Town spending, taxes on the rise
Tentative budget would hike 2009 town tax rate nearly 14 percent
By Denise Civiletti
Southold Town property taxes would spike 13.81 percent in 2009 under the tentative budget proposal announced Tuesday afternoon by Supervisor Scott Russell. The supervisor said he plans to seek concessions from the town employees' unions and offer retirement incentives to help reduce spending -- and the town's tax rate increase for the coming year.
"These are dire times," Mr. Russell told a hushed "emergency meeting" of town department heads Tuesday morning at Town Hall.
The supervisor's $38.1 million townwide spending plan, to be examined by the Town Board for the first time this afternoon at a 3 p.m. meeting at Town Hall, represents a 3.4 percent spending increase over 2008. The spending increase is driven primarily by health-care costs, the supervisor said.
The town is self-insured for health care. The self-insurance program operated in the red this year for the first time in its 18-year history, posting an $800,000 deficit, Mr. Russell said.
"It was a unique year. We had some very sick employees this year," he said. But overall the self-insurance program has been a fiscally prudent program, according to the supervisor.
Contributing to the budgetary pressures this year are skyrocketing energy costs -- which in some cases have doubled over the course of the last year -- labor contract obligations and debt service.
But sharp declines in revenues in 2008, most notably a nearly 50 percent drop in mortgage tax revenues compared to 2007 -- a trend expected to continue in 2009 -- mean that to fund next year's spending, the town must raise more through its property tax levy, Mr. Russell said.
The supervisor has scheduled meetings with representatives of the town's labor unions today, when he plans to ask them to agree to renegotiate their members' collective bargaining agreements. He wants union concessions on previously agreed-upon salary increases. The Civil Service Employees Association contract calls for a 3.75 percent wage increase in 2009, while the Policemen's Benevolent Association contract has a 4 percent wage increase built in for the coming year.
"I don't want to consider the prospect of layoffs," Mr. Russell said, "but that might be unavoidable" if concessions are not made.
Mr. Russell said he plans to use about $100,000 of the town's existing $2.3 million reserve fund to offer retirement incentives to people who agree to retire in the first quarter of 2009. His aim would be to avoid filling vacancies created by retirement. Six to eight vacancies left unfilled would drop the tax rate increase by two percentage points, Mr. Russell said.
The supervisor's budget also will not fill existing (as of the end of this year) vacancies in the highway, planning, code enforcement and town clerk's offices.
Mr. Russell does call for hiring four new police officers, however. Three would fill current vacancies (as of year's end) and one would be hired to fill a vacancy created by one anticipated retirement in 2009. The town police force currently has 48 officers.
Mr. Russell has spent the month of September reviewing department heads' budget requests for 2009, he said. He carefully went over the numbers with each manager, and reached agreement on a reduced budget amount with each, only to have to call Tuesday morning's meeting to inform them he had to reduce their budget lines even more.
"I told them this morning that I had to go over everything again and make substantial cuts," Mr. Russell said after the staff meeting Tuesday.
"No new hires and no filling of vacancies. They were very supportive and cooperative," he said.
The supervisor's budget plan also provides no salary increases for elected and appointed officials.
Last week, Mr. Russell told The Suffolk Times that the 2009 tax rate would have to rise 25 percent to fund spending at 2008 levels, due to steep revenue declines and a $2 million operating deficit at the end of the current fiscal year. The deficit itself is a result of actual revenues being less than budgeted this year. Mortgage tax revenue -- the town's share of a state-imposed tax of 1 percent on every mortgage recorded with the county clerk -- was budgeted at $2.3 million for 2008 (decreased from 2007's actual mortgage tax receipts of $2.7 million); the town will see only $1.3 million in mortgage tax revenue this year, the supervisor said.
"We expected a dip in the real estate market. We didn't expect it to come to a standstill," Mr. Russell said.
The real estate slowdown also contributed to declines in fees collected by the town for everything from building permits to construction and demolition debris disposal at the town's transfer station.
The proposed budget plan would retain $1.15 million of the $2.3 million currently in the town's fund balance.
If the supervisor's proposed budget is adopted, the 2009 tax rate of $30.96 per $1,000 of assessed valuation would mean a town tax increase of about $186 on the "average" home in the town with an assessed valuation of $6,000, town comptroller John Cushman said Wednesday.
Councilman Albert Krupski said after Tuesday's department head meeting that this difficult economic time might actually be a blessing in disguise.
"It's an opportunity for the town to seriously review everything, to reflect on how the government functions," Mr. Krupski said.
The Town Board, under state law, must hold a public hearing on a preliminary 2009 operating budget on or before Nov. 6, and a final budget must be adopted no later than Nov. 20.
denise@timesreview.com
