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Nov 10, 2008 11:59 PMPublication: The East Hampton Press

East Hampton Town now looking at 24-percent tax hike

Nov 10, 2008 11:59 PM

East Hampton Town Board members now expect to have to raise town taxes in 2009 by as much as 25 percent, after adding nearly $1 million to the anticipated 2009 budget last week to meet more conservative revenue projections and restore funding to a number of youth programs.

As board members prepared to hold their third work session on the $68.7 million 2009 budget last week, auditors from the New York State Comptroller Thomas DiNapoli’s office issued a critical report on the town’s appropriation plan, saying the town was underestimating spending and overestimating revenues.

Also, the town’s Democratic Committee took the unusual step of publicly chastising the all-Democratic Town Board for failing to make deeper cuts in the proposal budget and hitting taxpayers with too high a tax hike. The text of the committee’s statement, issued by chairman Bill Taylor on Monday, appears on page A9.

In its audit, the comptroller’s office warned that the town might face another budget shortfall at the end of 2009 if more realistic projections were not made.

At an all-day work session on Thursday, board members battled over spending cuts and increases, splitting opinions three-to-two on a variety of issues. In the end, the board made about $30,000 in cuts to the preliminary budget with which they had started the day but added nearly $1 million to the amount to be raised through property taxes, pushing the last estimated 22-percent tax increase to 24-percent with some further increases still possible before the final budget is adopted next week.

“It was a matter of mandatory additions rather than discretionary cuts,” Councilman Pete Hammerle said on Friday of the need for raising more tax revenues. He said “2009 is going to be a tough year. We’re not out of this yet. The next year is going to be more of the same. We’re going to have to evaluate a lot of our departments, take a look at their roles and their efficiency.”

The largest single addition to the revenue needs came at the insistence of the state auditors. Among a host of criticisms the comptroller’s office made as part of its review—which was required by the state after it allowed the town to borrow up to $15 million to pay off its budget deficit—the state accountants said the town’s estimates of income from mortgage taxes in 2009 were dangerously optimistic in the increasingly uncertain real estate market.

The board agreed to cut $500,000 from their initial $4.5 million projection, though they remained optimistic that mortgage receipts will still come in higher than that.

The comptroller’s office also warned that the budget underestimates medical coverage costs for employees at $7.5 million. It noted the town spent more than $8.3 million on medical costs in 2008 and paid $8.9 million in 2007. The auditors said that the cost projections by the town’s health plan administrator, Island Group, has not been accurate in past years and that the board should not rely on it.

Supervisor Bill McGintee, who has been pushing for the town to save money by switching employees to a fixed-cost insurance plan from Empire Blue Cross/Blue Shield, said that Island Group’s president Alan Kaplan has said he can tweak the benefits package in 2009 to ensure the town won’t go over the $7.5 million mark.

“He’s going to have to deliver on that projection,” Supervisor McGintee said. “If he can’t, we’ll be left with no alternative but to lay people off to make up the difference. Either way, it is going to have to be a $2 million savings.”

Throughout the budget process, the supervisor and board members have said they want to avoid laying off any employees at a time when the national economy is faltering and layoffs in many sectors are climbing. During Thursday’s budget work session, Councilman Brad Loewen proposed that the town cut back on the number of animal control officers it employs, from four to two, but got no support for the idea from other board members.

In lieu of layoffs, and handcuffed by millions in contractual expenses including salaries and debt payments, the board has struggled to increase revenues wherever possible to limit the looming tax hike.

One proposal is to charge residents $25 for beach parking stickers in the future, which the state auditors questioned, doubting that it would raise the $250,000 in annual revenues projected. The idea found support in a narrow majority of the board members. Beach stickers have always been free for residents.

Mr. McGintee assured the other board members on Thursday that revenue estimates from selling the stickers, which are currently free to town residents, are very conservative and could bring in significantly more income than $250,000. He said he would explain his reasoning to the state auditors this week.

The auditors noted that the town gave out only about 6,800 free stickers in 2008, which would total only $171,000 at $25 each. But Mr. McGintee noted that, because the old stickers did not have to be renewed each year, the number of residents who would purchase the new annual stickers would be much higher.

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These town board loonies should just walk away. Suppose we donated a buck for every mile they walked away from East Hampton! We think we could pay off the debt.
By we could run this town! (129), wonderful Wainscott on Nov 11, 08 7:53 PM
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