Michael Woyton • Poughkeepsie Journal • September 3, 2010
Taking full responsibility for the financial dilemma in which the Town of Fishkill finds itself, Supervisor Joan Pagones said a five-year deficit recovery plan is the way to make things right.
Meeting with the Poughkeepsie Journal Editorial Board on Thursday, Pagones and Comptroller Robert Wheeling laid out the plan and described how it would alleviate a deficit they identified as $1.3 million.
Talk of a deficit-reduction plan comes on the heels of a drop in the town’s credit rating by Moody’s Investors Service April 23 to Baa3 from A1, or a moderate credit risk from a low credit risk.
In August, the state Comptroller’s Office released an audit that said the town had been spending more than it took in for several years, which led to an overall deficit of $4.9 million from 2008 through February. Pagones and Wheeling dispute the $4.9 million figure, saying the state didn’t take into consideration the corresponding revenue when the town paid back
money borrowed from other funds.
The audit criticized the town for lack of controls and monitoring, and for failing to amend budgets when actual revenues did not meet estimates. Budgets were unrealistic in estimating revenues, the comptroller said.
“The board and supervisor have not adopted realistic budgets to effectively control town operations,” the audit said. Cash-flow problems have resulted,
causing a reliance on extensive loans from one fund to another, the audit said.
The board and supervisor used “restricted moneys from trust funds and capital projects,” the audit said.
Pagones said the deficit-reduction plan is based on a worst-case scenario, which would pay down the deficit each year until it is eliminated.
“It’s a real conservative model,” she said. “This is with the economy not turning around anytime soon.”
If revenues such as mortgage or sales taxes increase, Pagones said the deficit could be retired sooner.
She added the town has eliminated cost-of-living and step increases, instituted lag pay, added an early retirement incentive and required all
employees to contribute to medical benefits.
The other option was borrowing up to $6.5 million. Legislation to allow the town to do that was drafted in Albany, but state Sen. Steve Saland, RPoughkeepsie,.and Assemblyman Joel Miller, RPoughkeepsie,
demanded the borrowing be subject to a mandatory referendum. That would allow town residents to vote on the move.
The town decided against the borrowing. Pagones compared borrowing the money to taking out a home equity loan.
“If I want my kitchen done, or finish my basement, put on siding, instead of doing one project a year, you get the money all at once,” she said. “With the five-year plan, you are doing it a little at a time,” Pagones said.
Wheeling said if he has to borrow money, he must pay interest on the debt.
“If I do it inside, I’m paying myself interest and keeping it all in house,” he said.
Wheeling said the town was doing OK with mortgage tax revenue staying at about $1.3 million per year from 2006 to 2008.
In 2009, the housing slump hit and revenue plunged to about $587,000, he said, which set the town on its way to deeper financial problems.
Pagones said when the 2009 budget was being crafted, there was no indication of an impending housing crisis. Looking at the previous years’ revenues, “what number would you have come up with?” she asked
rhetorically.
Councilman Bob LaColla said borrowing isn’t what
the taxpayers want. He said there haven’t yet been any detailed meetings
discussing the five-year plan, but he is concerned that expenditures may be too low.
“I think we need to start an open process to see where we are and put an honest plan together to address the deficit,” LaColla said. “I look forward to meeting with the rest of the board,” he said. “I would love to do that as soon as possible.”
