Will Vote to Shrink Government

Cuts in services, taxes, number of employees, plus the sale of properties

(November 18, 2010) The town board will vote tonight on the adoption of a 2011 East Hampton Town budget that trims spending by $8 million and would provide a tax cut of 17 percent for most town residents, and of 20 percent for residents of East Hampton or Sag Harbor Villages.

The close to $64 million budget would set property tax rates at $26.55 per $100 of assessed value, or $12.21 per $100 for village residents.

In the face of an estimated $27 million deficit, which has accumulated over the past several years, Town Supervisor Bill Wilkinson had vowed upon his election last year to take the steps necessary to shrink town government and spending.

The proposed budget for next year achieves the reduction by cutting the number of town employees as well some town services, such as the Highway Department’s fall leaf pickup.

Cuts to the Human Services Department, as well as to grants made to several community social service organizations led Town Councilwoman Julia Prince and Councilman Dominick Stanzione to suggest last week the restoration of a total of $60,000 in grants, targeted for the East Hampton Day Care Learning Center, the Family Service League, the Retreat, and the Phoenix House.

With the support of Councilman Pete Hammerle, and over objections from Mr. Wilkinson and Councilwoman Theresa Quigley, that change appeared slated to occur until Tuesday, when Mr. Stanzione said he would offer another proposal instead.

Mr. Stanzione said at a board work session that after further consideration of the “important fiscal constraints the town is under,” he sees the 2011 budget as “a budget that takes place in an emergency situation.”

“As a result of that,” he said, “I had to take a closer look at the distinction between these service organizations.” Some, he said, with more funding sources, “can better weather the storm.”

Consequently, he said, he was withdrawing his support for the recommendation made last week and instead recommended the addition of a total of $20,000 in spending to the budget.

Of that $20,000, Councilman Stan­zione said, $5,000 would be added to the Human Services Department budget for wellness programs for senior citizens, $5,000 added to a $75,000 grant to the East Hampton Daycare Learning Center, and $5,000 would be put in the budget for a grant to the East Hampton and Amagansett food pantries. In addition, a $10,000 budget line to pay a town fisheries consultant would be increased to $15,000. The reduction of a $35,000 salary line in last year’s budget for the consultant, who represents the town’s commercial, recreational, and charter fishermen at meetings of fisheries regulatory agencies, had prompted a number of speakers at a budget hearing to request that the money be restored.

Town Supervisor Bill Wilkinson said that he would support Mr. Stanzione’s suggestion.

Another last-minute addition to the budget, of $135,000 for health insurance costs, is due to a record-keeping discrepancy, Len Bernard, the town budget officer, said Tuesday. The insurance costs were underestimated, as some newly retired employees were omitted from the lists of both active and retired employees used to calculate insurance premium totals.

As required under the terms of the State Legislature’s approval for the town to issue bonds to cover its deficit, East Hampton must submit its draft budgets to the New York State Comptroller’s Office for review.

In a letter dated Nov. 3, Stephen L. Hancox, a deputy comptroller, said that the budget’s “significant revenue and expenditure projections appeared reasonable.”

The letter, however, questioned whether a $6.4 million appropriation for health insurance costs and an $850,000 set-aside for contingencies were sufficient.

Mr. Bernard said this week that he felt the contingency allotment was more than sufficient, and that the budgeted amount for health insurance only appeared to be insufficient because of a comparison to one-time costs this year.

The comptroller’s letter also mentioned an expected revenue of $250,000 from the sale of town property, noting that, as a one-time revenue, “this type of revenue should not be used to fund recurring operating expenditures, but rather to reduce debt or to fund nonrecurring expenditures. . . .” Because a sale is not assured, the letter says, the board should reconsider including that money as revenue.

Several properties will likely be put up for sale, Mr. Bernard said this week, and yield much more than the $250,000 put in the budget.

Town Councilwoman Julia Prince told the board during recent budget discussions that she does not want to see spending cuts this year or next result in a surplus. Any money left over, she said, should be used to reduce the amount of borrowing needed to cover the accumulated deficit, or to pay back money already borrowed.

Zachary Cohen, a former member of the town’s budget and finance advisory committee, suggested in a letter this week that it would be prudent to reduce the tax break next year in order to cut long-term borrowing costs.

If enough tax money were collected in 2011 to cover the remaining town deficit, rather than borrowing to do so, he said, taxes could be lowered in future years and the town’s credit rating would get a boost.

However, Mr. Bernard said Tuesday that a long-term borrowing and payback strategy was adopted in order to spread the tax burden over more years, thus reducing its impact to individual taxpayers in any particular year.