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Southampton Budget Aimed at Boosting Town’s Credit Score

By Sally Maison
Published: Wednesday, October 14th, 2009

Suffolk County, New York- Southampton’s budget message was released yesterday to a silent audience of clerks at the Town Hall. Tax increases and layoffs made the day a somber one for many employees.

Southampton Budget Aimed at Boosting Town’s Credit Score Town supervisor Linda Kabot yesterday announced Southampton’s 2010 budget which includes tentative plans to lay off 48 employees, increase taxes by 5 percent, and privatize town’s animal shelter. She added that that next year’s government spending will be trimmed by $4.5 million. However, she reiterated that there is still a bright side in their financial crisis since deficits in Police and Highway Funds will be cleared by 2010. Experts say this could significantly boost Southampton credit rating, which in turn could save the town millions of dollars in bonds.  And that is exactly what Kabot has in mind. She says deficit financing hurts their municipal credit score so they are forced to spend more in interest payments. Next year, lesser spending and more government income is likely to take Southampton up the rating ladder, or at least keep it from going down.

2010’s municipal budget grosses at $78 million, with an additional $800,000 in reserve funds. $3.6 million will be set aside to clear off police and highway debts acquired within 2004 and 2007. Plans were also made to boost reserves for Police and Highway funds.

Meanwhile, financial planners propose citizens who own $500,000 worth of real estate to pay $33 more next year. During the previous year, no real estate and citizen tax increases were made since surplus funds were used in order to stabilize taxation. However, Kabot plans not to use “rainy day” funds this year so Southampton will have additional budget to keep it stable during economic fluctuation in the future.

The town likewise has plans in cutting back on its spending by laying off 48 employees. If supported by Southampton board, 48 people will be terminated in January 2010. Shutting down the town hall for a whole week next year is another drastic plan announced yesterday. The furlough is targeted at saving $1 million.

Analysts say that Southampton, like most towns in the United States, is deleveraging or cutting back on debts and spending in order to have more cushions against economic fluctuations. They say municipal efforts to improve credit score would help Southampton during the toughest times since it will give them better borrowing opportunities. They will able to borrow money when they need it most and get them at the best interest rates. Experts add that town ratings are used by lenders just like individual credit scores.

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