June 26, 2013

Good News, Moneywise

By Kitty Merrill

Two pieces of news out of Albany this week speak to East Hampton Town's success at righting the fiscal ship.

Last Wednesday Supervisor Bill Wilkinson announced East Hampton would receive a $536,425 local government performance and efficiency award from the New York Department of State in recognition of a municipal restructuring plan his administration designed and implemented. The restructuring was part of the effort to address the $27 million deficit left by disgraced former supervisor Bill McGintee.

Last week The New York Department of State announced over $12 million in Local Government Performance and Efficiency Program (LGPEP) grant assistance in recognition of the recurring financial savings generated by 13 municipalities. The grants will be distributed in equal parts over three years, and are contingent upon continued demonstration of savings.

According to a release from the NYDOS, a competitive program, LGPEP rewards local governments for undertaking significant and innovative actions that reduce the property tax burden confronting residents. The projects recognized are estimated by applicants to generate $38.2 million in combined annual savings. In accepting an award, local governments commit to measuring and sustaining the financial impact of these savings.

"This program is an integral part of Governor Cuomo's agenda to improve efficiency and reduce costs at all levels of government," said New York Secretary of State Cesar A. Perales. "The Governor is yet again applying a competitive process to stimulate creativity and innovation among decision makers, and the big winners are the taxpayers who will benefit from smart, cost saving investments in their communities' futures."

The Town of East Hampton implemented a comprehensive organizational restructuring of town government, downsizing 26 separate departments into 13 departments through attrition, staff reduction, and consolidation of functions to create a more efficient and cost effective government model. East Hampton realized a savings of $4.2 million dollars through this reengineering initiative, representing an 18 percent drop in the tax levy.

The savings are related to $2.7 million in salaries and benefits of employees who took the retirement incentive offered at the end of 2010, in positions that were subsequently eliminated, plus another $1.53 million for 19 positions that were in the 2010 budget and never filled, then eliminated from the 2011 budget.

"In 2010, the Town of East Hampton was facing a severe financial crisis," Wilkinson said Wednesday. "Through a combination of fiscal restructuring, municipal consolidations and organization re-engineering and by taking advantage of programs offered by New York State, East Hampton crafted a fiscal recovery while reducing operating expenses and property taxes for its residents . . . Those efforts were not simply a snapshot in time; they continue every day. We thank the New York Department of State for recognizing these achievements through our Local Government Performance and Efficiency Program Award and for their recognition of all other rewarded entities that participate in similar efforts and strategies."

East Hampton was the only town in Suffolk County to receive the award. Supervisor Wilkinson stated, "This award objectively evaluated our recovery plan that included implementing zero based budgeting, prudent deficit financing, reduction in staff through attrition and incentive retirements, consolidating operations and streamlining functions, improving operational efficiencies, eliminating and/or reducing select municipal programs, introducing personal accountability and sale of surplus assets."

Speaking of deficit financing, back in 2009 when The Independent was in the midst of conducting its years-long investigation into town finances – an investigation that led to the arrest of the then town budget officer and McGintee's resignation, Assemblyman Fred Thiele advised town officials to consider seeking state approval to borrow money to liquidate the deficit.

At the time, The Independent reported that just one other town in the state, Colonie, a well-heeled suburb of Albany, was considering deficit liquidation financing. The municipality decided to go with massive tax increases to fill the budget hole instead – a move that was promoted by one of McGintee's financial advisors. That was in 2009.

This week, State Comptroller Tom Di Napoli released fiscal stress scores for local communities, and designated two-dozen communities in New York as "fiscally stressed." Colonie was among them.


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