Towns stay mostly within 2 percent tax cap

By cutting services, slashing payroll, or dipping into rainy day funds, Long Island towns Friday largely heeded a new state law that curbs their reliance on burdensome property tax hikes.

All but two towns in Nassau and Suffolk that released tentative 2012 budgets on Friday intend to stay well within the law, which caps tax levy increases at 2 percent.

While trying to mind the cap, town leaders grappled with steep increases in employee health costs, debt service and other expenses.

The cap appeared to have had the intended effect on towns such as Oyster Bay, which proposed freezing taxes next year, after raising them 2.8 percent this year.

Towns tried various strategies to avoid exceeding the cap. Islip, which has reduced its workforce by about 25 percent since 2007, continued to cut payroll through layoffs and attrition. Southampton said it would have 29 fewer positions, 21 of which would be involuntary layoffs. Other municipalities, such as Smithtown, took more cash from reserve funds to avoid reducing town services.

"What I needed to do was use more rainy day funds to make it work," Smithtown Supervisor Patrick Vecchio said.

Tentative town budgets, required by state law to have been submitted by Friday, are the first major test of the cap, which was enacted earlier this year.

Riverhead and Southold submitted budgets with tax increases of more than 2 percent. But in both cases, most of the increases were related to employee retirement costs, which are exempt from the cap.

Other tax cap exemptions are capital construction, legal settlements and growth from new economic development projects. The cap, which applies to school and other taxing districts, allows boards to override the 2 percent cap with a three-fifths vote.

Final spending and tax figures will be known in late November, when town boards must adopt their budgets.

Workers in some towns will see less money in their paychecks because of reduced overtime. And Brookhaven residents will have to wait a few extra weeks to enjoy town beaches and pools, now slated to open July 4. Brookhaven is also cutting its budget for youth services by $500,000.

Brookhaven, Oyster Bay and Islip officials said they would hold the line on taxes, while Hempstead, East Hampton and Babylon announced they intend to cut theirs. In Southampton, officials said the budget and taxes would remain the same as the current year.

Smithtown's tax levy would go up 0.72 percent, and Huntington would raise taxes 1.1 percent. Spending and tax figures for North Hempstead were incomplete as of Friday night. Budget figures for Shelter Island were unavailable Friday night.

Most towns say they are avoiding increases in non-tax revenue. But Oyster Bay is proposing to raise parking and other user fees -- which are expected to net the town an additional $5 million next year.

The town also proposes slashing overtime by 40 percent, to $3 million next year from $5 million this year. The town's payroll will be down by $1 million, to $95,845,000, through attrition.

With Stacey Altherr, Aisha

al-Muslim, Jennifer Barrios, Bill Bleyer, Denise Bonilla, Sarah Crichton

and Patrick Whittle