Glen Cove budget calls for borrowing for tax settlements

Glen Cove's proposed 2014 budget includes a plan to borrow to pay for tax certiorari settlements that otherwise could have pushed the city above the state tax cap.

Mayor Ralph Suozzi's proposed budget calls for a property tax levy of $29.7 million, a 1.44 percent increase over the current year. If the city had raised its levy to match expected tax settlement claims, it would have had to raise property taxes by 2.87 percent.

The cap on increasing tax levies this year is 1.66 percent, though Suozzi said Glen Cove had room to raise it further if needed because of carry-over from previous years.

Tax certiorari payments are settlements paid to property owners who successfully challenge their tax assessments.

The city has tried to pay for tax certiorari payments without borrowing in recent years but has been unable to fully fund them from operations, Suozzi said in an interview.

"Every time we had revenue to put into there, it had to be moved somewhere else it was needed," Suozzi said. "There are other lines you can't borrow for. Tax certs we can borrow for -- we don't like to."

Borrowing to pay tax settlements is a practice frowned upon by credit rating agencies, which consider it a form of deficit financing.

"The impact for borrowing for tax certs is going to be an increase in your overall debt burden," said Moody's Investors Service analyst Robert Weber.

Peter Baynes, executive director of the New York Conference of Mayors said even before the cap was put in place, local governments were already trying to find ways to minimize tax hikes.