After several choppy years marked by the aftermath of financial mismanagement under a former administration, East Hampton Town’s financial outlook is clear, Len Bernard, the town budget officer, said in a May 21 report to the town board.
With the exception of one of the main town operating funds and the scavenger waste fund, expenses last year remained within what had been anticipated in the 2012 budget.
The remaining “fund balances are all pretty healthy,” Mr. Bernard said.
Expenses in the part-town fund, which include town police staffing costs, were higher than expected, because of required benefits payouts when four officers chose to retire. However, Mr. Bernard said, revenues into that fund were also higher than what had been expected, by about $250,000 and the fund ended the year with a $1.4 million surplus. Mr. Bernard said in an e-mail on Tuesday that the town collected about $170,000 more than was expected in building permit fees last year, and that the collection of fees for false fire or security alarms accounted for $160,000 more than had been anticipated.
The scavenger waste fund went into a deficit, he said, totaling $570,000, because there was only enough money placed in last year’s annual budget to cover expenses at the town’s wastewater treatment plant for three months — in an apparent gamble, on Supervisor Bill Wilkinson’s part, that the town board would go along with a proposal from the one company that responded to a request for proposals to privatize the plant. A majority did not.
Mr. Bernard drew a distinction this week between the combined fund balances at the end of 2009, when the current administration, with Mr. Wilkinson as supervisor, came into office, and the present state of affairs. After several years of financial mismanagement, the combined balances in town funds in 2009 was in the negative by 30 percent, he said. Now, the overall fund balance is positive, by 22 percent — a more than 50-percent turnaround, Mr. Bernard pointed out, even when factoring in the state of the scavenger waste fund.
Mortgage tax, traditionally a big revenue source for the town until the real estate market downturn, totaled almost $3.8 million last year, well above the $2.5 million that had been projected.
During the first three months of this year, mortgage tax revenues have been “really, really good,” Mr. Bernard said, totaling about $940,000. If the pace continues, the 2013 total could reach $3.7 million — above the $3.1 million listed as expected revenue in this year’s budget. “By conservatively budgeting mortgage tax, it gives us a little bit of cushion,” and ability to deal with unexpected expenses, Mr. Bernard told the board.
Despite new borrowing for various projects, Mr. Bernard said that the town’s overall debt decreased last year from $132 million to $124 million. Earlier this year, the board approved a three-year capital spending plan calling for $10.8 million in projects, for which money would be borrowed. Even if all of the some 150 capital projects get under way, Mr. Bernard said, the town would still continue to extinguish debt, with its overall indebtedness expected to decrease over the next three years.
The town’s community preservation fund, a dedicated land-purchase and historic preservation fund that receives income from a 2-percent real estate transfer tax, took in almost $22.2 million last year, Mr. Bernard said, and the town spent close to $13.5 million on land purchases. During the first quarter of 2013, $5.8 million flowed into the preservation fund.
As required by state law, a yearly audit of the fund has been completed for 2012. “It was a clean audit,” Mr. Bernard said. Money due to the fund, which was improperly transferred to other town funds under the previous administration, has been repaid; other adjustments among town funds based on a forensic investigation of the previous administration’s accounting have also been completed, Mr. Bernard said.
A new internal audit division of the town’s budget office, which will undertake regular reviews of various financial areas, examined Town Police Department record keeping regarding staff time and attendance in the early part of this year, Mr. Bernard said, and found “internal controls were good.” Several recommendations for improvement were made, however. The Police Department was chosen, the budget officer said, because of articles written about problems uncovered in other towns.
With contract negotiations ongoing between the town and the police union, the 2013 budget, Mr. Bernard said, contains money for potential salary increases included in a new contract. If the contract is not settled by the end of the year, he said, that money will go into a reserve fund to cover retroactive salary increases that may go into effect when the contract is finalized.
The town’s financial picture has been positively affected by staff reorganization efforts, Mr. Bernard said. Full-time positions, which numbered 397 in 2009, before the Wilkinson administration, were reduced to 312 last year and to 304 by the beginning of May.
“The movement to a seasonal work force is very, very important,” Mr. Wilkinson said at the May 21 meeting. The town must provide services for a summer population that is four to five times the year-round population, he said. Mr. Bernard said that the town’s part-time staff has not been reduced, and in some cases has been increased.
Mr. Bernard also reported that East Hampton will receive $472,000 from the Federal Emergency Management Agency to cover the costs of post-Hurricane Sandy cleanup, and that an additional $260,000 is expected to pay for repairs to Gerard Drive in Springs, which was washed out by flood water. The town has also requested a $1.2 million federal grant to redesign the road to prevent or mitigate damage from future storms.