Town-by-town look at 2013 budget process
Long Island's town supervisors are in the midst of preparing budget proposals for 2013. For the second year, they are doing so under the constraints of the state-mandated 2 percent tax cap. Since the cap was adopted in 2011, many supervisors have warned that its consequences will get progressively more onerous as the years pass.
The supervisors also are contending with the recent announcement by the state comptroller's office that contributions to the state pension fund from all municipalities are rising sharply again. Local governments will pay 20.9 percent on non-police and non-fire government salaries, an 11 percent increase from the current year; the figure for police and fire employees is 28.9 percent, a jump of 12 percent.
With town budget proposals required to be submitted by Sept. 30, Newsday asked the leaders of Long Island's 13 towns and two cities to share their thoughts on the process.
While the city comptroller is still compiling budget requests from department heads, Mayor Ralph Suozzi said there will be a tax increase, but "I think we'll be within the cap. I don't want to pass legislation to exceed the cap. We're trying to stay within the spirit of what the governor has proposed."
He said budgeting will be difficult this year because "pension costs are up again and health care costs have gone up again." Another issue is paying for a one-time bump in retirement costs because up to a dozen police officers are planning to leave next year. That will increase Glen Cove's debt and make it impossible to reduce its long-term debt, Suozzi said.
"We have increased our revenues in some other areas but expenses are outgrowing the revenue," Suozzi said.
The 2013 budget will continue to fund all town programs and services, such as park improvements, senior services, infrastructure upgrades and environmental projects, Murray said.
The town's 2012 budget of $414.8 million -- an increase of 2.9 percent compared with 2011 -- included a property tax cut of 0.08 percent.
Town officials are working to trim debt service costs, compile conservative revenue projections, control personnel costs and pursue grant funding for municipal projects, Murray said.
"While some governments have resorted to borrowing to unsustainable levels, relying on 'one shot' revenues and fiscal gimmicks to patch up leaky budgets, I will not take Hempstead Town taxpayers down that path," Murray said.
Long Beach, which struggled with a $10.25 million budget deficit earlier this year, approved an $88 million budget in May.
The spending plan came with a tax increase of 7.9 percent and 67 layoffs.
"In the coming year we're going to continue that effort as well as find additional revenues for the city, and slowly but surely dig our way out of the fiscal crisis," Schnirman said.
One step the city has considered is deficit financing, which would allow Long Beach to pay down its deficit over 10 years. The State Senate would have to approve the city's call for deficit financing, and has balked at the request so far. As a result, the city council this week approved an additional three-year tax increase of 6.6 percent.
Schnirman said the city's other options are to cut spending and reduce payroll.
Supervisor Jon Kaiman said two hurdles loom large over this year's budget preparations.
"The immediate challenges are the increase in pension costs and medical benefits," he said. "We're trying to offset those costs."
The supervisor said the town must add a half-million dollars to its pension contributions. "Ultimately we're going to go department to department," he said.
Last year the town budget exceeded the state's 2 percent cap on property taxes. This year, the supervisor said, "Our goal is to stay within the tax cap."
Kaiman said details about the budget are "premature."
Still, he's hopeful the town can meet its challenges. "We've reduced our workforce, we've reduced some of our spending in various areas, at some point we hope the economy grows and we'll get back to where we are in terms of being fully funded and being able to meet our obligation," he said.
"The overall goal for the town is for it to meet all of its responsibilities and maintain the quality of life in the Town of North Hempstead," he said, adding, "With reduced dollars, you make do."
Oyster Bay officials said they do not plan to exceed the tax cap or cut services in light of "proactive" efforts that began this year to close the town's budget gap.
Savings from a retirement incentive program, discretionary cuts and other actions will be realized in 2013, officials said.
The town faces a $13 million shortfall this year.
"In view of the continuing economic crisis facing all municipalities the Town has taken a proactive approach by reducing overtime, contractual expenses, and part time and seasonal employee expense," Supervisor John Venditto said in a statement.
The 90 employees who accepted the buyouts will not be replaced in 2013, officials said.
