$26 Million Dollar Deficit Projected for 2013
Putting the blame on the economic downturn, a lack of financial leadership and wasteful spending by the Town of Islip, the "Budget Task Force" predicted a $26 million dollar budget deficit for the year 2013.
Town of Islip Supervisor, Thomas Croci plans to "Swing for the fences and lay down a bunt.", when dealing with the budget shortfall revealed in a report issued today, at a press conference in Islip Town Hall. Changes will be subtle in some cases- drastic in others, but all will attempt to chip away at the financial deficit while keeping the Town's sterling bond rating.
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| Supervisor Tom Croce speaks at Press Conference |
Former Supervisor Phil Nolan was at the helm when the Islip economy fell off the proverbial cliff. According to Steven Flotteron, Islip Senior Town Councilman and Chairman of the Budget Task Force
the Town will no longer kick the problem down the road. Complete with charts and documents Supervisor Tom Croce, Mr. Flotteron and other Town Board members insisted it was not politics, but simple mathematics that was at issue here when the new Republican administration was asked by someone in the crowd if the Task Force was bipartisan.
The last administration simply spent more money than they were taking in.
Islip's fund balance rose from $42.3 million in 2002 until 2007, when the general fund balance was at its' peak of $75.4 million dollars.
From 2007 until 2011 the balance was $49.1 million...during the same time period Islip Town revenues rose from $76.7 million to a peak of $89.7 million dollars in 2006.
Since then, 2007 to 2011 there has been a sharp decline in revenues to $71.9 million in 2011.
This $26 million dollar deficit is the equivalent of 20% of the Town's entire budget and 85% of the Town's entire payroll.
Councilman Steve Flotteron, released the preliminary findings of the report with other task force members, Dr. Edward T. Gullason and William Mannix who were instrumental in putting together the findings of the report according, to Mr. Flotteron. They outlined how the Town's finances turned upside down.
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| Steve Flotteron points to deficit figures |
Some of the forces were beyond the control of the Town, such as: reduction in property taxes, due to foreclosures and problems from the burst of the housing bubble, the general economic downturn which resulted in lower sales tax revenues as well as higher unemployment, reduced individual spending and curtailed corporate investments, according to Mr. Flotteron and Mr. Mannix.
Other spending issues were the direct result of mismanagement by the former administration, including failure to trim spending when the financial distress was obvious. Prior years surpluses were exploited to balance the budgets and instead of making tough decisions spending increased from 2007 through 2011, the tenure of Mr. Nolan's administration.
Mr. Nolan was recently touted for the job of running Suffolk OTB, which is already in financial distress. If Mr. Nolan does for OTB what he did during his time as Supervisor of Islip, then it is "chalk" OTB is in for a bumpy ride.
Additionally, the state pension payments totaling $8 Million dollars were deferred by the Nolan administration until 2013 and decisions to issue bonds for short term borrowing were never made.
Cesspool Trucks and Street Sweepers..."The Devil's in the Detailing"
During Phil Nolan's watch there was detailing of Town of Islip trucks that are used as street sweepers and cesspool vacuum cleaners. This was pointed to as an example not only of wasting thousands of dollars, but of the lack of common fiscal sense that would lead anyone to hand detail a work truck and charge the taxpayers over $3,500 dollars just to send it back to the street to get dirty the next day.
The vendor payments to "Polished to Perfection" in Bohemia, show over twenty charges of $150 or more for polishing faded panels on the Town street sweepers approved by what appears to be a signature next to the title "Dep.Comm".
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| Trucks such as these were "detailed" at a cost of thousands of dollars to taxpayers. |
The Town's information technology division spent $97,000 on software contracts for computer-software and data services that were never installed and never used. Add to that, the Town, under Mr. Nolan purchased 100 computers that had the wrong operating system, requiring two employees months of work to make the necessary adjustments so the computers could be used by the Town.
As previously reported by Freelance Investigations, in 2009 Mr. Nolan gave raises to various executives while simultaneously laying off over 40 municipal workers.
The Department of Public Works was directed to use outside mechanics to repair Town vehicles when the same brake job that cost $1,000 could have been done by an Islip Fleet Service mechanic "working out of title" for a pay differential of just $36, according to the Budget Review Task Force.
This report is just the tip of the iceberg according to Mr. Flotteron and their task now is to find ways that services can be economized without the effect on the public wherever and whenever possible and without having to raise taxes.
To accomplish this, each Board member is a liason to a specific Town Department and will look for specific ways to save money. If a job is cheaper to farm out, it will be. If the municipal workers can do a job more economically, then it will stay in house.
An example given was the Industrial Development Agency closings that formerly were given to Huntington Town Councilman, Mark Cuthbertson, a good friend of Mr. Nolan. The Town took the work back into the Town Attorney's office (where it had always been before the Nolan administration) and not only is the work now done for a fraction of the cost, the Town makes money from the closings as well.
A Fine Mess of Parking Tickets
According to the report, Islip Town failed to collect fines on 12,000 parking tickets issued during the last three years. The Town under Mr. Nolan, had reduced staff for processing of the tickets at the same time they increased issuance of tickets and so there is a "closet full" of uncollected tickets with penalties totaling an estimated $1.5 million dollars, according to the report.
That number may not be as high as estimated if the "illegal tickets" Mr. Nolan's Public Safety Chief; Larry O'Leary and his crew, issued are identified and dismissed... as they should be.
See Freelance Investigations:
http://freelance-documentdrivennews.blogspot.com/2011_09_01_archive.html
In that article last year Freelance Investigations found documents showing Mr. O’Leary allegedly issued over 100 falsified parking permits in 2010 and 2011 to persons living within two blocks of the Islip Town water park. The permits appeared official as they had a bar code and the Town seal and allegedly Mr. O’Leary’s signature on them.
