"After two years of budgets with very modest increases, we're facing the same situation the state, counties and most towns are facing this year," said Gates. "It's not an easy year. What I think we've produced is a realistic budget, but I'm not happy about it."

The new budget calls for an increase in highway and general fund spending of almost $150,000 for a total of $1,455,000. The 2002 budget for general and highway purposes was $1,306,000.

In addition, the town budgets funds in four special districts - the Fly Creek, Schuyler Lake and Cooperstown fire districts, and the Fly Creek Lighting Districts.

With the increase in spending comes and increase in the tax levy, or the amount to be raised through property taxes. The projected tax levy for the general and highway funds is $888,000, up from $810,000 in the current budget, an increase of just less than ten percent.

The town maintains funds for general and highway costs divided into town-wide and town outside the village expenses separately and it can make tax rate projections difficult. To better understand the impact of the increase, Gates calculated estimated taxes for two theoretical homes. A house outside of the village of Cooperstown, assessed for $75,000 would face a town tax increase of about $23 for general and highway purposes. The tax increase for a similar house in the village would be about $6.

The supervisor cautioned, however, that these estimates assume no exemptions on the property, which would reduce the tax. Nor do the estimates include the impact of special district levies, which vary throughout the town outside the village.

A number of things all came together to create the increases in spending, Gates explained.

One of the items with a big impact on the budget is the provision for a revaluation of property next year in conjunction with the town of Hartwick and the village of Cooperstown.

"Reassessment of property is a necessity," Gates said. "It hasn't been done in nearly 15 years. To do nothing would put town taxpayers at a serious disadvantage when it comes to apportioning school and county taxes." He said $32,000 is budgeted for the reassessment. That, together with reserve funds, should be enough to pay for the project.

"We have to do it. People will grumble, but over the long run they'll grumble less," he said.

Another contributor is the up-front local share of the Main Street bridge construction costs which must be paid this month by the town. That payment is $103,000, which the state will reimburse over a year or two.

"That money will come back to us, but the state is a slow-pay. It will take a year or two. He estimates that approximately $75,000 of the cost will be repaid next year.

The town has been advised to budget about a 20 percent increase in health costs. Health costs are expected to rise about $21,000. "Big health insurance cost increases represent a serious continuing problem for local governments, as they do for individuals and companies. We have to take a hard look at this as a nation," Gates said.

Health insurance costs are locked into the contract the town has with highway employees. That contract is up in 2003 and health insurance costs are something officials will be looking at, he said.

The town has also pledged $12,000 toward the cost of remedial work to solve the flooding problem on Canadarago Lake.

At the same time, revenue is not rising as quickly as costs. Sales tax revenue is up this year, but Gates said he is hesitant to plan more into the budget, although he hopes the trend will continue. He expects sales tax to total just over $180,000 in 2002.

The increase in the sales tax helps to offset the loss of interest income the town received in the past. "We're not getting as much income from interest," he said. "The banks aren't paying it."

One bright spot on the revenue side of the budget is the money collected through mortgage tax which is running well ahead of last year. By the midpoint of the year, the town received $67,000 compared with a total last year of $60,000. The increase is due to rising property values, but also the fact that many people are taking advantage of lower interest rates and refinancing their homes, he said.

"The budget isn't as bad as it looks on paper," Gates said, "but I'm not suggesting it's a good budget. This one stings to do, but you have to put together a realistic budget."

There will be a public hearing on the Town of Otsego's proposed 2003 budget at 7 p.m., Wednesday, Oct. 9, at the Town Hall in Fly Creek.

Copies of the proposed budget are available from Town Clerk Pam Deane at the town offices.