They and the handful of retirees expected to file for incentives by the program's last deadline, Dec. 31, will save the town an estimated $10.5 million in 2013, town officials said.
The town also plans to lay off the equivalent of 150 full-time positions, possibly before the end of the year, saving between $4 million and $6 million, officials said.
The town's debt total was $754.2 million as of May, according to the town's borrowing document. The town did not raise taxes in its $262 million budget for 2012.
Supervisor Richard Schaffer said Babylon will do "everything we have to do to comply with the cap" short of layoffs in a year when the town carries fewer employees on its payroll than at any point in the last two decades.
With recommendations on possible cuts or sources of new revenue due from heads of the town's 13 departments by the end of the week, Schaffer said he did not yet know where any cuts might be made.
Schaffer expects the town's pension obligations to increase from about $3.5 million to about $5 million, he said. And mortgage tax revenue, once as much as $14 million annually, is expected to generate just $4 million next year, off from $4.5 million this year.
"Although we have issues, they're manageable," he said.
In Brookhaven, departing supervisor Mark Lesko issued an austere budget that meets the tax cap but slashes spending, eliminates some town services, and proposes laying off nearly 150 employees to cut costs. Acting supervisor Kathy Walsh, who will vote on Lesko's proposed budget in her capacity as councilwoman, said the budget offers "no false hope."
She said "everything is on the table" in terms of negotiating the 2013 budget, including whether to pierce the tax cap, and what the final cost of the pension increase will be. "There was an estimate put forward in the proposed budget, but I don't believe the numbers are final yet," Walsh said.
Proposed spending cuts include eliminating the adult day care and respite programs, services for women and veterans, and the Holtsville complex, which includes the pool, zoo and ecology center.
"I appreciate the honesty in the budget," she said. "I'm hoping that the numbers are better than what were put forth in the budget. But it's better than being caught short and saying you didn't appropriate correctly."
Supervisor Bill Wilkinson says he should be able to propose a budget that will not exceed the tax cap, but that the town is quickly running out of areas where spending can be trimmed.
His town reduced spending dramatically after he was elected in 2009, Wilkinson said, adding that those cuts -- made before the tax cap became law -- give him fewer options for reductions this year.
"We'll make it. But, with simple inflation in retirement costs, health care costs and contract escalators, you're going to have some very large increases and we're running out of surplus," he said. "I'm surprised we haven't run out of room already."
Huntington Supervisor Frank Petrone cited increased pension and insurance costs in a flat economy as big items impacting his budget for 2013. He said although the decision is not final he is preparing to lay off as many as 15 people, depending on final insurance costs and other variables.
"It's a handful of positions," he said. "I haven't identified the individuals yet. We're looking at essential personnel and we're looking at positions that have changed based on the fact technology has stepped in and taken over functions that use to be individually done . . . Taxpayers are not in any position to go and absorb a large tax increase. We're limited at 2 percent and we will come in under that. But you can't draw a fine line; there are variables in this entire science of budgeting."
Petrone added: "You can't draw a fine line on projections on everything, like what's happening with mortgage tax receipts into next year. We don't have a crystal ball. All those things must be taken into consideration, and you have to prepare for a balanced budget."
"I'm trying to avoid layoffs. I am not a person who likes to see layoffs but the times are not on our side and we have to look to do things in other ways."
On Tuesday, the town board will vote to advertise for a public hearing to consider a local law to override the tax cap, officials said. But officials said yesterday they will not be able to predict whether the town would exceed the cap until they digest information given to them by department heads at yesterday's workshop, where commissioners explained how budget cuts of 10 percent or more would affect their operations and town employees.
Facing a $26 million deficit for 2013, first-year Supervisor Tom Croci said, "It's going to have to be either a massive closure of facilities and reduction of services, which will come with a massive layoff, or it will have to be going back to the residents and asking them for more every month in order to keep these services."
He added, "The time for half-measures was probably over about four years ago."
Islip's town property tax rate is currently 0.9 percent lower than it was in 1984, Croci said.
