The district's superintendent, Joseph Giani, in 2017. On Tuesday, he...

The district's superintendent, Joseph Giani, in 2017. On Tuesday, he told board members that South Country's current budget problems could be traced to decisions made during an earlier crisis in 2005. Credit: Johnny Milano

South Country school officials have raised the prospect of a near-8% hike in property taxes for the upcoming 2022-23 school year unless the district can obtain an extension of debt payments or some other form of financial relief.

District administrators cautioned that weeks of expenditure review lie ahead before the district settles on a final tax figure. But at a board meeting Tuesday night, those officials announced that the highest allowable figure next year under state law would be 7.76%.

South Country's tax issue stems from a complexity in the state's system for helping districts pay for school building renovations. Under that system, South Country's state aid for renovations is due to plunge from about $9.3 million in the current school year to $3.7 million next year, leaving the district of modest wealth with a funding hole to fill.

South Country enrolls about 4,200 students in the communities of Bellport, Brookhaven and East Patchogue. Its wealth is about 80% of the state average in terms of taxable income and property, according to state calculations. The district's current total budget is about $145.5 million.

New York's tax-cap law sets a statewide baseline restriction on annual increases in taxation; the limit is 2% for 2022-23. However, the law provides exemptions for certain types of expenses including payments on bond loans for school renovations, and South Country has borrowed more than $100 million for that purpose since 2005.

Such loans typically can be paid off over 20 years. The state, on other hand, provides financial assistance to districts in paying these debts for 15 years — a scheduling mismatch that has produced a sudden crisis for South Country.

On Tuesday, the district's superintendent, Joseph Giani, told board members that South Country's current budget problems could be traced back to decisions made during an earlier crisis in 2005, and that the district should now concentrate on contacting state lawmakers and seeking their assistance.

"I think we need to focus on our next steps," Giani said.

Late last month, Giani announced his retirement after nine years as South Country's superintendent.

Calls to the regional offices of State Sen. Alexis Weik (R-Patchogue) and Assemb. Joe DeStefano (R-Medford) were not returned Friday afternoon.

Several school board trustees at the meeting, which was held online, expressed shock and outrage over the looming revenue gap, which has only come to light in recent weeks.

"How did we not know that?" said one board member, Cheryl Felice. "I can't wrap my head around."

Another trustee, Chris Picini, noted that the district had refinanced its bond debt in 2015 and 2016 to save money on interest payments, and questioned why the possibility of an eventual drop-off in state aid to help with those payments had not been discussed then.

"So I guess I'm struggling, and I'm sure the community is going to struggle with why this wasn't caught then," Picini said. "It's really troubling at this point."

Christine Costa, the district's assistant superintendent for finance, presented options for next year's increase in the tax levy, which is total revenues raised through property taxation. Options ranged from 7.76% to 2.29%, with 5% mentioned as a possible compromise.

Even that middle figure struck some meeting participants as a tough sell. This year's vote on school budgets and board candidates will be held May 17, and failure to win passage could result in further funding problems.

"Personally, 5% for me is extremely high, and I don't think the community will swallow it," said Trent Cameron, the board's vice president.

Costa's presentation made clear that dealing with the funding gap could require a combination of cost cutting and tax hikes, not just in 2022-23 but in subsequent years as well.

Local residents who have watched the situation unfold said they're frustrated.

"For this type of fiscal mismatch to go unrecognized for 15 years is wholly unacceptable," said Dan Polner, a resident of 20 years.

Polner is a former investment banker, now an economic development specialist at Stony Brook University.

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