Comptroller’s report projects ‘significant’ fiscal trouble for town
Riverhead Town wasn’t in serious fiscal trouble last year, according to the New York State Comptroller’s Office.
But if the Comptroller’s projections are accurate, that may not last.
According to a statewide report that projected the financial outlook of municipalities and school districts across the state, Riverhead’s dwindling fund balance and history of budget deficits make it likely for the town to experience “significant” fiscal stress this year, if those trends keep up.
If “significant” stress did hit, elected officials would have to “take immediate action before the situation becomes more dire,” said Brian Butry, a spokesman for Comptroller Thomas DiNapoli.
The report’s findings come as no surprise to Riverhead Town Supervisor Sean Walter, who said the town has been racing for years to plug a budget deficit with reserves before the fund runs out.
“The town overspent its budget since probably [former supervisor] Jimmy Stark,” Mr. Walter said. “The town has been laboring under too much borrowing.”
But while Walter says the report’s findings were addressed in time, Anthony Coates — running as the Democratic candidate for supervisor in a three-way race this fall — said the report is a damning indictment of his administration.
Mr. Coates said previous reports had warned that there were “icebergs dead ahead and Riverhead did nothing to correct course.”
This year’s Comptroller’s report is based on “financial indicators that make up what we deem to be the best gauge of a municipality’s fiscal health,” with towns, school districts and other municipalities earning points for poor fiscal policy, Mr. Butry said. The higher the point total, the worse shape the municipality is in.
The report lags behind one fiscal year, so the most recent report released last week reflects data from the 2014 fiscal year.
Most of the financial weakness noted by the Comptroller’s Office is due to the town’s depleted reserves, Mr. Butry said, which is weighted heavier than other fiscal issues like operating deficits, child poverty rate or a drop in property value — categories that Riverhead also earned demerits for.
The general lack of reserves is an issue some towns across New York State are dealing with, especially within the constraints of the tax levy cap, which limits how much municipalities can increase what they collect in taxes. Riverhead’s reserves, according to the report, dropped from $7.6 million in 2012 to $3.6 million last year.
Many have been burning through their reserves to avoid raising taxes, leaving them in more desperate straits than Riverhead Town.
“Most municipalities are walking a fine line with their reserve,” Mr. Butry said.
The town’s fiscal stress score for 2014 — 44.6 percent on a scale to 100 — is just outside the rating indicating noteworthy fiscal stress (45 percent). It had remained level from the previous year, according to the report.
But the report predicts the town will run into “significant” fiscal issues in 2015, jumping the fiscal stress score up to more than 65 percent in one year.
Mr. Butry cautioned the report only includes a projected number based on historical trends, and said steps already taken could prevent a financial crisis.
“It’s more a warning,” Mr. Butry said “Should you continue down this path, this is what may happen … They’re living this year’s score now.”
Mr. Walter said the town has already endured the worst of its financial issues and claimed the town’s fiscal situation wasn’t a surprise, but was instead engineered to get the town in better fiscal shape.
“This was done by design to stabilize the tax base during a very difficult economic time,” Mr. Walter said. He said the town’s employee and spending cuts have made the town leaner, and said the tax base on Route 58 has increased during his tenure.
Raising taxes higher to fill the gap wasn’t on the table, he said.
“We kept it under the tax cap … because the economy is in the tank,” he said. “It’s still not humming along on Long Island, especially in Riverhead.”
Mr. Walter also said Town will finally hit the jackpot with the Enterprise Park at Calverton, long cited as the solution to the Town’s fiscal woes. Gifted to the Town in the late 1990s, the former Grumman property has been the site of numerous development proposals, all of which have fallen through.
The Walter administration’s signature proposal was to subdivide EPCAL, splitting up the land into smaller plots that would supposedly be easier to sell to private businesses. Four years after consultants were hired to come up with a map for the property, the land remains unsold.
But Mr. Walter said the Town is closer than ever to finally selling EPCAL.
“We’re right there,” he said, claiming to have half a dozen offers from businesses on the table. “We just have to finish up some final touches.”
Mr. Walter also said it was unfair to judge Riverhead against other towns because of the EPCAL property, which he has frequently said would fill the depleted reserves. Other issues, like relying too heavily on reserves, have been addressed, he said.
“I will deliver a balanced [2016] budget this year that will counter what DiNapoli’s talking about with fund balance,” Mr. Walter said. “My goal is to leave this town with a balanced budget. Everything is moving in the right direction.”
That’s far from the truth, said Mr. Coates, who will face off against Mr. Walter and Councilwoman Jodi Giglio in this November’s election for the Supervisor seat.
“The Comptroller is telling us what those of us who live in Riverhead and watch government in action already know: that the town budget has been propped up by imaginary revenue,” he said. “That has made us the highest-taxed, lowest bond-rated town on the East End.”
Moody’s downgraded Riverhead’s bond rating in March, also citing the town’s depletion of reserves as the reason why.
Mr. Coates also slammed Mr. Walter’s proposed EPCAL subdivision, saying the demand for land just isn’t there.
“We keep waiting for the goose to lay the golden egg, and the goose isn’t ready,” he said.
Mr. Coates has proposed leasing the EPCAL land for a solar array, which he said would bring in enough money to close the town’s fiscal gap and restore its preserves. He has also called for an “accountability audit” of the town’s departments and the sale of town assets that “aren’t producing,” such as the Route 58 municipal garage and the East Creek Marina.
Mr. Coates took issue with Mr. Walter’s claim that the town was already in financial trouble when he was first elected in 2009.
“It isn’t right when Barack Obama blames George Bush. It’s not right when Sean Walter blames Phil Cardinale,” Mr. Coates said. “When you have six years to fix things and you can’t, you need to step aside.”
He also said Ms. Giglio isn’t immune from citicism either.
“I’m running against two people who had their hand on the steering wheel for the past 6 years and didn’t react,” Mr. Coates said.
Ms. Giglio did not return phone calls seeking comment Monday.
Photo Credit: TaxCredits.net, flickr
