Finances on the Mend

A 2010 surplus; 2011 mortgage tax revenue on track

     One might expect that Len Bernard, East Hampton Town’s budget officer, is taking a deep breath this week, now that bonds have been issued and the money is in hand to straighten out the town’s finances.
    Things have finally been pinned down and repayments between funds outlined or even accomplished following an extensive forensic accounting effort to sort out financial transactions between town funds during the last administration, when money was improperly allocated and records were found to be lacking or inadequate. The state comptroller has certified the town’s deficit, which accumulated through 2009 under the previous administration, at $27.2 million.
    A final draft of a 2010 independent audit is due within weeks and is expected to verify that reduced spending last year resulted in approximately $9.7 million left over from the $71.7 million budget for 2010, though final calculations may change the surplus amount.
    The town has no outstanding short-term notes, meaning that all of its debt has been converted to long-term bonds or paid off.
    This year, Mr. Bernard said, “I would hope to have an in-year surplus, but it’s not going to be like last year.”    
    The 2011 budget is the result of “zero-based budgeting,” he said, and contains little, if any, more than will be needed.
    The 2011 budget relied on an expected $2.7 million in mortgage tax revenues this year. The town has received $735,000 for the first quarter of the year, Mr. Bernard said. If that trend continues, the annual revenue would equal $2.9 million.
    Along with money raised through issuing deficit financing bonds, a $5.9 million portion of the 2010 “within-year” surplus has been allocated to help cover the town’s overall deficit.
    The remainder will be used to establish two reserve funds, one to cover “accrued liabilities” — payouts to retiring employees for unused sick days, for example — and another that could be used to pay for minor capital projects, allowing the town to avoid borrowing to pay for them.
    An “undedicated surplus” of up to 5 percent of the total of each of the town’s two general operating funds will also be set aside.
    Under the terms of the town’s deficit financing plan, any surplus in those funds of more than 5 percent must be used to pay down the debt on the deficit financing bonds.
    The surplus last year was the result of a number of factors, Mr. Bernard said Tuesday, not least of them the decision not to hire new employees for 18 vacant positions whose salaries were already in the budget. A decision by 33 employees to retire in October under a state incentive plan resulted in further savings on salaries.
    Belts were also tightened. There was little spent on conferences or new equipment, and spending was carefully tracked. At the end of the year, Mr. Bernard said, “every [budget] line, all of those little lines, were in the black.”
    The 2010 bottom line also benefited from two unforeseen occurrences. With contract negations with the police union under way, the previous board had included enough for a 6-percent increase in police salaries in the 2010 budget. Under Mr. Wilkinson, officials were able to negotiate an increase of only 3 percent.
    In addition, a change in the way that the county makes mortgage tax payments to the town added an additional three months’ worth of that revenue, amounting to $575,000 to the town’s coffers in 2010, Mr. Bernard said.
    Mortgage tax, which is collected by the county for allocation to individual towns, is now distributed quarterly, rather than twice a year.
    A $1.5 million allocation in the 2010 budget, included by the previous board as part of its plan to address the deficit, was left untouched and added to the in-year surplus.


Comments

How does the Town plan to reduce the deficit in the future?  When will the debt be paid off?

We have gone from a $27 million to $22 million deficit.  What's next?  Why not sell some more

unneeded or underutilized assets?

Oh Geez,

Now that Alec Baldwin is running for mayor of New York City, he can do to the city (expletive deleted) what he has done to East Hampton during the last eight years when he supported and financed his friends, and friends of the STAR - the same Democrats who robbed blind the Land Preservation Trust Fund and the town of East Hampton.

This blind support of criminality demonstrates Alec's good judgment, proving to us all why we should elect him to high office. In fact, he should run for president. Of the animal shelter in Hampton Bays.

We all look forward to Baldwin's unique solutions for man's problems.

Seriously, if I could think of a man with low intellect and even lower morals, Alec would fit the bill. Though  on second thought I can understand.

Minnessota elected a former wrestler for governor and then they got serious. They elected Al Franken as senator.

We can do likewise.