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S&P: Oyster Bay bond rating at risk

Oyster Bay Town Hall on March 26, 2012.

Oyster Bay Town Hall on March 26, 2012. Credit: Nicole Bartoline

Oyster Bay's long-term bond rating could take another hit, warns a new Standard & Poor's report on the town's preliminary 2013 budget.

Next year will be a "challenging" one for the town due to budget imbalance and $13 million in short-term debt to pay off, according to the report released last week. The ratings agency cited the town's "recent history of optimistic budget assumptions and operating deficits" as reasons fiscal stability probably won't be achieved next year.

S&P in May dropped Oyster Bay's long-term bond rating three notches to A, or negative. The report affirmed the rating.

"Failure to make the necessary revenue and expenditure adjustments to restore balanced operations and a continued deterioration in the financial position could lead to a multi-notch downgrade within the two-year outlook horizon," S&P wrote.

"Their expenditures exceed their revenue," S&P credit analyst Ruth S. Shaw said Thursday in explaining Oyster Bay's situation. "There's a gap."

Town Supervisor John Venditto Thursday focused on the positive -- an affirmed rating.

"Notwithstanding the current difficult economic times, the agency has recognized that we're moving in the right direction," he said in a statement. "This is a direct result of the sometimes difficult decisions the Town has made in terms of cuts and other cost-saving measures."

S&P acknowledged the town has taken some steps toward solving its financial problems in the preliminary 2013 budget, including $10.5 million in spending cuts and $6.7 million in additional revenue from a 3.81 percent property-tax levy increase that is within the state's cap.

The budget also assumes $8 million in savings, or a 10 percent "giveback" in union salaries, S&P said. A deal between the town and union has not yet been finalized.

The town board last week approved the $265-million preliminary 2013 budget. A vote on the final budget is set for Nov. 13.

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