Riverhead Town has quietly been in the throes of a budget crisis for several years. On the upside, the hefty surplus Supervisor Sean Walter inherited when he took office in 2010 has kept the town from sinking entirely into the red.
On the downside, the town has relied on that same surplus to balance its budget ever since. Only in 2016, after a credit rating downgrade pushed it too close to the edge of a financial cliff, did officials decide to raise taxes and pierce the state-mandated 2 percent cap.
News that proposed legislation could allow the town to repay the debt owed to its Community Preservation Fund — against which it borrowed in the early to mid-2000s — over an extended period is a mixed blessing. On one hand, an extension would prevent the town from tumbling over that cliff. On the other hand, it would generate additional interest charges that could total 1.4 million over 30 years — a harsh reminder of the town’s recent history of poor fiscal planning.
This fall, residents will be asked to support a referendum extending the CPF program — and the 2 percent real estate transaction tax that funds it — from 2030 to 2050.
The measure extending the payback period for CPF debt was part of the state budget but the town must still adopt an authorizing resolution that’s subject to a permissive referendum. That means it will appear on the ballot only if a qualified petition challenging it is submitted within 30 days of the town bonding resolution.
Residents have little choice but to support both measures. Environmentalists have lauded Riverhead Town leaders for their foresight in purchasing land as soon as it became available to pre-empt development. That’s a fair point. Generations upon generations of Riverhead residents will be able to reap the benefits of that preserved property. The CPF has allowed the town to retain part of its heritage.
But the town clearly overborrowed in the process. Any conservative financial estimates weren’t conservative enough, leaving future taxpayers with the bill.
It’s now just a matter of how — and when — those funds will be repaid. Would taxpayers prefer that taxes rise dramatically and services be slashed to ensure the town can cover its CPF debt through 2030 — a tab that now totals $46 million, not including about $12 million in interest? Or would they rather pay out an additional $1.4 million over an extended period and essentially maintain services?
Given the choice between two less than ideal options, paying the added interest seems like the prudent thing to do.