Riverhead Supervisor Sean Walter said he plans to unveil a tentative 2012 town budget soon that raises the tax levy by 2 percent, the maximum allowed under a new state tax cap enacted this year.
However, Mr. Walter said that in order to meet that cap, he had to cut about $1.3 million in spending from the town budget.
The tax cap applies only to the tax levy, which is the total amount of taxes collected in the town.
It doesn’t apply to tax rates, which determine how much individual tax payers pay, or spending, which can include other revenue sources besides taxes.
Under state law, the supervisor must present a tentative town budget for 2012 by Oct. 1. From there a public hearing must be held, and the entire Town Board must adopt a final budget by Nov. 20.
Last year, the town adopted a final budget of $49.9 million that cut spending by 1.5 percent, but raised the tax rate by 4.3 percent, and the tax levy by 5.2 percent. It also cut six full-time and seven part-time positions.
Mr. Walter said his proposed budget, which has not yet been officially unveiled, will cut spending without having to cut any positions.
He said he was able to do so by applying $2.6 million in reserve funds toward the budget.
“In 2010 (the last budget developed under former supervisor Phil Cardinale’s administration), the town used $5.2 million in fund balance, this year we used $2.6 million, and I’m proposed to use $2.6 million again in my 2012 budget,” Mr. Walter said.
The tax cap calls for tax levies to be capped at two percent or the rate of inflation, if the latter represents a lower increase. Mr. Walter said it originally appeared that the rate of inflation was going to be 1.7 percent, but new information from the state put that number above two percent.
The two-percent cap applies to every taxing district in the town, so the town’s general fund, highway fund, street lighting district and so on will all have to be capped at a two-percent tax levy increase, according to Mr. Walter.