The Riverhead Town Board is set to start hammering out a spending plan for 2013.
And that process will once again start off with a $2.6 million “structural deficit,” according to Supervisor Sean Walter, who is required to present a tentative town budget for 2013 by the end of September.
As with previous years, the deficit stems not from overspending the current budget, but with the fact that this year’s budget uses $2.6 million in surplus funds to lower taxes.
But Mr. Walter, who had been critical of previous administrations for their use of surplus funds to lower taxes, said in an interview that he will likely have to apply another $2.6 million in surplus, also called fund balance, to lower taxes in the 2013 budget.
The town must pay about $450,000 in landfill debt next year.
The debt from the landfill will heavily impact the next few town budgets, he said.
The town ran into cost overruns at its town landfill when it tried to do a landfill “reclamation” while closing the landfill, instead of the customary capping of the landfill. The reclamation, which involves excavating garbage and recyclable material from the pit and either selling them or taking them elsewhere, ended up costing way more than the town had anticipated.
Another big increase in the upcoming budget is from employee salary increases that are mandated as a result of already signed contracts with employee unions, Mr. Walter said.
That number adds about $500,000 more to the budget, he said.
“Between the salary increases and the landfill debt, you’ve got a million dollar increase,” Mr. Walter said.
Also, department heads’ requests for funding in the 2013 budget, if approved, would total another $500,000, he added.
The town allocated $2.6 million in surplus to this year’s budget and $2.6 million to the 2011 budget, Mr. Walter said. The town only spent about $2 million of that amount in 2011 and Mr. Walter’s hoping the town won’t spend the entire amount this year.
In the 2010 budget, which was adopted before Mr. Walter took office, the town allocated $4.7 million in fund balance to lower taxes.
The 2009 budget used $2 million in surplus funds to keep taxes from spiking.
The town began 2012 with about $11 million left in fund balance — or reserves — and that number will be reduced by however much the town spends of the $2.6 million this year, Mr. Walter said.
In addition to the spending issues, the town also must comply with the state’s 2-percent tax cap, which applies to the tax levy increase.
The landfill debt must be paid, so any cuts will have to come from other areas, Mr. Walter said.
He added that it’s too early to know if he will propose eliminating some town jobs.
An audit completed earlier this year found about $360,000 in “trust and agency accounts” that were left over from things like forfeited bonds over a 30-year period and Mr. Walter said he plans to use about $250,000 of that money on engineering to turn the old armory building on Route 58 into a new police headquarters and justice court.
There’s also another $493,000 the audit discovered in foundation permit accounts that the town is still auditing to determine if it can be claimed by the town.
If that money can be claimed, the supervisor wants to use it to update the town’s antiquated computer system, which is about 30 years old.
As for revenues, the supervisor expects the mortgage recording tax revenue, which is one of the bigger revenue items the town gets, to increase about $100,000, bringing the total to about $1 million. Meaning, the amount of those revenues the Town Board can apply to the 2013 budget will be $100,000 more than the amount the board applied to the 2012 budget.
That number is affected by the real estate market. The town got about $2 million in mortgage tax revenues in 2004, Mr. Walter said.
Read more in the Sept. 6 edition of the News-Review.
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