For nearly five years, Noyac community members had been petitioning Southampton Town for a community center, and in November 2008, it looked like the hamlet was one step closer to getting their wish. Town supervisor Linda Kabot visited the Noyac Civic Council in late November and told the group the town was receptive to the idea of erecting a new center on a parcel of land adjacent to Trout Pond. The town had even scheduled funding for the project as part of the 2011 budget.
Â Â Only five months have passed since the meeting, but in that time, a host of fiscal blunders in Southampton Town have come to light — leaving the town strapped for cash and unable to complete many of the projects it had hoped to accomplish, including a new Noyac Community Center.
Â Â “There was great discussion on the board about the Noyac Center, about creating a brand new facility, but in these times it certainly doesn’t seem prudent,” deputy supervisor Bill Jones reported during an interview last week. “There is basically no surplus. The plan for capital projects for 2009 has slowed to a trickle unless there is a great need or if there is an issue of public safety.”
Â Â Jones added that this bare bones approach to funding capital projects would likely continue through the next couple of years. Supervisor Kabot said the projects which will take precedence now include roadwork, necessary building improvements and drainage, while other projects like playground and community centers will be put on the back burner until the town’s coffers are healthy and plump once again.
Â Â As 2009 approaches the mid-year mark, it seems the Town of Southampton is experiencing a perfect storm of financial troubles. The town continues to reconcile the hidden I.O.U.s from the capital fund to the general fund from 2004 through 2006, but is also burdened by $19 million in authorized — but unissued — bonds, which must be issued at some point. In order for Southampton to go out to bond, the financial statements of the town must be completely accurate, which is only possible after the town’s financial records are fully reconciled. In addition to these worries, the town is also facing a $2 million revenue shortfall from mortgage taxes and the possibility of decreased property assessments for the next tax year, both of which are due to the ailing economy.
Â Â In town hall, expense cuts have already been implemented across the board. The town has enacted a hiring freeze and is looking closely at part-time positions, said Jones. He added that the town hasn’t ruled out a lag payroll, in which employee wages for certain days work are deferred until employment is terminated. The supervisor has also frozen each department’s contingency fund.
Â Â “Her [Kabot’s] message there is don’t overspend,” explained Jones. “There is no safety net.”
Â Â Of the loss in mortgage tax revenue, Kabot said, “The taxpayer cannot absorb the difference. We must cut the expense side of the balance sheet.”
Â Â In these situations, Kabot added that trimming spending could possibly translate to personnel cuts.
Â Â Financial consultant Tamara Wright, who was recently appointed to the position of town comptroller, noted that decreases in revenue streams is a problem municipalities across the nation are grappling with, but unlike other municipalities Southampton Town must issue $19 million worth of authorized but unissued bonds. Both Kabot and Jones, however, noted that the town can ill afford to issue these bonds all at once. Jones said if the town issued all of the bonds and increased the tax rate up to the 5 percent tax rate cap, almost 4.4 percent of the tax increase would be set aside to pay off these bonds. Furthermore, the remaining .6 percent wouldn’t cover the expenses associated with running town hall or the town.
Â Â “If we were to borrow all of that money in September 2009, it is like a mortgage. At some point in 2010 we would have to pay the principal on it,” explained Jones. “No way and no how would that 4.4 percent solve the problem because the town still has to continue operating into the next year.”
Â Â Kabot remarked that it was the town’s duty to issue these bonds, which had been signed off on by previous town board administrations, and said the taxpayers will most likely have to pay back this debt over the next 30 years.
Â Â For now, the town is focusing its efforts on reconciling the I.O.U.s from the capital fund to the tune of $10 million, of which $8.7 million is owed to the general fund.
Â Â “We are looking at the transactions to see what was spent and then we have to analyze what was supposed to be spent in terms of budgets and authorized spending,” said Wright, who added that she has poured over thousands of resolutions for the 175 accounts, dating back to 2002, which need to be reconciled down to every penny spent. Kabot predicts the town will have a full analysis of the actual spending by Monday, June 1.
Â Â According to Jones, the town will have certified financial reports for the audit of the 2008 budget by August. Jones expects the New York State Comptroller to come in at the end of the summer, or early fall, to conduct a risk analysis, which he predicts will prompt a full blown state audit of the town.
Â Â In terms of the capital fund debacle, it is still unclear exactly where the fault lies, though former comptroller Charlene Kagel admitted she knew of the problem in 2007.
Â Â Of any future legal actions, Kabot said, “It would be premature to assign culpability [right now.]”