It was a somber day in Southampton Town Hall as supervisor Linda Kabot delivered the 2010 budget message. Kabot filed the tentative budget at the eleventh hour on Wednesday, September 30, with the town clerk. The contents of the preliminary fiscal plan was discussed during an emotionally fraught special meeting as Kabot announced tentative plans to layoff 48 town employees, to privatize the town’s animal shelter and to increase the tax rate by 5 percent.
Kabot, however, maintained that the light at the end of this financial tunnel is a fiscally sound budget, which will clear deficits in the Police and Highway Fund. She added that spending in 2010 will be cut by $4.5 million.
The overall budget for Southampton in 2010 is expected to be $78 million with an extra $800,000 slated for the general fund’s “Rainy Day Fund.” Budget documents showed that a home owner, with a property assessed at $500,000, will pay an additional $33 in town taxes in 2010. Last year, the tax rate was $1.321 for every $1,000 of assessed valuation. However, in 2009, almost $4.5 million of surplus was used for tax rate stabilization. In 2010, the tax rate is $1.387 per $1,000 of assessed valuation. Next year, the town will not be able to use surplus monies for tax rate stabilization as they are focusing their efforts on replenishing the “rainy day” funds. Kabot further stated that she hoped to wean the town off of using surplus monies to reduce taxes.
Kabot added that the preliminary 2010 budget includes a plan to handled existing deficits in the Police and Highway Fund. These debts accrued from 2004 through 2007 and were funded through inter-fund borrowing, or “IOUs”, from the town’s general fund to the police and highway accounts. The 2010 tentative budget sets aside $3.6 million to pay off these and other debts with $1.4 million for the police fund and $1.5 million for the Highway Fund, $150,000 for the E-911 Fund and $150,00 for the Hampton Bays Water District. In the tentative budget, Kabot said she has laid down a plan to incrementally build up the reserves in the Police and Highway Fund over the next few years.
In order to clear some of these deficits, items from the expense side of the town’s ledger had to be cut and the tentative budget finds a bulk of its savings by cutting 48 positions. The town has already saved $600,000 through natural attrition and a hiring freeze in 2009, said Kabot. Mid-year cost saving measures for discretionary spending, equipment purchases and consultants were already enacted in 2009 and now, contends Kabot, the board must slice deeper to the bone. The proposed staffing cuts include the director of housing, the youth counselor, the assistant director of the youth bureau, six sanitation helpers in the waste management division, the assistant town director of public transportation and traffic safety, four law enforcement positions and all the positions associated with the animal shelter. If the board supports the proposed lay offs, these employee’s contracts will be terminated in January 2010.
An alternative to layoffs, said Kabot, is to enact a combination of wage freezes, lag pay, deferred compensation, early retirement incentive plans and salary parity adjustments. Kabot said the board was also exploring a mandatory week-long furlough. With a furlough, town hall would effectively shut down for an entire week. Kabot estimated this measure would save the town around $1 million.
The elimination of all the positions in the animal shelter hints at the town’s proposal to privatize this service next year. Kabot argued that over the last year the board has curtailed the shelter’s hours of operation and raised fees which led to a $300,000 savings for the town. However, Kabot maintained that the town spends $1 million per year to operate the shelter and isn’t required by law to provide this service. The town is mandated to have an animal control operation, said Kabot, but not a shelter. Kabot said she plans to put in a request for proposals, or RFPs, for private entities to lease the animal shelter facilities from the town. She added that the town’s existing staff could be put on a preferred hiring list for the private company who moves into the shelter.
Similarly, Kabot added that the town is exploring privatizing one or two of the town’s waste management transfer stations or closing down the stations a couple of days in the week. Kabot assured the public that the Westhampton and Hampton Bays stations would most likely be looked at for privatization as Sag Harbor has the most consistent use out of the town’s four facilities.
Although the final count for the capital budget deficit has yet to be released, Kabot said she expects the figure be brought down from $10 million to around $5 million. Kabot explained that several of the authorized monies intended for projects weren’t completed in full, thus reducing the size of the overall deficit. To correct these errors in the capital budget from the years 2004 through 2007,Kabot hopes the board will opt to do a deficit reduction plan within the town rather than deficit financing. Kabot argued that deficit financing diminishes the town’s credit score, forcing them to pay more in interest payments.
“The multi-million dollar Capital Fund requires more extensive remedial action and a multi-pronged approach that includes a 5-year repayment plan through a separate tax line listed on the property tax bills and an exemption from the five percent tax rate increase cap computation,” said Kabot in her budget message. Kabot later added that the town will also sell off surplus properties to pay off the Capital Fund debts.