The worst-case scenario could include layoffs in every town department, cuts to services such as garbage collection and road improvements and the closure of popular town-run parks, pools and beaches, he said. Croci mentioned Timberline Park in Brentwood, Casamento Park in West Islip, Byron Lake Park in Oakdale and the 200-acre South Shore Nature Center in East Islip as possible closures.
Supervisor Sean Walter said he expects to stay within the tax cap but only by doing what every town supervisor in Riverhead has done for the last decade -- go to the big piggy bank that was filled with money when the town started selling off the former Grumman plant at Calverton.
Now called the Enterprise Park at Calverton, it was sold to the town for $1 in 1998. When the built-up core of the 3,000-acre facility was sold to a private investor, the town got $17 million. Former supervisor Phil Cardinale banked another $7 million by insisting on nonrefundable good faith payments for proposed land sales at EPCAL which were never completed.
There is about $9 million left in that reserve account, and Walter says he likely will use $3 million to hold down tax increases in the 2013 budget, and another $3 million for 2014. "That's not a good place to be," he said. "The problem is that we've had all our eggs in one basket for more than 10 years."
Even with proposed spending cutbacks, Walter expects the general fund to grow by $450,000, contracted employee expenses to grow by at least $300,000, and medical expenses to grow by $500,000, but the town can only increase spending by $725,000 without hitting the tax cap, unless it dips into the reserves.
Supervisor James Dougherty says he will get his proposed budget done on time this year, but doesn't yet know if he will stay within the tax cap.
"I just don't know yet," he said. "We're going into our fifth year of austerity. You can only put things off for so long."
One problem for the town, he said, is that it took over ambulance service from the American Red Cross on Jan. 1. Until this year, the $100,000 cost of running the ambulance had come from private donations, and it is not clear how much money will be donated now that the ambulance has become a municipal service, he said.
To the longest-serving town supervisor in Long Island history, the 2011 tax cap statute is "probably the worst law ever written."
Now preparing his second town budget under the law, Vecchio has refused to take phone calls in recent weeks as he pores over budget figures. With costs for pension contributions up $1.5 million, and hospitalization insurance expected to rise another $900,000 or more, staying within the cap next year will be a challenge, Vecchio said.
"It's very difficult," he said. "I'm close to staying within the cap."
Town employees might not see a raise next year, Vecchio said. Their contract expires Dec. 31, and there have been no negotiations toward a new pact, he said. "I think unions are aware of the current state of the economy," he said.
Southampton Supervisor Anna Throne-Holst will present a budget with a zero percent increase for the third year in a row, she said.
"The process was a very productive one," she said. "It was a lot of time with my fellow town board members . . . and there was a good level of consensus."
The flat budget of about $80 million was possible, she said, because of an uptick in revenues and staff reductions that took place throughout the year based on retirement incentives offered through the town.
"It's a good budget," she said. "I am feeling good about it."
Throne-Holst will present the budget at Tuesday's town board meeting.
Supervisor Scott Russell said his budget will comply with the tax cap but in reality taxes will increase about 2 to 3 percent.
"About one percent will be the increase in retirement costs," he said, which are exempt from the cap.
"My goal is to come in two percent overall, but it's conceivable I will have a budget proposed from the two to three percent."
Part of the process to keep costs down in the town is to put off smaller projects, some that have already been ignored for awhile, including repaving of municipal parking lots.
"We will do what we can in-house," Russell said of the public work projects.
The state's tax cap is a "simplistic approach to the issue," Russell said, adding that the hard part is figuring out how to keep costs from going up and finally giving relief from state mandates.
-- REPORTING BY AISHA AL-MUSLIM, STACEY ALTHERR, JENNIFER BARRIOS, BILL BLEYER, SOPHIA CHANG, SCOTT EIDLER, MITCHELL FREEDMAN, CARL MACGOWAN, DEBORAH S. MORRIS, EMILY NGO, CANDICE RUUD, NICHOLAS SPANGLER AND PATRICK WHITTLE