Oyster Bay Town's bond rating, which a year ago was the highest on the scale, has tumbled another three notches, to A from AA, according to Standard & Poor's Rating Services.
The credit service cited a "failure to make the necessary budget adjustments to offset declining revenue" as a reason for the downgrade. "Over the last two years, the financial situation has deteriorated significantly," Manhattan-based S&P credit analyst Nicole Ridberg said Tuesday.
Oyster Bay had an estimated general fund balance deficit of $655,000 last year and planned to issue deficiency notes to cover a $13 million shortfall this year, according to S&P. The firm said it was not confident the town would make budget adjustments to "restore structural balance in fiscal 2013."
"Now, it's the Town of Oyster Bay's turn, but we're not going to take it sitting down," he said. "We're already in the process of formulating an array of steps, which we believe will bring the town's budget back in line."
Venditto said S&P's report implies the town must raise taxes and that it does not have the "political will" to do so. That's a step the town does not plan to take, he said. "It's not political will that's preventing us from raising taxes, it's concern for the welfare of our residents," he said.
Instead, the town has proposed a retirement incentive program. Venditto said details are not yet set, but the town board Tuesday approved a June 19 public hearing date.
Town officials also approved a formal request to state legislators to allow the town to issue bonds to cover those retirement costs and pay them back over 10 years. The bill was submitted Tuesday for consideration this session, officials said.
The legislation "will assist the town in keeping its tax levy as low as possible," said Assemb. Charles Lavine (D-Glen Cove), one of its sponsors.
S&P also lowered the town's short-term rating, to SP-1 from SP-1+. The downgrades, which will increase borrowing costs, were made two weeks ago.
The town had S&P's top rating of AAA until August, when it was lowered one notch to AA.
The S&P report cited as positives the town's "very strong wealth and income" and "moderate overall debt with additional planned debt issuance."
"They're all going to begin to sag under the weight of their own bloated patronage system," he said. "They're locked in . . . with all these high-paid employees that they cannot fire because they're part of the Republican organization."
Venditto responded: "I respect chairman Jacobs very much. However, the economic problems confronting the Town of Oyster Bay are nonpartisan."