Editorial: Oyster Bay formula failing
Oyster Bay plans to borrow $30 million to address cash flow problems. Above, a view of Town Hall on March 26, 2012. Credit: Nicole Bartoline
Supervisor John Venditto says he wanted to have his cake and eat it, too. Now the Town of Oyster Bay is being eaten alive by its mounting debts.
He took over the town in 1998 and says he found infrastructure that hadn't been improved, or even maintained enough, to provide residents all they deserved. He now says you can put Oyster Bay's roads, parks and services up against those of any community on Long Island.
He's also proud that the town portion of taxes on his house, $1,067 in 1992, has only increased 30 percent, to $1,391, today. But inflation over that period has raised prices 80 percent. And municipalities, burdened with fast-rising health care, payroll and pension obligations, have seen their costs increase far faster than the world at large.
Put it all together and what have you got? A town that's seen eight bond-rating downgrades in the past few years, from the ultimate AAA down to a score just two levels above junk. A town that's run operating deficits for eight years. A town that's seen its debt increase to more than $800 million.
Oyster Bay owes about $8,000 per household. Compare that with Babylon, which owes $2,400 per household, or North Hempstead at $3,900.
Venditto is an optimist who believes in the future of Oyster Bay. He never thought the downturn that began in 2008 and cost municipalities so much revenue from depressed sales and mortgage recording taxes would impact town finances for so long. So, he did not cut spending or raise taxes fast enough or severely enough to deal with continued shortfalls in a budget that totaled $277 million this year. And his general opposition to development has failed to grow the tax base.
Beyond cutting the tax revenue, the downturn has also depressed state aid to municipalities and made it tougher to get money out of Nassau County. For years the county paid the tuition for Oyster Bay students attending the Fashion Institute of Technology. Now Nassau is holding on to $14 million owed to Oyster Bay in sales tax proceeds against $7 million the county says the town owes in tuition.
Venditto did get one gift. Last year, Oyster Bay got $30 million in a cushy deal that sold town land to developers and effectively ended the threat of a luxury shopping mall being built on the old Cerro Wire property. That money went fast. So did another $30 million borrowed to make payroll in July. Officials characterize that as normal borrowing in anticipation of tax revenue, and while such practices are standard, financially healthy municipalities don't skate so close to the edge. That worries ratings analysts and led to higher borrowing costs.
The town busted the state tax cap this year, with an 8 percent hike, and is considering doing it again next year. Although a buyout offer led to retirement for about 8 percent of the town's 1,200-person staff, and their replacement by cheaper workers, no wholesale staff cuts have been made. Venditto says he's ready to scrutinize expenses line-by-line, a solution thriftier town leaders embraced five years ago. He says he hasn't lost his desire to spend more to improve the town, but now lets his staff rein him in. He repeatedly says that "the town is still in control of its own destiny," which is true. But if he doesn't wield that control far more wisely, it may not be true much longer.
