Riverhead Town Board refuses to vote on 2015 budget, opts to allow Walter’s proposal to take effect by default

Supervisor Sean Walter’s proposed 2015 budget — criticized by three of the four council members as  “phony,” “unrealistic” and “not in the best interests of the taxpayer” — is about to become Riverhead’s 2015 operating budget without a vote of the town board.

Councilman John Dunleavy’s last minute effort to bring a budget resolution to a vote at last night’s board meeting failed. Only Dunleavy and Councilwoman Jodi Giglio— who said in an earlier interview the supervisor’s budget was “phony” — voted to bring the measure to a vote. Councilman James Wooten, who in September said he thought Walter’s budget was “unrealistic,”  and Councilman George Gabrielsen voted against having a vote on the budget. Walter, the deciding vote, abstained.

Under New York State law, if the town board fails to adopt a budget by Nov. 20, the preliminary budget — the one on which a mandatory public hearing is held — automatically becomes the budget for the ensuing year.

That’s nothing new in Riverhead, where the town board has failed to adopt a budget for three of the last four fiscal years — 2011, 2012 and 2013. Last November was the first time the town board actually adopted a budget since Walter took office. Budget resolutions were brought to a vote in 2010, when Walter’s budget (for the 2011 fiscal year) called for layoffs and generated much controversy; but no budget resolution had three votes needed for passage.

“It’s my constitutional right to vote on a budget,” Dunleavy said, as he moved to take a resolution to adopt the 2015 budget off the floor for a vote.

Afterward, the councilman said he was attempting to bring the supervisor’s budget — not an alternative spending plan — to a vote, “so I could vote no.”

Dunleavy said the town board should “make some cuts” to the budget delivered by the supervisor before the Sept. 30 statutory deadline. Specifically, Dunleavy said, the number of police officers, whom he called “the highest paid employees in the town,” should be reduced.

“There are jobs being done by police officers earning $100,000 a year or more that could be done by civilians or traffic control officers at great savings to the taxpayers,” Dunleavy said.

He said the police officers who are retiring at the end of this year should not be replaced. The supervisor’s budget provides for new cops to replace the retiring officers. All other vacancies created by retirements are not slated to be filled under the supervisor’s spending plan.

Councilwoman Jodi Giglio said she had proposed nearly $675,000 in personnel cuts to Walter’s budget, but no one else on the town board — including Dunleavy — would support them. In an interview after the board meeting, Giglio said she’d called for eliminating the following positions: deputy financial administrator Scott Harrington and accountant Raymond Scelzi from the accounting department; one of the three deputy town attorneys; building and planning administrator Jefferson Murphree; either deputy supervisor Jill Lewis or chief of staff Tara McLaughlin in the supervisor’s office; and one custodial worker. The resulting savings, including salary and fringe benefits, add up to $674,428, Giglio said.

The town board did not have any public budget discussions since the supervisor delivered his tentative budget without fanfare on Sept. 26.

Giglio said she discussed her proposed cuts privately with fellow board members in one-on-one conversations.

During the summer, Walter had sounded an alarm about a $4 million budget gap he said would require a 12.5 percent tax rate hike and “draconian” cuts to town staff and services. He asked the board to agree to leverage the town’s real estate at the Calverton Enterprise Park with a short-term loan to plug the gap. In a split vote, the town board in September rejected the idea — despite having unanimously supported hiring a law firm to pursue the financing arrangement with Suffolk County National Bank. The board also refused to set a public hearing on the possibility of piercing the 2 percent property tax cap.

Walter’s budget: the nuts and bolts

The $91.5 million budget proposed by the supervisor estimates revenues of just over $39 million and anticipates using just over $5.5 million in fund balance money to help keep the 2015 tax levy under the state limit.

The budget anticipates entering into leases with two energy companies at the Calverton Enterprise Park — one for a solar energy facility that would bring in revenue of $500,000 and the other for propane storage that would bring in revenue of $250,000, according to the supervisor. Neither deal would require a finalized subdivision, he said; the solar facility is dependent on the selection of the developer by the L.I. Power Authority, which won’t be known until December, according to the power authority.

The tentative budget also anticipates revenue of more than $600,000 from a county trust fund established under a 1998 law to compensate towns for landfill capping and closing costs. The town also expects a $178,500 increase in its share of the county’s quarter-percent sales tax dedicated to public safety expenses. And it’s drawing down $700,000 in fees paid to store storm-damaged cars on the EPCAL runway following Super Storm Sandy.

On the expense side of the equation, Walter’s budget reduces spending by more than $491,000 through retirement and attrition as well as the elimination of the $118,843 position of longtime planning director Rick Hanley — the sole layoff in his budget proposal.

The town would hire a part-time cook to replace a retiring full-time employee at the senior center and a part-time planner to supplement remaining full-time staff in the planning department. (Under civil service “bump and retreat” rules, Hanley can “bump” the department’s remaining planner, Karen Gluth, from her $86,000 position.)

The tax levy for the three town-wide funds — the general fund, highway fund and street lighting district — would increase by $831,800, or 2.08 percent.

The tax rate for the three town-wide funds would increase by 28.1 cents per $1,000 of assessed valuation — an increase of $14.05 per year for an “average” single family home with an assessed valuation of $50,000.

Walter: Another fiscal crisis looms unless the state steps in

“I believe we can get through 2015,” Walter said. But unless the town can sell land at the Calverton Enterprise Park, a crisis looms, he said. “In 2016, the $4 million deficit becomes an $8 million deficit because the CPF reserve runs out and we’ll have to pay CPF debt service out of the general fund,” Walter warned, referring to past borrowing by the town against anticipated 2-percent Community Preservation Fund revenues.

In the 2000s, the town borrowed about $70 million against future 2-percent transfer tax revenues to fund farmland and open space acquisitions.

But the future 2-percent transfer tax revenues have not materialized as hoped. When the real estate market went bust in the last decade, land values plummeted and property sales declined dramatically. Since 2008, transfer tax revenues have lagged behind the annual payments of principal and interest due on the community preservation fund bonds, so the town has been using previously collected transfer tax revenues — kept in a segregated reserve fund — to make up the difference in CPF debt service due.

For example, the CPF debt service (principal and interest) was $5,796,219 in 2013. CPF revenues (2-percent transfer tax receipts) were $2.56 million. The difference came out of the CPF reserve fund.

The CPF reserve is running out, however, and with annual 2-percent transfer tax revenues still less than half of what they were before the recession, the town is looking at a $4 million gap in that by 2017, Walter said.

The supervisor says he’s hoping to be able to refinance the town’s CPF debt through the state Environmental Facilities Corporation, extending the town’s time to repay through 2040 and thereby reducing the town’s annual CPF debt service by more than half.

Walter said he’s hoping Assemblyman Fred Thiele and Senator Ken LaValle will be able to get legislation passed in the next legislative session to extend the Community Preservation Fund through 2040 — it currently expires in 2030. The measure would require taxpayer approval in a referendum Walter hopes will be on the ballot next November. He’s asking lawmakers to include a provision in the legislation that will allow the Town of Riverhead to “automatically qualify” to refinance the CPF debt through the state.

Refinancing and extending the debt would reduce Riverhead’s annual CPF debt service from about $5.9 million per year to $2.7 million per year, Walter said. The town’s annual CPF revenues are currently about $2.5 million.