Another problem with the permits was that the bar code that was used on the parking permits was from a book ISBN number.
Islip Town never made a resolution authorizing either the permits or the parking signs. Public Safety officers allegedly put the signs up in the middle of the night on telephone poles and trees within a two block radius of the water park. This would force most people to pay the $10 parking fee in the Town owned marina lot or get a ticket. How many of the tickets that were unpaid are these illegal tickets, issued without proper authorization? That remains to be seen.
Putting signs on telephone poles is against Town ordinances and LIPA rules.
"No Parking" signs were placed on telephone poles...under Islip Town Code (Article 29), it is illegal to post signs of all types on trees and telephone poles.
THE FOLLOWING IS A COPY OF THE REPORT
Town of Islip Budget Review Task Force Report 2012
SUMMARY
Research by Islip Town’s Budget Task Force has uncovered various factors that have resulted in a potential $26 million budget deficit in 2013. These include economic factors resulting from the Recession that reduced employment, mortgage-tax receipts, and business in general, a failure by the prior administration to curtail spending at a time when revenues were declining, a reliance on surplus funds to keep taxes from rising, and careless spending for top employee raises, unnecessary equipment, technology never implemented and a failure to collect parking violation fines. The Task Force will seek solutions to these and other issues that may arise.
THE TASK FORCE
Soon after taking office, Town of Islip Supervisor Tom Croci discerned that the Town would incur a $26 million budget deficit in 2013. The Town Board subsequently asked Councilman Steve Flotteron to chair a task force that would determine how the Town’s financial condition changed so dramatically and to make recommendations on how to solve the shortfall.
A $26 million deficit is the equivalent of 20 percent of the entire Town budget and 85 percent of the Town’s entire payroll (or the entire general fund payroll).
Before the Task Force could begin its work, however, it first had to identify the causes of the current budget pressures and how the Town’s financial condition changed so dramatically over the past decade.
FUND BALANCES, REVENUES, EXPENDITURES
Islip’s fund balance rose from $42.3 million in 2002 to a peak of $75.4 million in 2007. Since then, the trend has been in decline, to $49.1 million in 2011.
During this same period, Town revenues rose from $76.7 million to a peak of $89.7 million in 2006. Since then revenues declined sharply and in 2011 totaled $71.9.
The Town’s expenses remained steadily below revenues from 2002 to 2006. Expenses in 2002 were $71.7 million and rose steadily through 2007 to $89 million, when they first exceeded revenues by $3.1 million. Since 2007, although expenses trended lower, they exceeded revenues in every year through 2011, when the gap was $12.7 million. That gap continues to widen and the proposed level of expenditures, put forth in 2011, cannot be supported.
THE CAUSES
How did the Town’s finances turn upside down?
Economic forces beyond Town Hall’s control significantly shaped the Town’s financial health. Core Town services are funded by the general operating fund, which relies heavily upon property taxes, mortgage tax receipts and franchise fees. These resources have been battered over the last four years as the Recession diminished property values, forced home foreclosures and curtailed home sales. Moreover, unemployment has reduced individual spending and corporate investment.
Additionally, in each of the last four years, the Town has experienced structural budget deficits in which ongoing revenues were not sufficient to meet ongoing expenditures. Regrettably, the prior administration did not thoughtfully address these deficits by selectively reducing expenditures and services and establishing more efficient operating models. The looming financial distress was ignored. Recommendations to the prior administration by the Town Comptroller to either trim expenses or increase revenues went unheeded and prior years’ surpluses were exploited. In the 2012 budget, 17.3 million dollars of surplus funds was earmarked to balance the budget.
Significantly, difficult decisions were postponed, perhaps in the hope that the economy might right itself in the near future. This, of course, has not yet occurred.
In addition, state pension payments totaling $8 million had been deferred by the prior administration budget until 2013 and decisions were made not to issue bonds for short-term borrowing.
Spending, in particular, was unwisely done in the last 5 years. Among the most egregious examples include:
* In 2011, the Town Department of Public Works spent $3,545 to cosmetically detail street sweepers and two vacuum trucks (used to clean out storm drains). Operators of the equipment were not permitted time during the course of their work day to address the maintenance and cleaning of the equipment, resulting in more down time, more breakdowns and more money spent on parts and cleaning.
* The Town Public Safety Department over past years spent thousands of dollars cosmetically detailing its vehicles.
* Hundreds of thousands of dollars were spent on paving equipment that was never used by the Department of Public Works because of poor suitability to operating conditions in Islip.
* The Town’s Information Technology Division spent $97,000 on contracts for computer-software and data services that were never installed and never used.
* The Town purchased 100 personal computers with the wrong operating systems, requiring two months of work by two full-time town employees to make the necessary changes.
* In 2009, the prior Supervisor gave out raises to various top executives while at the same time he laid off 40 employees.
* In 2007, the Department of Public Works was directed to use outside mechanics to repair Town vehicles to make up for reduced staff and reduced overtime. One manager cited the private cost of a brake job at $1,000, while an Islip Fleet Services mechanic working out of title could have done the same for a pay differential of just $36.
In addition:
The Town failed to collect fines on 12,000 parking tickets issued during the past three years due in part to increased ticketing at a time of staff reductions involving those who processed the tickets. Fines on unpaid tickets generally double every 30, 60 or 90 days they remain unanswered. Some individual outstanding tickets total as much as $770 if unpaid. A backlog of unpaid tickets, totaling an estimated $1.5 million, remains outstanding.
Actions that could have been taken in previous years’ budget cycles weren't and the result has heavily burdened the budget for 2013.
The Budget Task Force intends to cast a wide net to find ways for the Town to continue delivering services while figuring out a way to deal with the deficit, all without raising taxes. Tough decisions will be required to solve these issues.
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