January 1, 2025:

Minimum wage increase (of $.50/hour);
Higher NYS DOL thresholds for administrative and executive employees exempt from overtime (increasing from $58,458.40 to $60,405.80 in upper New York and from $62,400 to $64,350 in NYC, Westchester, and Long Island); and
Higher FLSA threshold (jumping from $43,888/year to $58,656/year) for professional employees exempt from overtime.

If during your budget or strategy development you need assistance, please know, RBT CPAs professionals are available to provide advisory, accounting, audit, and tax services, while our Visions Human Resources Services affiliate can help with all things people-related.

RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your confidential financial data.

Beneficiary Designations Trump Wills in a Number of Situations

True or false? Your will controls who inherits all of your assets upon your death.

You may be surprised to learn the correct answer is false when it comes to certain assets that have a beneficiary designation. In those cases, the beneficiary designation takes precedence.

A primary beneficiary is an individual or entity that you assign to receive the proceeds from a financial account or arrangement upon your death. A contingent beneficiary is the next person to receive the assets should the primary beneficiary pass away. A beneficiary designation is considered a contractual agreement that even a will cannot override.

For life insurance policies, retirement accounts (i.e., 401ks/403bs, IRAs, etc.), Health Savings Accounts (HSAs), and trusts, the beneficiary you name inherits the account assets, generally regardless of what your will states.

For checking or savings accounts, or CDs, you may name a payable on death (POD) beneficiary. For an investment account, you may name a transfer on death (TOD) beneficiary. When you pass away, the beneficiary can simply access the money (to make it easier to cover funeral expenses and such) and bypass probate.

What if you don’t name a beneficiary when one may be named, or one is named but passes away before you do? For a life insurance policy or an IRA – Roth or traditional, the account balance becomes part of your estate and is subject to probate. Similarly, when a beneficiary is named for a POD or TOD account and that individual passes away before you, assets will revert to your estate, negating the primary purpose of such accounts – to bypass probate.

The situation becomes more complex if the beneficiary of your estate is a minor (who can’t claim assets until age 18) or an individual with special needs (who may lose eligibility for government benefits after receiving an inheritance). In such situations, trust may be a solution.

Just as it’s important to review your estate plan annually to ensure your financial legacy is carried out according to your wishes, it’s also important to regularly review beneficiary designations. Situations that may warrant a change in beneficiaries include major life events such as marriage, divorce, the birth of a child, the death of a previously named beneficiary, or a significant change in financial status.

If you overlook this responsibility, assets may not get distributed according to your wishes at the time of your passing. There are numerous stories about ex-spouses being life insurance beneficiaries or the youngest child being the only child not named on an account because beneficiary designations were never updated. If you don’t have children or a spouse, failing to name beneficiaries or not having a will means that state laws govern to whom your assets go.

To ensure your financial legacy is carried out the way you want, be sure to review your beneficiary designations – and overall estate plan – annually. If you need assistance, have questions, or want to schedule an estate planning consultation with RBT CPAs, email irahilly@rbtcpas.com or call 845-567-9000 and ask for Ita. You’ll see why you and RBT CPAs can be Remarkably Better Together. RBT CPAs is also available to handle your accounting, tax, audit, and business advisory needs. Give us a call today.

RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your confidential financial data.

Tips for Managing Insurance Costs for New York Construction Businesses

Like so many costs of doing business, insurance premiums have surged in recent years. Storms, inflation, lawsuits, and astronomical awards, plus state laws (a.k.a. the Scaffold Law) are all making New York the most expensive insurance market in the country, especially when it comes to construction. While you can’t control many of the factors driving costs, there are actions you can take to put your business in a better position to keep cost increases under control.

First, make safety part of your business and culture.

Not only can a formal, documented, and comprehensive safety program and a stellar safety record help you manage workers’ compensation premiums (which can help offset larger increases to commercial insurance), but they can also help you attract and retain talent that shares your safety-focus, and serve as additional selling points to potential clients.

If it’s an option, hire or engage a risk/safety manager to develop and execute a comprehensive safety program that encompasses everything from recruiting and hiring employees and vetting subcontractors (plus checking certificates of insurance and risk transfer agreements) to addressing safety in pre-construction planning, equipment maintenance, and work site protocols. A strategy may explore how technologies like drones, robotics, and wearables may mitigate loss while improving your risk profile.

Best practices to consider include creating worksite safety committees, where managers and employees meet regularly to review safety goals and performance and reinforce a safety-first culture; developing and communicating protocols for recognizing, reporting, and resolving potential safety issues immediately; starting each work shift by reviewing a key safety concept with employees; and regularly inspecting and maintaining equipment to ensure safe operation.

OSHA offers a number of resources that can support construction safety efforts, training, and communications, including the Focus Four (key safety areas for construction businesses to focus on); trenching and excavation; heat illness prevention; personal protective equipment; and more.

Second, evaluate your coverage needs and give yourself adequate time to negotiate terms and rates.

Start the process at least 90 days before a renewal. Gather data about any changes to your business (i.e., equipment acquired or sold, or a change in headcount) that may impact coverage. Also, bring documented proof of your safety program, activities, and results – your insurer may offer discounts when you demonstrate a commitment to safety and risk management. Prepare to speak to your loss history, especially if it is favorable.

If you have a longstanding relationship with an insurer that understands your business, commitment to safety, and track record, collaborate on opportunities and options for managing cost increases.

If you’re interested in shopping around, explore programs that may be available through professional affiliations, before moving ahead with any new market entrants, research rankings, customer experiences, customer service, and ability to cover losses before moving ahead. In all cases, make sure coverage will comply with contract commitments.

As you move ahead, explore whether an insurer offers discounts for paying in full upfront versus monthly, or for bundling policies. While it’s tempting to offset insurance premium increases with higher deductibles, lower coverage, and/or more exclusions, balance these considerations with what increased risks and exposure can mean to your business. Consider the pros and cons of creating a contingency fund to keep in reserve for covering higher deductibles rather than paying higher premiums.

While you focus on protecting your business and people with insurance and a safe work environment, you can count on RBT CPAs to focus on your accounting, advisory, audit, and tax needs. Give us a call or send an email and let us know what you need. We would appreciate having the opportunity to show you how we can be Remarkably Better Together.

RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your confidential financial data.