Southold Likely To Pierce All-Time Low Tax Cap

While it’s been several years since New York State imposed a “2 percent” tax levy cap on municipalities and schools, there is a bit of a misnomer at play: The 2 percent number is not actually the cap.

The tax cap is set at either 2 percent or the rate of inflation, which has recently been less than two percent. There are several other factors unique to each town that could raise or lower their tax levy cap, including changes in taxable property, large settlements paid by towns and pension contribution increases.

This year’s effective tax rate is just .68 percent, down from .73 percent this year and 1.56 percent in 2015.

As East End town supervisors prepare to unveil their proposed 2017 budgets at the end of this month, they will have to do some fancy financial footwork to stay within that number, at a time when contractual union pay increases, health insurance increases and several years of not investing in infrastructure in order to stay within the cap begin to show some cracks in the logic of deferring repair.

Southold Town Supervisor Scott Russell said at the board’s Tuesday morning work session that “I don’t see any scenario where I can present you a budget that doesn’t pierce the cap.”

Mr. Russell said town employees’ health insurance plan costs are going to increase by 9 percent in 2017, and that that alone would mean the town would need to pierce the cap.

But with the town’s roads suffering from years of budget cuts, he said Southold needs to invest in its infrastructure this year.

“The difference between Southold and other places is we’re not piercing the cap to plug holes in the budget,” said Mr. Russell. “We have infrastructure needs. We need to plug holes in the roads. If the public doesn’t want us to pierce the cap, we wouldn’t get anything done, period.”

“We’ve had a couple of bad winters and we need to start investing in our roads,” he added. 

Other board members agreed.

“There’s an extraordinary amount of decay of the roads,” said Councilman Bill Ruland. “There’s no way you’re going to keep up with it unless you jumpstart this.”

Councilwoman Louisa Evans suggested that the board present the highway department’s capital improvement plan along with the tax increase, so members of the public can see where the money would go.

“I don’t think you have a choice,” said Town Comptroller John Cushman of piercing the cap. “At least put this on the table.”

The board introduced a local law Tuesday evening that would allow the town to pierce the cap with a vote of 60 percent of the board. A public hearing on the proposed law will be held at the board’s Oct. 18 meeting at 7:30 p.m.

While supervisor’s budgets are due at the end of September, allowing for public hearings and tweaks from board members before they are eventually adopted in mid-November, over on the South Fork, Southampton Town Supervisor Jay Schneiderman will be unveiling his 2017 budget at a special meeting at 10 a.m. tomorrow, Sept. 22.

We’ll have more details when they become available.