All five East End towns plan to pierce the tax cap over rising pension, health care costs

The five towns on the East End proposed budgets that would pierce the state tax cap in 2025, with officials citing the rising cost of employee pensions and health insurance premiums as key reasons for the tax increases.

Southampton proposed the highest hike to the tax levy at 11.1%, while East Hampton proposed a 9.2% increase. Shelter Island plans to raise the levy by 8%, and Riverhead proposed a 7.92% increase, budget documents show. The Town of Southold proposed a 6.44% tax levy increase.

Homeowners will face annual property tax increases as a result, ranging from $104 for the average assessed home in East Hampton to $288 in Riverhead, according to town budget data.  

Supervisors in each town, all in their first year of office, described a challenging budget process strained by labor agreements, the end of federal pandemic recovery aid and fewer opportunities for generating recurring revenue.

Rebecca Hansen, East Hampton’s town administrator, said staying under the cap was "not reality" this budget cycle. The town pierced the 2% cap for the first time since the state tax cap law took effect in 2012.

To pierce the tax cap, 60% of the town board must approve. Then the board can vote on the budget.

"Our hands were a little forced this year," East Hampton Councilman David Lys said.

"It’s global," Southold councilwoman Jill Doherty said. "Everybody’s expenses are going up, but our revenues are not, so it’s harder and harder."

Despite those challenges, town supervisors in four of the five East End towns proposed salary increases for elected officials. Southold was the exception.

Economist Martin Cantor, director of the Long Island Center for Socio-Economic Policy, said he believes the cap is good for transparency and forces supervisors to justify tax hikes.

He noted the increases this year come during an off-year for town elections.

“This is a free pass for the towns … Next year, when all the towns are up for reelection, you won’t see this kind of an increase,” Cantor said.

Southampton

Southampton Supervisor Maria Moore proposed a $133.9 million budget for 2025, an increase of $10.7 million from 2024. The tax levy would rise by $8.6 million, or 11.1%. 

Taxes on a home with a market value of $1 million, the average assessed value in Southampton, would rise by $140, according to town projections.

Moore called the budget a "fiscally responsible plan" during an Oct. 1 board meeting. 

Southampton is planning to pierce the cap for the first time since 2013. The budget adds four new police officers and funds two promotions to the rank of sergeant. The budget adds nine positions across various departments, including a director of traffic safety in the engineering department.

The supervisor’s salary would rise from $143,193 to $149,773, and council members' salaries would increase from $77,849 to $82,795.

East Hampton

In East Hampton, Supervisor Kathee Burke-Gonzalez proposed a $103.7 million budget that boosts spending by $8.2 million in 2025. The tax levy would increase by $5.5 million, or 9.2%.

Taxes on a home with a market value of $1.1 million would rise $104, according to town data. The figure excludes homes in the villages of East Hampton and Sag Harbor.

Burke-Gonzalez called the 2025 spending plan a "transitional budget." It's the first budget to take effect since East Hampton finalized new contracts with employee unions that raised most salaries by 4%. The town is budgeting 10% more for employees' health insurance premiums in 2025. 

Expenses for retiree benefits are expected to rise by $2.5 million next year. To stay within the 2% tax cap, the town could only raise the levy by $2.1 million, officials said.

Spending on salaries and benefits for employees in 2025 will rise from $58 million to $64 million, budget documents show.

The budget reflects the cost of providing services to a growing year-round population and toward paying staff "a living wage," Burke-Gonzalez said.

In East Hampton, the supervisor’s salary would rise from $137,158 to $142,644. The salary for council members would increase from $86,505 to $89,965.

Riverhead

Supervisor Tim Hubbard’s $73.5 million budget increases spending by $4.1 million. The town is raising the tax levy by 7.92%, collecting $56.8 million for Riverhead’s three townwide funds.

Homeowners' tax bills would rise by $288 more next year for homes valued at $720,000, Hubbard said. Garbage and recycling pickup would rise by about $63 per year.

The 2024 police budget includes $1.4 million more for salaries and funding for five new vehicles and new technology, including for Riverhead's new body camera program. 

Elected officials will receive pay raises in 2025. The supervisor’s salary will be $125,148 — a $10,000 increase. Town board members will be paid $52,627, up from the current $48,955.

Those salaries have stayed the same since 2009, town records show.

Hubbard defended the raises. "Nobody likes to vote for themselves," he said in an interview. "Elected officials still have to make a living."

Southold

Southold’s $62 million budget boosts spending by 8.5% over this year's $57 million spending plan. Supervisor Al Krupski proposed raising the tax levy by 6.44%, to $43.2 million. Last year, his predecessor, Scott Russell, did not raise the tax levy. 

"I’m really trying to get past last year’s zero percent tax increase, which didn’t help address the needs of this year," Krupski said.

Krupski said the plan accounts for state-mandated increases in payroll and insurance premiums. But it also budgets for upgrades to technology and other town infrastructure.

"This budget addresses the reality of having less revenue to work with," Krupski wrote in his budget message. He cited the discontinuation of federal pandemic aid and lower-than-expected collections from sales and mortgage taxes. Southold received about $2 million from the American Rescue Plan Act, a federal law that reimburses municipalities for pandemic-related expenses. The funding must be allocated by the end of 2024 and spent by the end of 2026.

Town comptroller Michelle Nickonovitz said homeowners on average will see the town portion of their property tax bills rise by $153 in 2025.

Krupski said he is still committed to funding major projects.

"There are a number of things that we’re not going to short," he said. Southold will proceed with water quality improvement projects, including new stormwater drains, he said. The town also will spend $620,000 to update its IT network and implement security upgrades.

Shelter Island

Supervisor Amber Brach-Williams's $17.5 million budget proposal hikes spending by $1.6 million. It raises the tax levy by just over $900,000, or 8%. A home with a market value of $1 million would see an increase of $202, according to budget projections.

Earlier this month, Shelter Island pitched a 10.2% tax levy increase before lowering it to 8%. Brach-Williams said it was "not a number I wish to put on the taxpayers" and added that "tough decisions" were ahead.

The supervisor’ salary would rise from $100,662 to $104,400. The salary for council members would increase from $45,030 to $46,700.

Town officials may revise the proposal further. 

The town is budgeting 7% more for salaries in 2025. Expenses, including for employees' health insurance, retirement and other benefits, are expected to rise about 15% next year, town officials said.

Shelter Island has tended to pierce the cap over the years because its budget is much smaller than other town spending plans. Last year, Shelter Island hiked the tax levy by 6.3%.