The town almost failed to make its payroll recently and at one point had only $900 in available cash, the New York Post reported. Officials estimate it may end the year with a $12 million deficit.

The state has come to the rescue. The state Legislature recently approved a loan of as much as $15 million. That would allow East Hampton to get rid of its deficit over a decade.

With houses valued at $1 million and up and local taxpayers like Seinfeld -- who paid $190,000 on his weekend home -- East Hampton has a healthy tax base. Critics say that officials maintained a small town outlook with practices like having a bookkeeper keep records with no comptroller, the report said.

Town Supervisor William McGintee, a Democrat, agrees that there has been mismanagement. He blames his Republican predecessor but has also decided not to seek a third two-year term.