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Russell unveils $44.1M tentative budget, looking to pierce tax cap

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Southold Town Supervisor Scott Russell is calling for a 7.63 percent tax levy increase in his tentative 2017 budget, which was released Friday. The estimated tax increase marks the first time the supervisor has proposed piercing the state’s tax levy cap since the law went into effect in 2012.

“We’re blowing through the cap,” he said in an interview, adding the increase was needed to cover necessary road repairs and contractual increases in employee health benefits.

[Scroll down to read the tentative budget]

The supervisor’s proposed $44.1 million spending plan was the result of what he called “several difficult decisions.”

“While I am proud that I have been able to present budgets that have complied with the New York State tax cap in previous years, I am unable to do so this year,” Mr. Russell said. “It is unrealistic to expect that the requirements of the tax cap be met each and every year without causing long-term injury to Southold’s fiscal health.”

Mr. Russell’s proposal includes more than $2.4 million to repair local roads, which town officials have been concerned about since harsh winters in 2013 and 2014 ripped up asphalt and cracked streets.

Money for the highway fund was historically used for basic maintenance, but the standard rate of maintenance wouldn’t make enough headway to repair the roads, Mr. Russell explained.

“If we had allocated at previous levels, under $1 million, we’d be standing in place,” he said. “We wouldn’t be able to keep up.”

While this year’s budget calls for a nearly six-fold increase in the town’s highway appropriations, the amount won’t cover the costs of all the road repairs, he added. The town’s highway superintendent, Vincent Orlando, is working on a larger report independent of the town’s budget that will explain how much additional work is needed and how much it will cost.

Mr. Russell said the biggest challenge with planning this year’s budget was a nearly $1 million increase in funding for the town employees’ Empire medical benefits. 

“It’s compulsory,” he said. “When you have to accommodate that, you have to look at another part of the budget.”

No new hires are proposed in the tentative budget and Mr. Russell said the Town Board will examine if the town can save money by leaving expected vacancies in the highway and planning departments due to retirements unfilled.

The 2016-17 budget also calls for about $1.19 million less to be pulled from the town’s fund balance reserves. While the money could be used to offset the tax increase, Mr. Russell said the town’s reserves needs to grow.

“To comply with the cap, towns have been relying a little too heavily on the fund balance and we’re partially guilty of that,” he explained.

Mr. Russell said fund balance in his proposal would increase from about $9.8 million by the end of this year to roughly $10.5 million in 2017.

A higher fund balance is preferred by fiscal experts who set the town’s bond rating, he added. The town is expected to refinance several existing bonds this year, saving an estimated $2 million over the life of the bonds, Mr. Russell said.

A larger fund balance will also be available for emergencies, he said. For example, a $250,000 influx of cash was pulled from the reserves into the highway department in 2015 to complete more roadwork before the winter.

The financial crisis of 2008 also cut deep into the town’s reserves, he said.

“If you keep living off of it, when you really hit that economic buzzsaw, there’ll be nothing there to rely on,” Mr. Russell said. “In 2008 and 2009, we went through this. We were in that situation. The economy tanked and hit us all like a ton of bricks.

“You need to be able to maintain the functioning of government and that’s what those funds are for.”

The Town Board will now review the supervisor’s budget plan in the coming weeks and hold a public hearing on the proposal later this fall. Piercing the budget would mean town residents would not receive the town portion of its property tax freeze credit next year.

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File photo: Southold Town Supervisor Scott Russell unveiled his 2017 tentative budget Friday. (Credit: Paul Squire)

Southold Town 2017 Tentative Budget

Southold Town 2017 Tentative Budget Statistics