Southampton Town continued to use surplus funds squirreled away through conservative budgeting last year to help cut future costs.
The Town Board agreed on Tuesday to use a portion of the more than $4 million surplus, realized once the 2012 books were closed, to finish paying off retirement incentives paid to town employees in 2010.
The board allocated $522,000 to complete the payoff of the retirement incentives, which had been amortized over five years at 7.5 percent interest.
Nearly 20 town employees took the retirement incentive buyouts that were offered in 2010 as part of a state program intended to help small municipalities trim their payroll amid the deepening fiscal crisis in the 2009 national recession.
The incentive offering allowed employees at least 50 years of age but with only 10 years of service credit, or at least 55 years of age with at least five years of credit, to retire with benefits. Employees who took the incentive got one additional month of service credit for each year worked, up to a maximum of three years of added credit. Longer-term employees who were at least 55 and had worked in civil service for at least 25 years, were able to retire early without a reduction in their benefits.
By paying off the incentive debt now the town will save approximately $65,000 in interest.
Last year the town resolved to make a concerted effort to eliminate as much borrowing as it possibly can in order to save on interest payments on debt.
Among the items at the top of the list to be removed from the typical program of borrowing is the purchase of equipment and vehicles by town departments, traditionally purchases that were made with capital borrowings. Instead, the Town Board and Comptroller Len Marchese have been working on a pay-as-you-go program to instead include such purchases in the town’s annual operating budgets.
In the draft 2013 budget, town officials allocated what Mr. Marchese this week called “large buckets of money” in different sections of the budget for pay-as-you-go purchases, allotments that the Town Board plans to add to from the surpluses from last year.
“It’s a more fiscally prudent path,” Mr. Marchese said. “What we want to do is, rather than randomly spending the money here and there, we thought we’d come to you and prioritize these ideas and find out where the board would like to have the money spent.”
The Town Board has been meeting with department heads to build a catalog of equipment that is needed so that it can identify the priority purchases that need to be made.
For the borrowing that remains, Southampton continued to bring favorable interest rates from lenders despite failing to have its credit rating upgraded to the highest level.
The credit analysis agency Moody’s last month announced that it was keeping Southampton Town’s credit rating at Aa, its second-highest rating, despite a push by town officials for an upgrade.
The Aaa rating is generally reserved for much larger municipalities, with larger asset reserves, than Southampton Town. Still, Supervisor Anna Throne-Holst and Town Comptroller Len Marchese had made a case for an upgrade, pointing to Southampton’s record of conservative budgeting and substantial reserves.
In spite of the rating company’s decision, lenders are essentially offering the town rates that are comparable to those reserved for municipalities with a Aaa rating, Mr. Marchese told board members. The town sold $8 million in bonds last month to cover the 2013 capital budget, and received a rate of 1.91 percent on its 20-year bonds, he said.
Mr. Marchese also told board members that the town has already taken in some $1.8 million in mortgage tax revenues for the year, more than $1 million more than it had received at this time last year. The jump is a good sign that the local economy is improving, Mr. Marchese said.
He also noted that the numbers are far in excess of the amounts the town forecast in its 2013 budget. In 2012, the town ended the year with a more than $4 million surplus above its adopted budget.
“So far this year, it’s gone surprisingly well,” Mr. Marchese said.