Southold officials Monday unveiled a $49 million tentative budget that would pierce the state tax cap in 2021.
Supervisor Scott Russell delivered the plan during a special Town Board meeting, where he explained how a mix of pandemic-related funding shortfalls and increases in mandated medical costs led to the increase.
Mr. Russell said the town’s medical costs are expected to increase by over 20% to $1.3 million. Employee retirement costs are also projected to increase by $600,000, a 17.2% increase.
Meanwhile, aid and revenue share from Suffolk County is expected to fall $755,699, a 50% reduction. State funding will be reduced by at least 20%, which represents $148,083 in Southold and is primarily used for road resurfacing projects, Mr. Russell said.
“So now we have a problem,” the supervisor said. “We’ve added almost $2 million in new spending that’s [obligatory] and lost about a million in revenue offsets.”
Based on that projection, the supervisor estimates a 3.1% tax increase, which exceeds the state’s limit, would be necessary. Mr. Russell said Monday that in order to comply with the cap, taxes would have to be within a 2.36% increase.
“The impacts of this are just insurmountable to overcome,” without piercing the tax cap, Mr. Russell said, explaining that he sifted through the budget thoroughly to make cuts wherever possible.
While the proposed budget maintains current funding for vital projects, including stormwater mitigation and sidewalk repairs, and sustains current funding levels for the town’s police department, many requests for capital projects were left out of the spending plan.
“A lot of good programs, a lot of good projects we simply couldn’t afford to absorb them this year. Some of it is regrettable,” Mr. Russell said. “They’re cuts that you don’t want to have to make, but you have no choice.”
The supervisor’s budget also does not allow for promotions of any kind, other than contractually-obligated raises.
Two new positions — a new building inspector and a full-time position in the Zoning Board of Appeals department —are funded in the 2021 proposal.
Though Town Police Chief Martin Flatley had initially requested five new police officers, the proposed budget includes funding for four officers who will replace retirees.
Two vacant positions in the highway department will not be funded, according to town comptroller Kristie Hansen-Hightower. Mr. Russell said he had contemplated leaving an open position in the town’s planning department vacant, but conceded that their staffing is already limited. “We felt that was a position we can’t do without…based on the activity that we’re going to be seeing in the near future, anticipating a lot of new investment particularly in subdivisions and commercial projects.”
Mr. Russell also said that while the state has said it will meet obligations for current grants, the town may not see the funding until 2022 and new grant opportunities may not be available for “the foreseeable” future.
Officials at each level of government are still hoping for the federal government to step in and restore municipal funding in order to offset budget issues. According to Mr. Russell, Suffolk County Executive Steve Bellone has said he’d restore annual funding to towns if a federal aid package is adopted.
Board members, who formally accepted the preliminary plan, said they weren’t surprised to see the tax rate rise due to current circumstances. Mr. Russell said he initially feared the town would be faced with a five to seven percent tax increase this year.
The town has until Nov. 20 to adopt a final budget and will require a hearing on both the budget and piercing the tax cap beforehand. Southold voted to pierce the tax cap as recently as 2016, when the proposed 2017 budget called for raising taxes by 7.5%.