Today’s the deadline for town supervisors across New York to file their tentative operating budgets for 2016.
We’ll get a first look at Supervisor Sean Walter’s proposed spending plan when the supervisor presents his tentative budget tomorrow morning at 9:30 a.m. in the Riverhead Town Hall meeting room.
Walter’s 2016 tentative budget is very likely to to call for the town board to pierce the property tax levy cap imposed by the state, which limits the levy increase to 2 percent over the previous year’s tax levy or the rate of inflation, whichever is lower. By law, the cap is adjusted upward to account for the exclusion of certain expenditures, such as capital improvements and certain pension costs. An increase in a town’s total assessed valuation also can effectively raise the cap.
This year the tax levy cap is 0.73 percent, before any allowed adjustments. The supervisor’s tentative budget is likely to call for a tax levy increase of 5 percent or more for fiscal year 2016, because the town no longer has any reserves to draw on to offset property tax increases.
Since this a local election year and the town is in tough fiscal straits — as has been well documented by this website for the past six years — there will surely be a lot of contentious discussion about the town’s finances in the next month or so, both in Town Hall and on the campaign trail.
As the saying goes: Everyone’s entitled to his or her own opinion. But there’s really only one “version” of the facts. To help you sort facts from spin, we think a primer on budget basics and a little history is in order.
Town budget basics
Process isn’t optional
The budget process is governed by state law. No surprise there, since a municipality is a creature of state law. Everything it can or can’t do — as well as all the powers and duties of town officials — are all controlled by state law.
State law spells out a very specific timeline for budget proposals and has a built-in fail-safe in case local elected officials don’t get around to fulfilling their statutory duties (which has been known to happen.) The budget proposed by the town supervisor becomes the final adopted budget by default, after a public hearing, in the absence of a vote by the town board.
The town supervisor — by law the town’s budget officer — is required to file his or her budget proposal with the town clerk on or before Sept. 30. This document is called the tentative budget. The supervisor is required to obtain and review estimates and recommendations from all department heads in preparing the tentative budget.
The town clerk shall present the tentative budget to the town board at a regular or special meeting on or before Oct. 5.
The town board shall review the tentative budget and may make such changes, alterations and revisions as it shall consider advisable and which are consistent with law. The board may call on any department head and the supervisor to discuss the tentative budget and the department heads’ estimates.
After the town board completes its review, and approves any changes it deems advisable, the tentative budget and any changes made by the town board becomes the preliminary budget.
The town board shall hold a public hearing on the preliminary budget, showing any changes made by the board, on or before the Thursday immediately following the general election. (The general election is held on the Tuesday following the first Monday in November.)
The town board is required to publish a notice of the public hearing at least five days in advance of the hearing date. The notice is required to contain the proposed salaries of the supervisor and town councilpersons, the town clerk and the town highway superintendent.
After the public hearing, the town board may make additional changes to the preliminary budget.
The preliminary budget, as amended, shall be finally adopted by resolution of the town board not later than Nov. 20.
The preliminary budget as adopted shall be known as the annual budget for the next fiscal year, which begins Jan. 1.
Upon the adoption of the budget resolution, the amounts proposed to be appropriated shall thereupon be appropriated.
In the event that the town board fails to adopt a budget as of the 20th day of November, the preliminary budget, as amended by prior resolution of the town board, shall constitute the budget for the ensuing fiscal year.
Words have meanings.
A budget by any other name? There are a few names for the budget and they each have a distinct meaning.
Tentative budget: the budget filed by the supervisor on or before Sept. 30.
Preliminary budget: the tentative budget after review and amendment by town board resolution.
Final budget or annual budget: the budget as adopted by resolution of the town board, which may make additional changes after the public hearing — or, if the board fails to adopt a budget by Nov. 20, the preliminary budget, as amended by resolution of the board (if amended.)
General fund: the town’s principal operating fund.
Highway fund: a special revenue fund for operations relating to the repair and maintenance of town roads.
Special district funds: proprietary and special revenue funds for the operations of various special districts, including: ambulance, sewer, water, scavenger waste, business improvement, and more.
Town-wide funds: the general, highway and street lighting district funds.
Tax rate: dollar amount per $1,000 of assessed value.
Tax levy: the total amount raised by real property taxes.
Tax cap: state-imposed limitation on yearly tax levy increase, set by statute as 2 percent year-over-year or the rate of inflation, whichever is less. Some expenditures are excluded from the cap calculation: unusual increases in state pension system mandatory contributions and the cost of tort actions where the costs exceed 5 percent of the prior year’s tax levy.
Total town operating budget: Includes all town funds, general, highway, special district and special purpose.
Fund balances: Unspent amounts in any given fund, held in reserve from year to year. Some, like the Community Preservation Fund balance, are kept in reserves for specified purposes, and may only be legally used for such purposes.
Contingency or tax stabilization fund: Money set aside to finance unanticipated revenue losses or unanticipated expenditures, to prevent increases in excess of 2½ percent of the amount of the real property tax levy needed to finance the eligible portion of the annual budget, i.e. the general and highway funds. Contingency/tax stabilization fund is limited to 10 percent of the eligible portion of the annual budget.
A look back over the past decade
Riverhead’s town-wide operating budget (general, highway and street lighting district funds) increased 32 percent in the five fiscal years from 2006-2010 and 13.6 percent in the five fiscal years from 2011-2015.
Overall, in the course of the last decade — from FY 2006 to FY 2015 — the town-wide operating budget has risen from $38,556,961 to $56,760,600 — an increase of $18,203,639, or 47.2 percent.
The cost of town-wide operations is paid by the town-wide tax levy, the application of other revenues such as mortgage taxes and user fees, and the application of any fund balances from the prior year.
Special district taxes fund special district operations: e.g. water district, sewer district, business improvement district.
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