After years of operating under budgetary deficits, the Town of Oyster Bay had its credit rating downgraded to junk status by Standard & Poor’s (S&P) last month—and that revelation has Supervisor John Venditto planning a longterm solution.
S&P dropped the town two steps, from BBB to BB+, and warned of the potential for more downgrades as it cited a negative outlook and future financial strain.
“Oyster Bay has had 10 consecutive years of audited operating deficits in its general fund, and as a result, financial reserves and liquidity have significantly deteriorated,” according to a report by S&P analysts Victor Medeiros and Rahul Jain.
“We believe these deficits are associated with the town’s lack of forward-looking financial management policies and relatedly, a history of optimistic revenue and expenditures assumptions without sufficient validation.”
The town’s junk status comes just four years after it received a AA rank—the third best grade bestowed by S&P.
The new report by S&P states that the town had a “$19 million operating deficit in its general fund for the 2014 fiscal year,” and to fix the financial shortfall, S&P said the town is “seeking concessions from unions, hiring freezes and further tax increases.”
Venditto, supervisor since 1998, said that he and his colleagues are working on an immediate solution that will work to turn the town’s finances around.
“My colleagues on the town board and I are committed to solving the problem and have been working on a comprehensive plan to correct our present situation and make sure our residents do not feel any adverse effects from the downgrade,” said Venditto.
“As such, I have created a task force, headed by Councilman Joe Pinto, which is charged with working towards developing a long term strategy plan in the next 90 days,” said the supervisor.
He also noted that since the town is not far removed from its high S&P ranking, a solution to the monetary malaise is attainable by the town board.
“While many factors contributed to the town’s financial difficulties over the years, the town did enjoy the highest bond rating attainable as recently as 2011 and does enjoy a strong institutional framework score and robust economy, as reported by S&P,” he said.
Meanwhile a Town of Oyster Bay resident, Dr. Dean Hart of Glen Head, has offered to spend up to $1 million of his own money in order for the town to hire financial experts to take over its fiscal management.
“I’m asking the Town of Oyster Bay to sit down with Wall Street’s top financial professionals so that they can help dig us out of the hole that Supervisor John Venditto recklessly dug us into,” said Hart. “To fund this worthy endeavor, I am offering to spend up to $1 million so that Oyster Bay is no longer the laughing stock of New York state. U.S. President Theodore Roosevelt would be turning over in his grave.”
Venditto did not respond with a comment regarding Hart’s offer.
“It’s both unacceptable and condescending for Supervisor Venditto to say he can unilaterally help the town after he hurt it,” said Hart, adding that his offer will remain on the table until the town’s credit rating is upgraded.