Dan's Papers - September 26, 2008 -And What Happened In East Hampton, In Black & White

Tucked away in his corner office down the hall from the East Hampton Supervisor's office, Nicholas Lynn, or "Nick" as he prefers to be called, toils away on his laptop. As the newly hired financial consultant for East Hampton, Nick Lynn believes that his role is to "remain independent," and make sure the present situation "won't happen again" by changing processes and putting in controls. He also mentioned the need for more visibility into how expenditures occur. What he is referring to, of course, is the town's $9-10 million financial hole.

In the Supervisor's office, Lynn Ryan was at no loss for words when asked how the town got into its current mess. Explaining that the town paid its bills "as they came in," in a timely manner, there was no way to get a handle on how the process was going, due to the fact that town revenues largely come in semi-annually from collected taxes on January 10 and June 10. On top of that, the facts and figures of both bills paid and expenditures lag in time of almost an entire year, and in other cases even longer. With the increase of delinquent tax payments by both residents and mortgage companies, collected revenue started to drop a few years back. Yet, Nick Lynn's graphs (which he presented to me) showed that spending for municipal workers benefits alone grew by over 23%.

The lion's share of the increases was the town's self insured employee health plan, which was becoming "out of control." While major health plans have leverage with doctors, dictating what they will pay for, the town simply paid the invoices submitted by the doctors for all procedures. (Perhaps down the road it should be investigated whether there was fraud by some doctors and medical facilities by comparing what they charged the town as opposed to what they received for the same procedures from the major medical plans.) Lynn Ryan believes the failure to act on converting to the Empire Health Plan cost the town an additional $4 million in the last year - Nick Lynn put the figure around $2 million. But rather than quibble about it now, it's clear that what must be done now is to take action to remedy the situation.

Of course, some board members want to do nothing on this front. (Perhaps they should come forward and take some of the heat for the accumulated $9-$10 million accumulated town deficit.) In a document provided by Nick Lynn, the noticeable growth in the cost of town workers benefit expenses and town payment to service debt is obvious. The recreational budget has also grown, perhaps due to the recreational center and its added cost and growing overhead. Nick Lynn believes aids like this document will help board members see more clearly the numbers and the trends of where the town budget of $76 million is being spent.

Concerning the much maligned town budget officer Ted Hults, Nick Lynn and Lynn Ryan, as well as Supervisor McGintee, agreed he had been asked to take on more duties than he should have, and according to Lynn Ryan, wasn't making policy. "He was paying the bills as they came in." She insisted that Hults is being blamed for spending more money than the town took in, but again she cited the lag time and the uncertainty of how much revenue the town can actually take in, as opposed to the forecast of revenues. "Who could have forecasted the county mortgage transfer tax payment to the town going down 48% this year?" she asked.

Opponents, of course, will have none of this - perhaps for political reasons. They scream deceit, mismanagement, and in some cases fraud. Lynn Ryan points to the state and other towns now facing the same problems of revenue shortages based on budgets created in anticipation of higher cash flows from fees, taxes and fines. McGintee is vowing to stand up to the political heat and give the town "the medicine" it needs. Many are throwing verbal rocks, grandstanding and criticizing. On the first three Tuesdays of October, at televised public hearings on the new 2009 town budget, they will get their chance to step up to the plate to be constructive.