CPF and mortgage tax revenues still sliding

Southampton Town Councilman Jim Malone said he scans two of the town’s real estate generated revenues daily—and given what he’s seeing early in the month, he’s worried.

Based on the early September figures, the councilman said last week that the town’s mortgage tax receipts and revenues from the Community Preservation Fund, a land preservation fund which is fed by a tax on real estate transfers, are much lower than he’s ever seen before. According to numbers provided by Mr. Malone—who is also a deputy Suffolk County clerk—that document the first nine days of CPF revenue in September for the past three years, revenues came in at $735,287 in 2008, $796,996 in 2009 and just a mere $68,130 this year.

Similarly, Mr. Malone said mortgage tax receipts have not picked up. Those numbers are trending at about $200,000 per month, or about $50,000 a week, as opposed to previous months in which mortgage tax revenues were at about $500,000 a month, he said.

“What I’m looking at now is very, very suggestive that we are on the edge of a broader deterioration in the real estate markets,” he said.

But Town Supervisor Anna Throne-Holst and Comptroller Tamara Wright said they’re hesitant to use September’s early numbers to indicate that there is a downward trend in the real estate market, noting that it’s too premature to make that claim. Ms. Throne-Holst said a variety of factors could have stalled the closings on sales in the early days of September, including threats of Hurricane Earl impacting the region, as well as the Labor Day holiday. Some she conferred with confirmed that, she said.

The supervisor said she is more focused on declining mortgage tax revenue. She said she is positive the town will not meet its budgeted target for mortgage tax receipts this year, which is $6 million.

Ms. Wright said this week that the town is slated to fall $700,000 short of its $6 million target in mortgage tax this year.

The comptroller said that using the first nine days of September as an indicator of CPF revenues is difficult, considering that she and town officials have seen a definite turnaround in real estate transactions this year, and an uptick in CPF revenue, compared to last year’s numbers. On average this year, the CPF revenue is coming in at about $3 million a month, Ms. Wright said. In July, the most recent month recorded, the fund gained $2.8 million.

“What we’re not seeing the same strength in is mortgage tax receipts,” she said. “That can only mean one thing and that is people aren’t taking more mortgages.”

The issue came to a head at a Southampton Town Board work session on September 9, at a discussion about a resolution sponsored by Ms. Throne-Holst to increase this year’s budgeted CPF revenue by about $10.4 million, to a total of $30 million. The resolution also intends to increase land purchases by $10.4 million to a total of about $17.3 million.

Town Board members discussed the proposal at a meeting on Tuesday, September 14. Ms. Throne-Holst moved to table the resolution to the next Town Board meeting on September 28 and instructed Ms. Wright to look more closely into the trend.

Ms. Wright said that September is typically a month when the town would see an increased number of closings from summer sales.

“Usually September is a strong month because people have identified the houses they want in July or August and it takes actually a month to close,” she explained.

The comptroller said she was unaware of the figures Mr. Malone cited, but said that if those trends continue, the town may see an even bigger budgetary hole in mortgage tax revenue this year, closer to $750,000 instead of $700,000.

As town officials are in the middle of budgeting for next year’s expenses, Ms. Wright and Ms. Throne-Holst are turning their attention to making up the inevitable shortfall in mortgage tax receipts. Ms. Wright said she and Ms. Throne-Holst have been discussing ways to make up the difference, including honing in on 20 vacant employment positions the town is expected to have this year. Ms. Wright said she is currently assessing whether some money saved from those vacancies could mend the gap in mortgage tax.

Ms. Throne-Holst also said she is considering offering an incentive that would compel about 20 employees eligible for a New York State early retirement incentive to retire earlier within the retirement window this year, which would allow the town to achieve more salary savings in the remaining months of 2010.

The supervisor said she has asked Ms. Wright to tally up the town’s run rate per month, or expenditures for each department. Options on the table to plug the mortgage tax hole could include budget modifications of some contract lines in departments. For example, the town attorney’s office may see a reduction in what is budgeted for outside counsel, which would allow the town to put that money back into the general fund, she said.

“I think everyone was hoping for an economic recovery to start to really affect, and I think we’re seeing nationwide it’s not happening at a pace we hoped for,” Ms. Throne-Holst said.