Riverhead Town's budget woes deepened Wednesday evening, as a divided town board shot down two ideas -- a loan and a tax hike -- designed to solve a $2.2 million shortfall in 2015.

Supervisor Sean Walter said Thursday that he has no choice but to craft a budget balanced with "draconian" cuts by the state's deadline of Sept. 30.

He said balancing the town's $46 million budget will require 20 to 30 layoffs from the town's workforce of roughly 300, and does not include about a dozen staffers who accepted a retirement incentive. The town's workforce has already shrunk by about 20 percent over the past four years, he said.

"It's pretty grim at the moment," Walter said, but added that he hoped the all-Republican board would change course after seeing the damaging cuts laid out in his budget. "Probably every department is going to share in the pain."

Riverhead is in financial trouble despite some economic gains from the development of big-box stores on Route 58 and relatively modest budgetary increases in recent years.

That's largely because it is struggling under the weight of a $52 million landfill-closure project from the 2000s, which saddled the town with debt service payments of about $4 million a year, town officials said. Reserves the town has previously tapped to cover the cost are running dry.

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On Wednesday, the town board voted 3-2 against the supervisor's preferred solution: a bridge loan bill that would have allowed the town to borrow up to $6 million against future land sales at the Enterprise Park at Calverton.

Walter and Councilman George Gabrielsen said it made sense given the prospect of a windfall from sales of town-owned land at the mostly undeveloped 2,300- acre park known as EPCAL. The town is in the middle of subdividing the property.

But Councilman James Wooten, the swing vote, opposed the plan. "Although it makes sense because we're land rich, I don't think it's a good idea," he said. "I don't think we should borrow money to pay our daily expenses."

Councilmembers Jodi Giglio and John Dunleavy also voted no, citing their opposition to borrowing.

The board then voted 3-2 against an alternative: a bill that represented a first step toward busting the state's cap on tax-levy increases. Walter, Gabrielsen and Giglio voted against it. Walter said he believed a steep tax hike would persist into future years, even after the budget situation is righted.

The $4 million shortfall the town board discussed earlier this summer shrank after some one-shot revenues and savings from a retirement incentive program were factored in, Walter said.

The retirement incentive offered this spring and summer yielded 13 prospective retirees, including at least two department heads, he said.