East Hampton Village’s “2023 tentative budget includes the biggest tax cut of the last 20 years,” the village’s administrator, Marcos Baladron, announced at a village board meeting on Friday.
Taxes will be lowered by one full percentage point for village residents, assuming the nearly $26 million budget is passed at the June 17 board meeting. With inflation, rising costs, an unstable stock market, and tons of uncertainty on the horizon, how was the village able to accomplish this?
At the meeting, Mr. Baladron spoke of a “zero based budgeting approach.”
“We question every dollar, every year,” said Mr. Baladron over email. The administration stays on top of the department heads, meeting with them each Monday to address needs and concerns. In this manner, it makes sure the managers of each department and the administration are in sync. Mr. Baladron said that while there are no annual employee reviews, maintaining an open dialogue with each department precludes the need, since feedback is constant.
In January, Mr. Baladron and Dominique Cummings, the village treasurer, reviewed the prior year’s budget line by line, looking for areas where too much money was allocated, or not enough. “The budget should contain exactly what the organization needs to deliver high quality services — and nothing more. In my opinion, cutting taxes should always be the goal, if possible,” said Mr. Baladron.
“I see Dominique and Marcos working on this every day until late at night,” Mayor Jerry Larsen said at Friday’s meeting. “I know it’s a lot of hard work. . . . I don’t know any other municipality that is actually lowering their tax rate.”
“In February, armed with very specific knowledge and questions about each department’s spending, we meet with all department heads about their ‘proposed’ budget for next year,” said Mr. Baladron. The process takes weeks, with the administration listening to what the departments need and then occasionally pushing back, and making the managers defend their requests. “Everyone learns a lot,” said Mr. Baladron. The new budget is born from these meetings and negotiations.
Another major factor contributing to the village’s ability to manage its budget and lower taxes is the rise of the East Hampton Village Foundation, a nonprofit created in January 2021 to support village projects.
Last year alone, according to Bradford Billet, the chairman and C.E.O. of the foundation, it donated over $500,000 to the village. This money was used to fund capital projects, including the engineering for phase one of the rehabilitation of Herrick Park, the village’s centennial celebration events, a new A.T.V. for beach patrol, and snow removal equipment. “In the last agenda alone, Brad Billet was able to pay for $140,000 worth of material upgrades,” which went to updated security cameras, said Mr. Baladron at the board meeting. “Every agenda the foundation is helping the village get what it needs.”
Some residents worry about the influence of the foundation. For example, David Ganz called into the board meeting asking for “an accounting of the contributors.”
As a 501(c)(3) organization, the foundation is under no legal obligation to disclose the names of donors. However, some of that information will be available when the foundation files with the Internal Revenue Service. Mr. Billet said that auditors didn’t complete their work by the May 15 deadline and were granted an extension until Nov. 15.
“We will disclose exactly the donations that we have to disclose. Some are made anonymously, and some are not. They run from $100 to $1 million. Some are general donations made for the benefit of the village, others donate to specific causes,” said Mr. Billet. The overall purpose is to support the village and to engage the community. Mr. Billet said the foundation has an independent board and though created under Mayor Larsen’s tenure, it will exist after he leaves office. Such foundations are now commonplace to help municipalities meet extra-budgetary needs.
The village also floated a very large bond issue this year to purchase fire equipment and fund the second phase of the reconstruction of the Dominy shops. The cost of the bond will be paid back over time, in this case 15 years, much as a homeowner must repay a mortgage. The tax hit is spread out over time.
Arthur Graham, a trustee who is up for re-election on June 21, mentioned his concern about a possible recession, and the way it may affect the budget. However, he said he was assured that “we have the flexibility on the expenditure side, so if we lose revenues we can tighten the belt and not put ourselves in a terrible position.”
A public hearing on the budget will be held on June 17 at 11 a.m.
