Riverhead budget crisis: Expect 25 to 30 staff cuts, financial administrator says

It’s going to be an interesting budget season this fall at Riverhead Town Hall.

In a pair of 3-2 votes late last night, the Riverhead Town Board rejected both short-term financing to plug the town’s projected multimillion budget gap next year and piercing the state-mandated 2-percent property tax cap.

The result of that one-two punch: town officials will have to balance the budget and stay within the cap by cutting expenses and, wherever possible, increasing non-tax revenues.

At least $2.2 million will have to be cut from the operating budget to make ends meet next year without a cap-piercing property tax increase, Riverhead financial administrator Bill Rothaar said after the meeting. That’s the difference between the amount the town is allowed to increase the property tax levy under the 2-percent cap and what it needs to fund a 2015 operating budget identical to this year’s $92 million spending plan. There is a $4 million deficit, but the town can close some of it by increasing taxes to the limit the cap allows — actually about 2.7 percent — using revenue one-shots (such as the sale of the Second Street firehouse for $500,000 and $750,000 in funds paid to store Sandy-damaged cars at EPCAL), and saving money from the early retirement incentive plan, Rothaar said. That leaves about $2.2 million to cut.

Those cuts would be painful, however.

It would mean reducing the town workforce by “roughly 25 to 30 people,” Rothaar said. The exact number of layoffs depends on many different variables, Rothaar said, including salaries, fringe benefits, buybacks, new unemployment expenses and other things he said he has not yet fully calculated.

In order to plug the 2015 budget gap without making cuts he calls “draconian,” Supervisor Sean Walter advocated taking a short-term loan secured by a mortgage on the 2,400 acres of town-owned land at the Calverton Enterprise Park. The town board authorized the loan application earlier this year and the town secured a loan commitment from Suffolk County National Bank. But last night, after a resolution authorizing the loan failed (council members John Dunleavy, James Wooten and Jodi Giglio voted no) Walter joined Giglio and Councilman George Gabrielsen in voting against calling a public hearing on piercing the cap. (The state tax cap law requires a public hearing prior to piercing it.)

“I will deliver to you on Sept. 30 a balanced budget,” Walter vowed before casting his vote against setting the hearing, “and you are not going to like what it looks like.”

The budget cuts necessary to stay within the cap will mean “eliminating whole departments, not just staff here and there,” Walter said in an interview after the meeting.

He said town board members “should have had the courage of their convictions,” singling out Giglio especially for failing, he said, to answer his challenge last week to come up with a plan to avoid drastic cuts and massive layoffs.

During the failed vote on the loan, Giglio said she showed board members a plan to balance the budget, which both Walter and Gabrielsen denied.

“She came in with what she said was $320,000 in revenue from excavation fees her client Island Water Park is going to pay, but it turned out to be $160,000. Even so, that was it — and that’s not a plan to deal with the problem at hand,” Walter said.

He accused the councilwoman — with whom he has often been at odds since they both took office in 2010 — of grandstanding and playing politics, setting herself up for a run against him next year.

Giglio said this morning Walter is the one playing politics, “as usual.”

“Island Water Park is not my client and hasn’t been my client for seven years.

“All he does is point fingers and deflect like any well-seasoned politican does,” Giglio said of Walter. “The budget is his responsibility. He hasn’t been able to manage this $4 million deficit after almost five years in office.”

The councilwoman, who was elected to a second four-year term in 2013, declined comment on whether she was considering a run for supervisor next year.

Giglio said she presented Walter last week with “$571,000 in staff cuts that he didn’t agree with.”

Though she wouldn’t divulge the specific suggestions she made, Giglio said they would not cut essential services. She said she’d like to eliminate some department head positions. She also said she doesn’t believe the town needs more than one CPA in the accounting department “now that the town is caught up with its audits.” It has three.

“Maybe the supervisor should lose someone in his office too,” Giglio added. “We can merge our assistant [the town board coordinator] with his office,” she said.

“We need to keep our purse strings tight.”

The plan she devised brought the budget to within about $520,000 of where it needs to be to stay within the tax cap limitation, according to the councilwoman.

“The remainder can come from the fund balance,” she said, which remains at about $1.5 million to $2 million.

Like Giglio, Dunleavy said he believes the board can make the necessary budget reductions, though they will be require “drastic cuts in employees and services,” which is why he favored piercing the tax cap instead, he said.

“But we can get it down,” he said after last night’s meeting. “You have to look at the budget a little harder.”

In prior years, board discussions about budget cuts produced little result. In 2010, the town eliminated 13 staff positions in its controversial 2011 budget, under a plan proposed by the supervisor and discussed for six weeks by council members, who in the end failed to adopt any revisions.

The less controversial 2012 and 2013 budgets were also adopted without a vote of the town board.  Under state law the supervisor’s tentative budget becomes the adopted budget unless the town board votes to amend it. Last year, board members actually increased the supervisor’s proposal by adding back a staff position he cut.

“The board needs to be prepared for some very intensive budget meetings after I present my budget on Sept. 30,” Walter said. “They’re not going to like my budget,” he said, “but I am not going to be left holding the bag for this town board.”