Saugerties bond rating downgraded by S&Pby David Gordon on Mar 6, 2013 • 10:03 am
Citing a “worsening financial position” and negative fund balance, Standard and Poor’s busted the town’s bond rating down two steps last week, A-plus to A-minus. It was the second time in two years a rating agency downgraded Saugerties bonds; a lower grade, like a lower credit score, can mean a higher interest rate when borrowing money. The agency said the town is taking steps to restore its fund balance (also known as the “rainy day fund”) which was drawn down to pay for social services and pension costs, and should be back on solid footing within a couple years.
The current fund balance is -$41,000.
In addition to a steep increase in state-mandated pension contributions ($280,000), which no one disputes, many of the issues at play —past debt, social services (safety net) and Supervisor Kelly Myers’s list of cuts presented last fall—have been sources of disagreement between the supervisor and much of the board.
Myers attributes much of the problem to a combination of debt she inherited from predecessor Greg Helsmoortel and the board’s decision to forego $394,000 in cuts she suggested.
“So here we are, at this stage — with a lot of work to do,” Myers wrote in a release that called on board members to make unpopular but necessary choices to cut spending. “There are some things we just cannot afford.”
She also cited what she felt was a generous settlement with developer Steve Aaron on past taxes for the Birches senior housing complex ($60,000) and the recent “buyout” of highway department secretary Mary Lou Dengler ($25,000) as examples of the board’s fiscal lassitude.
Councilman Fred Costello, former deputy supervisor under Helsmoortel, said the statements sounded like political rhetoric and disputed Myers’s interpretation on each score. He said it was up to Myers to plan for changes in the Safety Net budget, as other town supervisors did. Instead, the town had to add $400,000 after the budget deadline.
“If we had known when we were planning the budget that we would have to pay the Safety Net costs immediately, we could have dealt with it,” he said previously.
He said the cuts she suggested would not have saved the money advertised; rather, they would have shifted costs to other lines, like overtime. Cuts included: closing the transfer station ($100,000), one police department position ($70,000), one assessor’s office staff position ($60,000) and one highway department position ($60,000).
Councilman Bruce Leighton said the charge that the board had wasted the town’s money in the settlements with Birchez Associates and Mary Lou Dengler was incorrect. Had the town not come to agreements in these cases, the legal costs and the final outcome could have been far worse.
“I’ve been in business for 30 years, and I base my decisions on good business principles,” he said. “Not taking those actions could have cost us a great deal more.”
Myers said the town can’t afford to wait for fall budget time to make cuts.
“It’s difficult to get board members to make politically unpopular decisions, particularly in an election year,” she stated. “It’s not popular to cut services, reduce workforce, reduce department spending, cut employee overtime, and say no to union demands — but the alternative is a raise in taxes for all of the town’s taxpayers.”
The board’s next meeting is tonight at 8 p.m. at the Senior Center, 207 Market St.