Tax Hike Could Be Coming Soon For Southold Residents

SOUTHOLD, NY — The 2017 budget season in Southold Town will mean tough choices, and a possible tax hike, Southold Town Supervisor Scott Russell said at a town board work session Tuesday.

With a new property tax cap for local governments of 0.68 percent, Russell said funding for much-needed road repairs will be a challenge to secure.

According to a press release from New York State Comptroller Thomas DiNapoli, the property tax cap for local municipalities will be 0.68 percent for 2017, decreasing slightly from 2016, when it was 0.73 percent.

The latest inflation figure affects the tax cap calculations for local governments that operate on a calendar-based fiscal year, which includes all counties, towns, fire districts, 44 cities and 10 villages, the release noted.

"In what is becoming the norm, New York’s local governments must cope with extremely limited growth for property taxes to stay within the tax cap,” said DiNapoli. “Low inflation has positive effects for consumers, but it also reflects an uncertain economic environment. Local officials have faced growing fixed costs and limited budget options for years, but 2017 will necessitate even tougher financial choices.”

The tax cap, which first applied to local governments beginning in 2012, limits tax levy increases to the lesser of the rate of inflation or 2 percent with some exceptions, including a provision that allows municipalities to override the tax cap, the release explained.

The 2017 fiscal year is the fourth year in a row that local governments have had their levy growth capped at less than 2 percent and the second year in a row that it has been capped at less than 1 percent.

By comparison, property tax levy growth for school districts was capped at 0.12 percent for the 2016-17 fiscal year.

Challenges ahead

Russell said the budget will pose a challenge: "I won't be able to comply this year," he said. "I don't see any scenario where I can comply with the tax cap."

But Southold Town roads, socked hard by two severe winters, are in dire need of repair, leaving the supervisor and town board with no choice but to weigh alternatives to get the necessary work done and ensure safety for residents.

"There are two options," Russell said. "One is to bond. The annual cost for debt service would be much easier; however, I think that bonding for costs that are part of general operating expenses is bad fiscal policy. The other option is to raise taxes."

Southold Town Highway Superintendent Vincent Orlando is working on a capital plan, Russell said.

"I think we can all assume that we will need several million dollars over the next several years. If I appropriate just $2 million in my budget for 2017, the impact would mean a 6.85 percent increase in taxes, assuming everything else in the budget doesn't change. That's an unlikely assumption," Russell said.

The town could spend $2 million on road repairs "very easily," Russell said.

The only other option, Russell said at Tuesday's town board work session, would be to spend down the fund balance, "a recipe for disaster."

"I won't vote for that," said Councilman Bill Ruland.

On the positive side, Russell reminded that the town has recently refinanced, meaning a savings to the town "to the tune of $1.3 million."

The town’s credit rating was recently upgraded by Moody’s to Aa1, its highest ever rating, Russell said at his state of the town address this year.

With an eye toward maintaining that stellar rating, Russell reminded that bond rating agencies "get nervous" when the see fund balances drawn down and capital projects on the horizon.

"What Wall Street likes to see is town boards raising taxes," the supervisor said. "Bond rating agencies look at taxes as revenue."

Councilman Jim Dinizio said a tax hike to help fund necessary road repairs is "responsible. If you want something, you should pay for it."

Councilwoman Jill Dinizio asked for the status of Orlando's capital plan; Russell said it's expected shortly.