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Most towns avoid tax hikes; 7 on LI plan to either reduce or hold rates steady; But falling revenue, rising costs prompting layoffs

By: 
Patrick Whittle
Publication: 
Newsday
Oct
1
2010

Despite grappling with plummeting revenue and swelling pension and health-care costs, most Long Island towns intend to hold the line on taxes in 2011.

Flat tax rates will not come without a cost in towns such as Brookhaven, which intends to lay off 69 workers, and Islip, where officials expect to continue their effort to reduce the workforce, which will be 24 percent smaller than it was in 2006.

With 10 Long Island towns revealing proposed 2011 budgets by the end of yesterday, Brookhaven and Islip were among seven to report that town taxes will either hold steady or drop. Town taxes are a relatively small part of a homeowner's overall tax bill; in Brookhaven, they are less than 7 percent.

Islip Supervisor Philip Nolan said the town's tax bill of $340.40 for the owner of an average home will remain the same. But because the town expects to collect less than $7 million in the taxes it receives from new mortgages - down from $26 million in 2006 - the town must lay off one manager and defund about 10 vacant positions, Nolan said.

"It's mortgage tax, pension cost, health coverage, all going in the wrong direction," Nolan said. "The tsunami is the mortgage tax."

Early retirement savings

Some towns, including Brookhaven, said early retirement incentives offered this year helped avoid even deeper staff cuts. Brookhaven expects to save $2.5 million by shedding more than 60 employees through a state early retirement incentive program, Supervisor Mark Lesko said. Another town buyout program will save $1.2 million over 2010 and 2011 by reducing the workforce by 24 employees, he said.

Still, a projected $2.4-million increase in health insurance costs contributed to Brookhaven's need to lay off workers, Lesko said. Heavy pension and insurance costs, combined with declining revenue, made for a grim budget picture, he said.

"The time we hoped wouldn't happen is here," he said, adding that the layoffs announced yesterday amounted to "my saddest day as supervisor."

Declining revenues were too severe to avoid tax increases next year, said officials in Oyster Bay, Riverhead and Southold.

A $4-million increase in debt service costs, as well as increases in health insurance costs and lower permit revenue, caused Oyster Bay's proposed 3.5 percent tax increase, said Supervisor John Venditto.

Venditto said he proposed a tax increase in hopes of avoiding fiscal problems faced by other levels of government.

"It is difficult to make the tough decisions when it comes to the fiscal integrity of government," he said. "In the Town of Oyster Bay, we're not going to shun that responsibility. We're going to do the right thing."

Officials in several towns scrambled to meet yesterday's state-mandated deadline for proposing next year's spending plans. Ten of Long Island's 13 towns made public proposals by day's end. Southampton, East Hampton and Shelter Island could not provide information.

The deepest proposed tax decrease is in Babylon, where Supervisor Steve Bellone wants to lower taxes by 5.02 percent. The town proposes to freeze its highway, part-town and street-lighting funds and cut overtime costs by 51 percent.

Deadline for adopting plans

State law requires towns to hold a public hearing on the budget by Nov. 4 and adopt the spending plan by Nov. 20.

The deepest proposed tax decrease is in Babylon, where Supervisor Steve Bellone wants to lower taxes by 5.02 percent. The town proposes to freeze its highway, part-town and street-lighting funds and cut overtime costs by 51 percent.

In Hempstead, the owner of an average home in an unincorporated area will see a reduction in taxes of 4.52 percent or $32.65.

Officials in some towns said it was impossible to balance the budget without trimming services or facilities. In Brookhaven, a roadside litter crew will be eliminated, and public pools in Centereach and Holtsville will be shuttered, Lesko said.

He and other supervisors said their towns' future financial health is tied to the eventual rebound of the housing market, which provides mortgage taxes and landfill revenue from construction debris.

Until then, towns will have to make sacrifices, Lesko said. "If we don't take action now ... we will be flat broke in 2013."

BUDGET DAY

Biggest tax decrease
Babylon, 5.02%

Biggest tax increase
Riverhead, 4.36%

Most Layoffs
Brookhaven, 69

Taxes go up
Oyster Bay, Riverhead, Southold

Taxes go down
Babylon, Hempstead, Huntington

Taxes stay flat
Brookhaven, Islip, North Hempstead, Smithtown