Walter delivers 2017 budget calling for 4.19-percent tax rate hike — $96 per year on the ‘average’ $350,000 home

Riverhead Town Supervisor Sean Walter delivered his 2017 town budget to the clerk and council members this morning and, as he told the board two weeks ago, it requires the town to pierce the tax levy cap in order to make ends meet.

The supervisor’s tentative budget calls for $55.45 million in total spending in the three town-wide funds — general fund, highway fund and street-lighting fund. That would result in a town-wide tax rate of $53.228 per $1,000 of assessed valuation — a 4.19-percent tax rate hike.

The town’s portion of the property tax on the “average” home — which has an assessed value of $50,000 and a market value of $350,000 — would increase by $96 per year.

The tax levy would increase by 4.81 percent to $44.6 million in 2017. That’s 3.39 percent higher than the 1.4 percent tax levy cap imposed on Riverhead Town by state law. The tax levy limit is set at the lower of 2 percent or the rate of inflation, with certain adjustments, including tax base growth. Without the tax base growth the levy limit would have been set at .68 percent.

Walter’s town-wide spending plan for next year represents a 1.95 increase in spending over this year’s spending.

Overall spending, when special districts are taken into account, will be just shy of $94 million next year. The special district spending is funded by special district taxes assessed against properties in the special districts. The special districts include the garbage district, water district, the town’s two sewer districts, ambulance district, public parking district and business improvement district.

Walter said during this morning’s work session that “unavoidable” cost increases are driving the budget increases. Among them are a $600,000 hike in the town’s health insurance premium costs, financial administrator William Rothaar said.

Most town employees have their health insurance premiums fully paid for by the town. Employees covered by the Civil Service Employees Association contract pay 25 percent of their premium costs for the first 10 years of employment. The town pays 100 percent after that. All other employees, including police, do not have to contribute to their premiums.

“The employees don’t want to hear this but they’re getting huge raises every year because they don’t pay into health insurance,” Walter said during today’s meeting.

CSEA employees have not had a contract with town since the end of 2014. The police unions have been out of contract since the end of 2015. The supervisor said in an interview today that contract negotiations have been stalled because the town will not agree to a pay hike in excess of the tax cap, i.e. the lesser of 2 percent or the cost-of-living increase.

In the absence of a new agreement, the terms of the existing agreement remain in effect by law.

“This is a very lean budget,” Walter said of his proposal. Like the current budget, the 2017 budget does not draw on the town’s general reserve fund, which the town previously utilized to supplement property taxes and balance the budget. The 2017 budget does not rely on any “one-shots” — including the sale or lease of any town-owned property, such as land at the Calverton Enterprise Park.

“The tax levy cap is unsustainable the way it is working at this point,” he said. “You can’t dictate to a town that it has to stay within the lesser of 2 percent or cost-of-living when everything it has no control over is going up more than that, including unfunded mandates.”

Under state law, the board may now revise the supervisor’s tentative budget. It must hold a public hearing on a preliminary budget — the tentative budget, as amended — on or before the Thursday immediately following the general election. After the public hearing, the town board may make additional changes to the preliminary budget.

The preliminary budget, as amended, shall be finally adopted by resolution of the town board not later than Nov. 20.

To keep the 2017 budget within the tax levy cap, the board would have to cut — or fund in another way — $1.3 million from the tentative budget.

“If anyone can figure out how to find a million-three, have at it,” the supervisor told the council members.

Councilman James Wooten said he had an idea which he said was “radical,” but said he wants to “vett it first” before going public.

Board members were each given printed copies of the full budget document at today’s meeting. They did not discuss scheduling any group budget discussions.

A public hearing on a local law authorizing the board to pierce the tax levy cap is set for Oct. 18. The board must adopt the local law before it can vote to approve a budget requiring a tax levy increase in excess of the statutory limit.