Special District Administrative Fee

 

Scroll down for 2013 updates 

 

Overview

For many years, it has been standard practice for the Town's special districts (water, refuse, sewer and special park districts) to pay an administrative fee to the General Fund to cover the services that staff, paid for in the General Fund, provide the districts.  This includes processing purchase orders, paying bills, collecting water bills, reviewing bid specs and contracts, etc.

 

The fee becomes an expense in the district's budget which raises the district's tax rate, but a revenue in the General Fund which lowers the town tax rate paid by all taxpayers.

 

In the 2013 budget, administrative fees generated $1.4 million in revenue for the General Fund, the second largest non-tax revenue line item after the sales tax.

 

But, because not all taxpayers are in the special districts, this money shifting results in winners and losers; special district revenue ends up paying for services that should be paid for by all taxpayers. 

 

As the pie charts illustrate, for some homeowners, the town tax represents only 53% of their total town tax bill. For others, the town tax represesnts 76% of their total town tax bill.  

 

Charging an administrative fee is legitimate. The issue is how the fee is calculated so that it is fair and equitable for ALL taxpayers.

  

Calculating the Administrative Fee

There are 2 options for calculating the administrative fee: actual cost figures or a flat percentage. Obviously, the latter is far easier to calculate.

 

Historically, the water and refuse districts were charged 5% of their budgets, except when water was increased to 6% when the Highway Superintendent was in charge of the water district. The Yorktown sewer district has been charged 10%-14% because it uses more services paid for by the general fund.   For historic information on special district administrative fees, click here

 

In his 2013 Tentative Budgert, the Supervisor used the 5% fee -- but later proposed raising the fee  to 7%.  When some Town Board members objected to the increase, the Board ultimately compromised on a 1% increase -- to 6%.

 

And, on December 18, when it adopted the 2013 budget the Board also adoped a resolution directing the Supervisor to:

 

"...undertake a study to determine exactly what general fund services are provided to the special districts, and at what cost, and that the findings of this study shall provide the basis for assessing special district fees for the 2014 budget that are reasonable and justified based on the actual services provided..."

 

The resolution called for the study to be completed by July 1 in order to give the Supervisor and Comptroller ample time to review the findings before beginning work on the 2014 budget.

 


July, 2013 Update

As of July 22, there's been no word from the Supervisor on the status of the special district fee cost study. When asked at a July 16 Town Board meeting for an update, he declined to respond.  

 

For more insights into the issue, see  It's Time to Start Thinking About Your 2014 Tax Bill

 


August, 2013 Update

 

The town's outside auditor advised the Town Board that it should have a clear methodology and documentation for assessing the special district fee.  See Thank You, Mr. Auditor.

 


September, 2013 Update

 

The town's auditor again advised the Board that it should have a clear methodology and documentation for assessing the special district fee, and again, Supervisor Grace made it clear that he had no intention of doing such a study.

 

copy of a 2013 audit of the Town of Riverhead conducted by the Office of the State Comptroller has been reviewed. The audit makes it very clear that special district charges should be allocated based on a direct relationship between services provided and the cost of such services.

 

On September 5, a letter was sent to all members of the Town Board, together with a copy of the Riverhead audit, once again asking that the special district study be done in time for the Supervisor's 2014 Tentative Budget.


December, 2013 Update

Supervisor Grace included the 6% fee in his Tentative 2014 Budget. On November 21, after a brief discussion, and acknowledging uncertainty as to what the fee should be, the Town Board adopted aPreliminary Budget that retained the 6% fee.

Click here for more insights into the discussion, and for an example of how the 6% flat fee unfairly raises the water district administration fee.