Oyster Bay officials said Tuesday they plan to authorize the town to breach the state property tax cap, less than two weeks after a ratings agency downgraded the town's credit.
The town board scheduled a hearing for Aug. 12 on exceeding the tax cap. Last year, the board approved breaching the cap in 2014, setting a tax levy increase of 8.8 percent when the tax cap permitted 1.66 percent. The board needs five out of seven votes to override the cap.
Town Supervisor John Venditto said he does not anticipate piercing the cap, which is the lesser of 2 percent or the rate of inflation, not including certain exemptions. "There are no plans to raise taxes beyond the tax cap at this point," Venditto said.
Some municipalities approve breaking the tax cap in advance of preparing a budget to give themselves flexibility. The town plans to introduce its preliminary budget on Sept. 30, hold a hearing on Oct. 14, and pass the budget by Nov. 20.
"When the budget cycle is completed in the fall, I want to have all of the tools available to me," Venditto said.
The state is expected to set the tax cap in September. Last year, the state comptroller's office reported that more than 18 percent of counties, cities, towns, school districts and fire districts planned to override the cap in 2014.
On July 11, Standard & Poor's slashed the town's credit rating two notches to BBB with negative outlook from A-minus. The rating has fallen from the highest possible level, AAA in 2011, to two notches above junk bond status.
The rating agency cited the town's "deteriorated liquidity position and continued structural imbalance."
Venditto said the downgrade was not unexpected but said the town is in a "transitional period" since the financial crisis of 2008.
"We in the town are beginning to see the good things that are starting to happen as a result of the steps we took," Venditto said."Although management is taking steps to restore structural balance, including the 8.8% percent tax levy increase in 2014 . . . and a reduction in expenditures in 2012, it is uncertain if these steps are sufficient to maintain fiscal stability," the rating agency wrote.