Sweet Surplus

History can be a guide

   The Wilkinson administration in East Hampton Town Hall is proud of having set the town’s financial condition to rights on the heels of former Supervisor Bill McGintee’s irregular manipulation of funds, which left the town with a huge internal deficit. But there is a flaw in the proceedings of the town budget office that warrants attention.
    If Len Bernard, the budget office director, is good at one thing, it is fiddling with the books to leave the next, presumably opposing-party, town board majority with the prospect of a tax hike two or four years hence.
    History can be a guide: As the budget officer for Town Supervisor Jay Schneiderman, Mr. Bernard left several anticipated expenses unfunded, notably pensions and police contracts. This forced Supervisor McGintee to raise taxes in the first year he was responsible for the budget, and even more the following year.
    This time, the budget office calculation involves as much as a $5.7 million surplus, which was created by the town’s borrowing more than it turned out to need to repay the McGintee debt due to the depletion of various funds during the McGintee years. The question now is what to do with the extra money.
    Applying the surplus to operating expenses, or to purposes for which it was not borrowed to begin with, would provide taxpayers with a “reward” of lower rates now at the expense of higher rates in the future. This is a serious risk and a matter that deserves scrutiny by the state comptroller, whose office is overseeing East Hampton Town’s books as a condition of the deficit-financing deal, as well as public discussion.
    There is a big question of how the deficit-financing money can be used and the appropriateness of applying it to anything other than its state-authorized purpose — to pay back the money improperly burned through during Mr. McGintee’s time. Correspondence from the state comptroller’s office appears to say that local government cannot borrow to build a slush fund, even by accident.
     What Mr. Bernard apparently would like to do is apply the surplus to town employee benefits or retirement funds. Depending on how you look at this, as a good idea or a trick, the fact is that once the money is gone, it will have to come from taxes in subsequent years.
    At this point, the only reasonable course for the over-borrowing, and one that would benefit taxpayers in the long run, appears to be to set it aside to repay what is owed, not to stave off tax increases for political advantage.