State Criticizes Budget As Taxes Rise In East Hampton

Posted on 13 November 2008

In an effort to reinstate funding to a number of youth related programs in the Town of East Hampton and ensure revenue projections from 2009 are at conservative levels, the town board discussed adding roughly $1 million back into its proposed budget last week. If adopted the plan would result in an almost 24 percent tax increase for town residents.

The work session, held last Thursday, came as the New York State Comptroller Thomas DiNapoli released a report on November 6 stating the town has over-estimated some projected revenues in the proposed 2009 budget, while under-estimating some projected costs. This would set the stage for what the comptroller’s office calls the possibility of “a budget shortfall next year that could amount to several millions of dollars.”

The proposed 2009 budget comes in around $69 million, although the board has the ability to revise the budget through November 20 when it must be adopted and submitted to the state. The board is expected to do just that at its Tuesday, November 18 board meeting. The comptroller had the authority to review the spending plan in a deal struck after the town and the state reached an agreement for the town to acquire some $15 million in state bonds to cover a growing deficit that could reach as high as $12 million by the close of 2009.

According to the comptroller’s report some of the revenue and expenditure projections presented in the budget “are not reasonable.” The report states that revenues for the mortgage tax, revenues from the community preservation fund (CPF) to cover town expenses as a result of administering the fund, beach parking permits, and the federal aid for a bike path in the town are overestimated. It adds that a number of appropriations are “understated.”

According to the state comptroller, the proposed budget for 2009 estimates $4.5 million in revenues from mortgage tax. The report notes that while the town received mortgage tax revenues in 2006 and 2007 reaching $7 million, in 2008 the town has only received $4.2 million “as a result of the current economic downturn.”

“With the downturn continuing, it is unwise for the board to estimate a revenue increase for 2009,” reads the report. 

During the Thursday work session, the town board agreed to cut $500,000 from the projected mortgage tax revenue figures – one of the largest additions to the spending plan made throughout the day. Despite the change, board members did say they believed revenues would ultimately be higher than what is now projected in the 2009 budget.

The report also points to $250,000 projected in revenues from charging town residents $25 for resident beach permits as questionable. The town has proposed charging for the permits annually – a practice already in place in the Town of Southampton, but one East Hampton has never implemented. However, the comptroller notes the town clerk’s office only issued 6,863 permits to residents at no charge in 2008. At $25 apiece that would result in $171,575 in funds.

On Thursday, supervisor Bill McGintee noted that residents have not been required to come back for the free permits each year, but only when a permit is needed for a new vehicle. He argued because of that, the number of residents who would pay for their annual permit this year would likely be greater than the number of permits granted last year.

The report also suggests the board take a second look at projected Federal grants for a bike path, as money it expected to receive last year never materialized, and expressed concerns about a proposed $420,000 earmark to cover management of the town’s Community Preservation Fund. The comptroller’s office simply states because accounting of these costs in the past was not provided, it has difficulty determining whether this expenditure is reasonable.

A number of appropriations have also been underestimated, states the report, specifically in employee health benefits, for personal services for the town police department, which is in the midst of contract negotiations with the town, and for auditing services.

After some discussion, and at the request of the comptroller, the town board agreed to pay $710,000 to the YMCA RECenter. The town is contractually obligated to pay the grant, but had considered accepting a proposal by the YMCA to enter into a five-year funding contract with the RECenter in return for the organization agreeing to the reduction in funding by over $100,000 this year. The board chose instead to fulfill the last year of its contractual obligation to the YMCA and renegotiate funding next year.

The comptroller also suggested a contingency fund, $1.1 million, that is used to cover unforeseen expenditures be beefed up. On Thursday, McGintee said he believed the contingency appropriated was sufficient and he would provide more information to the state.

On Thursday the board also agreed to reinstate funding to a number of youth-related organizations in the town – organizations that saw their grants cut in the first round of the budget in the face of a looming town tax increase. The East Hampton Day Care Center’s $25,000 reduction in grant assistance from the town was restored, as was $7,500 for the town’s youth court program.

In other budget news, the East Hampton Town Democratic Committee issued a statement this week on the proposed 2009 budget, which it said it was “disappointed by.”

“The budget makes no significant cuts in any town spending,” states the letter. “With the unconscionable exception of cuts to social and educational services, there is scarce evidence in this budget of the things most municipalities do in a budget crisis, such as cutting expenses, nonessential projects, activities and purchases.”




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