How high can they go?
Tax hike could hit 18 percent after budget changes
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Riverhead Town's tax rate could increase by a whopping 18 percent, far more than the 2.9 percent pitched in Supervisor Phil Cardinale's tentative budget, the News-Review has learned.
The voters' decision on Election Day to keep public safety dispatchers in-house, rather than letting Suffolk County provide that service, increased the budget by up to $950,000, which officials said added another 4 percent to the tax rate hike.
And during a public budget session in Town Hall on Monday, town finance administrator Bill Rothaar told the board he didn't believe $3 million the town will receive through its deal to sell land in Calverton to Riverhead Resorts can be used in the general fund, since proceeds from the sale go into the town's Community Development Agency budget.
Mr. Cardinale's tentative budget includes that $3 million as revenue in the general fund.
Mr. Rothaar said the town's auditors agree with his stance, though outside counsel is reviewing the matter.
If that $3 million can't be used and another $3 million in taxes were needed to replace it, the tax rate would increase by another 11 percent, Mr. Rothaar said, bringing the total potential increase from 2009, including the originally proposed 2.9 percent, to 17.9 percent.
[if "'...the town should consider moving title [at EPCAL] from the CDA so that the tax relief that everybody envisioned from the sale of this land can be implemented.' Riverhead Supervisor Phil Cardinale" equals ""]
The CDA owns the town's land at the former Grumman plant -- now called the Enterprise Park at Calverton, or EPCAL -- though the Town Board members also serve as the agency's governing board.
Mr. Cardinale was not present at Monday's budget work session. Reached Tuesday, he questioned why this opinion had suddenly arisen, noting that the town has used money from the sale of land at EPCAL to offset general fund costs in the past, and that the sale of land at EPCAL was always intended to bring tax relief.
Mr. Rothaar said another concern is that the $3 million is a one-time revenue that would "leave a hole in the 2011 budget."
"That 11 percent is going to rear its ugly head sooner or later," Councilman Jim Wooten said.
Supervisor-elect Sean Walter, who had proposed to cap town tax rate increases at the rate of inflation, cautioned the current board on adding spending.
"There's a 7 percent [rate hike] right now, before one thing gets added in," Mr. Walter said at the meeting. "Every single one of these things we're putting in the budget is taking us up from 7 percent, and next year I won't have the benefit of this $3 million. So I start next year with an 11 percent budget. That's what the residents of Riverhead can expect. So I implore you, don't add anything. I don't want to start at 11 percent next year."
Regardless of how the town uses the money, there is no doubt that the town will get the $3 million, Mr. Rothaar said.
Under a provision in the contract with Riverhead Resorts, which is seeking to buy 755 acres at EPCAL for $155 million, $3 million paid by the development group to the town is being held in escrow.
After Jan. 15, the town can use that money, regardless of whether Riverhead Resorts pulls out of the deal.
Mr. Cardinale further said he doesn't believe the $3 million is a major problem, because the town could split it in half and pay all costs to fund the CDA, which are paid through the general fund, for the next two years, or it could make use of the nearly $8 million it already has in general fund reserves to make up the difference.
He noted that if the $3 million can't be used for general fund tax relief, then the entire $155 million the town would receive from the Riverhead Resorts sale also couldn't be used for general fund tax relief.
"To restrict that money, if that's what they're saying, is interesting, because it hasn't been said before," Mr. Cardinale said. "But if that's accurate, the town should consider moving title from that property from the CDA so that the tax relief that everybody envisioned from the sale of this land can be implemented."
Mr. Cardinale later said that Frank Isler, the attorney researching the matter, said the CDA can "gift" property to the town for purposes consistent with Urban Renewal laws. Mr. Isler was still researching whether tax relief is one of those purposes.
tgannon@timesreview.com
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1 comments found
Dispatchers add 4% tax increase : 11/12/2009
Really? Wow!
