Shortfall Feared, Town Surplus Found

Supervisor wants to put money in reserve account to cover future increases

    Health insurance costs for East Hampton Town employees will rise next year under the New York State Health Insurance Program much less than town officials had feared, just 1.8 percent.

    In preparing the 2014 budget this fall, before the state program had tallied its costs for next year, Supervisor Bill Wilkinson included enough money in the employee insurance budget to cover an increase of up to 10 percent. Before the budget’s adoption late last month, the amount was dropped about $500,000, at Mr. Wilkinson’s request, to cover an increase of only 5 percent. New projections, he said at the time, indicated that the costs would not be as high as at first anticipated.

    Under state law, town budgets must be adopted by Nov. 20. However, NYSHIP did not confirm its cost figures for next year until Nov. 29.

    The $500,000 change was made over the objections of Councilwoman Sylvia Overby and Councilman Peter Van Scoyoc, the town board’s two Democrats, and of Len Bernard, the town budget officer, who advised budgeting for at least a 7-percent increase.

    Leaving the budget as originally proposed, Mr. Van Scoyoc said, would prevent a possible shortfall. He suggested that any funds collected from taxpayers for the health insurance premiums in excess of their cost could be set aside for future insurance costs.

    The disagreement resulted in both Democrats voting on Nov. 19 against the adoption of the $69.4 million budget.

    On Dec. 3, Mr. Wilkinson introduced a resolution calling for the surplus  between the approved budget and the actual insurance cost to be transferred into the “employee benefit reserve,” and “used to offset future expenses related to employee benefits.”

    Mr. Bernard, who has been tapped by incoming Democratic Supervisor-elect Larry Cantwell to stay on as budget officer, expressed some confusion last week about the resolution, which was, he said, prepared by Mr. Wilkinson without consulting him. Its purpose and specific intent were unclear, he said in an e-mail, and “I have not received any clarification on the resolution or its intent.”

    “We have no general ‘employee benefit reserve’ as referred to in the resolution,” Mr. Bernard wrote. Pursuant to fiscal regulations applied to East Hampton under a state-approved deficit correction plan, the town has established reserve funds earmarked for employee retirement costs and accrued benefit payouts.

    The budget officer also noted that “we do not yet have surplus for 2014 because we are still in 2013, and surplus cannot be generated when we have not even collected revenue or sent out tax bills. Normally surplus (and the existence of the cash that composes surplus) is something you identify at the end of the fiscal year and at that point use it to fill reserves.”

    Mr. Van Scoyoc and Ms. Overby voted against the Dec. 3 resolution, which passed along party lines by a 3 to 2 vote.

    After the NYSHIP announcement of next year’s rates, Mr. Wilkinson sent out a press release touting his “zero-based budgeting” practices.

    “From a budgeting point of view,” he said in the release, “we are glad we reduced the current and future tax liability for our residents. Absent of insisting on maintaining the financial disciplines which saved us in the first place, history could very easily repeat itself,” he said, referring to the financial disarray he inherited when he took office in 2010.