While the discussion of a Town Board resolution on gun control has dominated discussion over the past two board meetings, the recent reduction in the town’s bond rating has not been forgotten.
The reduction from A-plus to A-minus, announced last month by Standard and Poor, was based on a lack of financial reserves and increasing debt. Town officials say the difference will not have a great impact on the town’s ability to borrow or on the interest rate it would pay, though the supervisor is calling for mid-year budget cuts.
Supervisor Kelly Myers said she has begun bidding out the town’s bonds to get the cheapest interest rate available when borrowing money, and was able to get a rate of 1.01 percent. She said last April the rate was 3.39 percent.
So while concern about the town paying higher interest rates is not an issue, that doesn’t mean the supervisor believes the budget situation is settled. “In order to manage a deficit and rebuild the town’s reserves we will need to make some mid-year budget cuts,” wrote Myers in an email. She said these cuts could include service and workforce reductions, overtime, reduced departmental spending and “standing firm with union contracts.” The supervisor said she plans to set up meetings with board members and the department heads they supervise to discuss their budgets.
“We have some hard choices ahead,” said Myers. “People in Saugerties have been very clear that they cannot afford more taxes.” (Taxes went up just over six percent last year.)
It explains how previous cuts suggested by Myers, including one full-time position in three major departments (police, highway and assessor) and closing the transfer station have been opposed by the board majority.
Councilman Fred Costello said the board is aware of what needs to be done to restore the rating, and has already taken action. He said by appropriating $400,000 for the county social service charges, the town covered its obligation for 2012 and 2013. Over the next few years, the county will assume full responsibility and the welfare costs will be paid through the county tax bill, freeing up that money from the town budget. Then the Saugerties fund balance will be restored.
A second factor that led to the budget problems last year was a $280,000 increase in the town’s contribution to the state retirement fund, a one-time increase that probably won’t be repeated.
The downgrade from A-plus to A-minus was a sign that the town needs to improve its finances, Costello said, but compared to many other New York towns, A-minus is not a bad grade.
“I don’t put a lot of stock in those financial services,” Costello said. “They didn’t do their job for five years, and now they are going too far in the other direction.” (Costello was referring to high grades given to the toxic assets that led to the financial crisis in 2008.)
“We still have challenges, but we are not in serious financial trouble,” Costello said.
Councilman Bruce Leighton agreed that the decline in the town’s bond rating is not going to make a big difference in its ability to borrow money. Leighton said he’s not aware of anything the town could do to improve its rating in the near-term; that will take a few budget cycles and a restored surplus.