Although state law prohibits the town and other local taxing authorities from raising the property tax levy by more than 2 percent in any one year, Southold Town could see a tax rate hike approaching 3 percent in 2013, said Supervisor Scott Russell, who must submit a new spending plan outline by the end of this month.
At the moment, the supervisor is not calling for layoffs but, he added, “I can’t take that off the table. We’re exploring every option. Our wish is to avoid layoffs, but we’ve got a job to do.”
To cut down on payroll costs, the town offered its own retirement incentives two years ago, and state incentives were available last year. The supervisor believes offering town workers any additional retirement incentives would have little impact on the budget.
“Frankly, I think the people who were going to retire have already retired,” Mr. Russell said.
Although an arbitrator recently awarded a new labor agreement for the town police covering 2010 and 2011, PBA members are currently working without a contract.
The most recent contract with Southold’s non-police civil service employees expires at the end of the year. In exchange for some union concessions, the town agreed to a no-layoff provision, but that also expires Dec. 31.
“It’s my hope that we can find savings without layoffs, but everything has to be considered,” said the supervisor.
Several economic factors, all unfavorable, are at the root of the town’s difficult financial situation, Mr. Russell said.
Town employee pension payments alone will rise $277,000 over this year’s level, he said. That will add a full percentage point to any tax rate hike. Pension costs do not count toward the 2 percent limit, which is why the property tax hike can pierce the 2 percent ceiling.
While employee and other expenses continue to rise, the town’s mortgage tax revenue continues to come in far below past levels. When real estate sales are booming, that funding can approach $7 million a year, and even in an average year the town can expect to take in between $4 million and $5 million, Mr. Russell said.
Next year, however, he expects the town will receive less than $1 million.
“It should come as no surprise to anyone that the economic conditions have not improved and the outlook remains bleak,” Mr. Russell said.
The supervisor said he’ll call for a “modest investment” in new equipment, but will suggest delaying major capital projects, such as parking lot and sidewalk repairs.
He said he will not call for borrowing funds through bonds to cover that expense.
“We’re going to establish priorities and try to get the work done in-house,” he said. “I’m not going to rely on debt service to run the town.”
One major project the town shouldn’t avoid, Mr. Russell said, is constructing a new highway department mechanics’ shop, at an estimated cost of $2 million.
Highway employees “are working in decrepit buildings that haven’t been worked on in years,” the supervisor said.
Mr. Russell said he expects to submit his new spending plan Sept. 28.
This year’s town budget raised property taxes 2.2 percent.