Dan's Papers - August 29, 2008 - Southampton Town, with Budget Woes, Still Throws Stones at East Hampton

September 30 is coming near, and that is the date that towns are required to submit their fiscal budgets. The Town of Southampton is at a difficult time in its path of transforming from a small rural town to a wealthy big town in the 21st century. With a 2008 projected deficit of over $7 million now coming to light, the warning signs are going off for next year's budget process and the future. However, East Hampton Town Supervisor Linda Kabot's chief aide, Ryan Horn, does not see Southampton's situation as anything like East Hampton, writing in an e-mail, "East Hampton Town has a $14 million deficit. They need the state to bail them out. Their audits have been consistently overdue, sometimes by more than a year. Their accounting firm audits its own work. Eight million dollars was taken from the Community Preservation Fund. The district attorney's office has subpoenaed the Town's financial records." He added that, "East Hampton Town employees are worried their paychecks will bounce if they don't cash them right away." Horn expressed dismay at East Hampton's decision-making process, saying, "East Hampton kept budgeting the exact same amount for accounts they knew they had consistently overdrawn."

However, Horn acknowledges that a new approach is needed for Southampton. On this matter, reacting to deficits reported in waste management, police funds and highway funds, Horn stated, "The Town has hired FTI Consultants, which is a high-end consulting firm that will scrutinize the Town's police and waste management funds. Out of that analysis will also come a series of recommendations on how best to proceed."

Supervisor Kabot came into office with a narrow victory in a hotly contested election. Now she must unite the board to face tough decisions about raising revenues in a tough economic environment. According to Horn, her plan is simple. "Over the next several weeks, Supervisor Kabot will meet with department heads to review the 2007 audited figures released last week and examine the current status of the 2008 budget. They are going to do this in preparation for the 2009 budget, which will seek to restrict expenses and improve the efficiency of town operations...state law requires the Town Supervisor to file the 2009 budget by September 30. The Town Board will then hold hearings during October and adopt the 2009 budget by November 20."

Town Comptroller Steve Brautigam has reportedly gone on record as calling the existing deficits "red flags" that will have to be paid off over time. With a balance of $4.5 million in the bank, and overspending of $7.2 million already done, perhaps Horn should also be concerned about his paycheck with the town technically overdrawn. The process used by both the Towns of East Hampton and Southampton of using surpluses from better times to finance overspending and trying to keep tax rates lower than they should be may be over. In fact, Kabot herself believes this, reportedly saying, "We need to wean ourselves off the use of budgetary surplus to fund government operations." Horn put it another way - "Southampton's financial condition is a world of difference from what has happened in East Hampton Town - both in terms of degree, kind, and number." That may be true, but what is also true is that if the Town of Southampton goes on doing what it has been doing, that can change - as it did for East Hampton. Brautigam has done his job and pointed out the red flags. Now the board must do its job and start raising revenues and making prudent cuts to end deficit spending before the Town of Southampton goes broke. First order of business is, at least, get out of the red.