Southold tax hike falls under exception

Southold Town Supervisor Scott Russell's $39.8 million budget proposal for 2012 includes a 2.79 percent tax increase -- but it complies with the state's 2 percent tax cap.

That's because 2.4 percent of that increase, about $700,000, is for new mandated contributions to the state's employee retirement system. State law allows 2 percent of such increased costs to be an exception to the cap.

Russell said that means the portion of the town's tax increase to be compared to the cap is less than 1 percent.

The tentative budget includes a 1.32 percent spending increase over this year.

Declining mortgage tax revenue and increased costs have made each year's budget more difficult since the economic downturn, Russell said. The town anticipates about $1.06 million in mortgage tax revenue in 2012. Before the recession, Southold could expect $6 million to $7 million, he said. "It has simply been evaporating," he said.

While there will be no layoffs, a "firm policy" on attrition and very few promotions are part of the budget, the supervisor said. "It's holding the line," he said.

The tax cap law enacted earlier this year allows for other exceptions in addition to increases in retirement costs, including payments for capital construction, legal settlements, and growth due to new economic development projects.

Russell said real changes cannot be made simply by a tax cap, but require state leadership on ending some mandates, such as required arbitration in negotiations with collective bargaining units.

In his budget message released yesterday, Russell added, "The days of employees not contributing to their own retirement accounts needs to come to an end now."

Councilman Vincent M. Orlando, who had not seen the budget yet, said the town council will most likely go through the budget together at Tuesday's work session and "pick more meat off the bones if possible," he said.