$150 Million In Bonds by Town of Huntington
By Peter Nichols
Peter Nichols is a Huntington resident and former Town Board candidate. He runs the savehuntington.com website.
In 2007, the New York State Comptroller issued a report entitled, “Layers of Debt: Trends and Implications for New York’s Local Governments.” According to the report, local government debt increased 94% between 1995 and 2005 while the debt service increased over 60%. What does this mean to the average citizen in New York State? Your guess is as good as mine, but I’m betting that this means higher taxes down the road for the middle class as more of our earnings go to pay off the interest on that debt.
What is the reason for this enormous rise in long term government debt? According to the report, “local governments in New York occasionally issue debt for purposes that are usually financed with cash, such as vehicles, computer systems and other equipment. When local governments substitute debt for cash financing, it may signify growing fiscal stress.”
According the April 2011 town board meeting agenda, the board authorized the issuance of bonds for the following:
- $150,000 in bonds for the acquisition of equipment (doesn’t say for what kind of equipment)
- $150,000 for the acquisition of vehicles
- $100,000 for fencing
- $161,000 for a network computer server
- $410,000 for town wide computerization
So, is the town experiencing any ‘fiscal stress’ because it issued bonds instead of paying cash for the above mentioned items? Well, if you listen to the supervisor’s office, our AAA bond rating speaks for itself and we have nothing to worry about. In fact, our credit score seems to cloud out just about everything else in the town, including rising crime, random murders, school closings and skyrocketing property taxes.
Sometimes I feel like I’m watching a game of ‘three card monty’ and I just lost sight of the card I’m looking for. What we need is to have another audit like the one that was done back in 1997 by the New York State Comptroller’s office. Better still, we need to have a Performance Audit, similar to the one the voters of Washington State approved back in 2005.
What I would like to know is that if we have nothing to worry about, then why did it take almost 6 weeks after filing a FOIL request with town comptroller’s office to find out that the town of Huntington is on the hook for $150 million in serial bonds? Why wasn’t this information readily available on the town’s web page, which I think was just re-engineered but looks exactly like it did five years ago? I would really like an outside expert to investigate if we are headed straight for a financial iceberg in the murky waters of Huntington’s finances. Also, I don’t like the idea of spending $10 in gas to go pick up a 25 cent copy that could have been emailed to me. But, I guess they’re just following some feudal procedure leftover from the ‘80’s.
Regarding this matter, the town’s spokesman, AJ Carter, issued the following statement about Huntington’s $150 million debt obligation: “The $150 million includes the total outstanding debt and interest ($27.8million) through 2025. Bonds are issued for capital improvements ONLY that are required to maintain the infrastructure of the Town. The Town typically spends approximately $5-10m annually to maintain roadways, parks, recreational facilities, sewer and drinking water facilities, equipment and town buildings. This debt includes $29m issued on behalf of the two water districts and are not obligations of residents Townwide.”
Call me crazy, but I agree with what was written in the NYS Comptroller’s report. I don’t think fencing and computer equipment should qualify as ‘capital improvements’ and we should have paid cash for those items instead of charging it on the town’s credit card.
Others are taking a closer look at Huntington’s finances, as well. Back in June, Fitch Ratings assigned Huntington a AAA rating but noted that “further deterioration of reserves beyond what is budgeted for in fiscal 2012 may put downward pressure on the rating” and that “management’s ability to control expenditures will continue to be an important rating factor going forward.” As many an economist will tell you, even if the debt service remains constant at 8% of overall spending, the overall amount of debt can grow along with an increase in government spending.
Maybe the Petrone administration is doing a great job and the town board really isn’t rubber-stamping all the budgets put in front of them. Maybe they asked the same questions I did, and everything is alright. Then again maybe not.
For me, I would like a second opinion.
So our long term debt is 75% of our budget ($200,000,000)? To give you a comparison, you make $60,000 per year and you have $45,000 in credit card debt. How long will you be able to deal with that? And you know that you are about to be hit with a new bill for 15% (pension costs) on your 60k so 45k plus 9k you are not slowly going down but going down like the Titanic in it’s last hour.
April 10, 2012 12:17 pm at 12:17 pm