Brookhaven's Romaine cancels $15M in capital projects
Brookhaven Supervisor Edward P. Romaine said the town could save up to $16.5 million by canceling some of its planned projects and refinancing some of the town's $675 million in overall debt.
Romaine said he has reduced the town's pipeline debt -- or capital improvement debt -- by $15 million from $76 million -- provided none of the programs are reintroduced -- and has a plan to save an additional $1.5 million through debt refinancing.
"When I came in, we were facing a fiscal cliff," Romaine said recently. "We did a lot of things to step back from that cliff; we are still at the edge of that cliff . . . Are we out of the woods? Absolutely not. Have we stopped the bleeding? Yeah, but we still have an injury and a cut that has to heal."
In January, Brookhaven owed more than $465 million in bond debt and borrowed an additional $61 million, bringing the debt to $526 million, Brookhaven Town Finance Commissioner Tamara Wright said.
Interest from the bond debt has reached $149 million, bringing the total to $675 million, she said.
Romaine, who after taking office late last year said the town appeared to be in a "financial free fall," said controlling overtime costs, not taking on additional debt and separating the capital and operating budgets have helped stabilize the financial picture.
Despite the town's fiscal issues, Moody's rating service in January affirmed Brookhaven's Aa2 rating -- the third-highest ranking -- which the town has had since April 2010.
Officials with Moody's said Brookhaven was looked at favorably because the town's large tax base makes it capable of repaying the debt, and it has above-average wealth levels and a stable workforce.
But Martin Melkonian, an adjunct economics professor at Hofstra University, said that if the economy does not rebound strongly, Brookhaven may not be able to continue financing such large debt, and the rating could drop. "I'm not particularly optimistic the rating won't drop," Melkonian said.
The Moody's report noted that stabilization of the town's finances and improvement in the wealth levels could bolster the town rating, but continued deterioration of the financial position and significant decline in the town's tax base could do it harm.
Romaine last month introduced a resolution to reduce pipeline debt by eliminating capital projects the municipality has approved but not funded. In an interview with Newsday editors and reporters on Friday, Romaine said the resolution passed, resulting in a savings of up to $15 million.
Canceled projects include more than $27,000 for renovating the town animal shelter, more than $230,000 for upgrading Manorville Park, and more than $308,000 for Motts Pond remediation.
Wright said the town had a chance to take advantage of low interest rates by refinancing $55 million in outstanding principal bond debt, resulting in what Romaine said was the additional $1.5 million in savings.
According to town documents, 25 cents of every revenue dollar earned in the general fund goes toward the repayment of debt, while 37 cents of every revenue dollar in the highway fund goes toward repayment.