The Shelter Island Town Board spent much of an Oct. 21 budget work session going line by line through the proposed 2026 town budget, reconciling spreadsheets and debating how much money to draw from reserve funds to soften a proposed property tax increase before sending the budget to a public hearing.
Board members discussed lowering the tax levy increase from roughly 6.5% to about 4.5% by pulling additional money out of the B fund, which covers building and zoning operations. One board member said the fund's balance has grown unusually large over the years because building permit revenue has consistently been underestimated.
"I do feel like we should think about pulling more from B since we've got such a balance in there," one board member said, adding that the fund balance had reached about 118% of expenditures.
Members discussed taking two additional percentage points from the B fund to bring the levy increase down to 4.5%, while keeping the town's main operating fund reserve closer to 19% of expenditures. "I'm comfortable with the A fund around 19%," one board member said, while another argued for moving more money out of the B fund because of its size.
The board also discussed raising projected revenue from building permit fees to $825,000 for 2026, up from an earlier figure of $791,449, reflecting a restructured fee schedule weighted toward larger construction projects. "I think you could even go to 825, especially with the changes that we're talking about," one board member said, noting that the fee increase falls most heavily on larger homes.
Officials said the fee change is expected to bring in about 48% more building-permit revenue than current figures, according to calculations one board member cited during the discussion.
The board also flagged that a decision on a town-owned parcel on School Street is expected at Tuesday's meeting, with members needing to decide whether to keep it as town property or transfer it to the Community Housing Fund for a potential housing project. "That's going to be on the agenda for Tuesday," one board member said, citing a year-end deadline tied to bonding requirements.
Throughout the session, board members and staff corrected a series of calculation errors in budget lines, including longevity pay and social security contributions, as they worked to finalize figures before the budget moves to public review.