On The Right: Oyster Bay’s financial woes

On The Right: Oyster Bay’s financial woes

Years of political cronyism and incompetence has caught up with the Republican-controlled Town of Oyster Bay.  

Its finances are a disaster; Moody’s Investor Service withdrew its already dismal credit rating, citing the town’s failure to submit the 2014 financial audit; and the U.S. Attorney and the S.E.C. are investigating every nook and cranny.

Oyster Bay, which has the highest median income (approximately $110,000) of any township in Nassau County, has had a structurally imbalanced budget for over six years and most of its operating funds have incurred negative balances.  At the end of fiscal 2013, the town’s total reserve position was a negative $16 million.

Moody’s blames the town’s chronic fiscal woes on “aggressive revenue budgeting, increasing pension and health care costs and budgets that were structurally unbalanced.”  

In other words, town officials approved budgets that contained “smoke and mirror” revenue and expense estimates that could never be achieved.

The town’s bonded debt has gone through the roof in recent years to finance deficits.  

Total bonded debt in 2014 was $717.4 million compared to $366.2 million in 2010 — an incredible increase of 96 percent.

Taxes have also been skyrocketing.  

A super majority of the all-GOP town board approved tax increases significantly beyond the state-mandated 2 percent cap to the tune of 8.8 percent in 2014 and 8.8 percent in 2015.

That explains why Oyster Bay has the highest per capita town property taxes.  According to the U.S. Census Bureau, property taxes per capita were $646 in Oyster Bay, $557 in North Hempstead and in Hempstead, $347.

Adding to this mess, the U.S. Attorney indicted Harendra Singh, a restaurateur with town concession agreements which contained largely or wholly undisclosed loan guarantees.  

Charges included bribery of a former town attorney who allegedly accepted multiple $5,000 checks made out to cash and other freebies from Singh.  

The town attorney was reportedly instrumental in drafting the legal documents underlying the guarantees, and was named a co-conspirator. 

By unanimously approving the Singh agreements, the Town Board may have violated Article 8 of the New York State Constitution which reads in Section I, “No…town…shall give or loan any money or property to or aid any individual or private corporation…or loan its credit to or in aid of any…individual or private corporation….”

Not only do records show the Town of Oyster Bay guaranteed a Singh loan in the case of default, but that contingent liability was not disclosed in the town’s official statement which included an independent audit opinion, when issuing bonded debt.  

And the Security Exchange Commission, which is investigating a complaint filed against the township, takes very seriously breaches of municipal fiduciary obligations and could recommend the U.S. Attorney bring civil or criminal charges.

Meanwhile, as federal investigations proceed, Oyster Bay’s town officials are scurrying for cover.  The town board is considering plans to nullify the $20 million in loan guarantees to Singh.  

While such a move may be necessary, it doesn’t explain why the board approved the guarantees and did not properly disclose them in the first place.  

Did they approve a deal that violates the state constitution due to corrupt crony capitalism, or were they asleep at the switch or just plain dumb?

One town councilwoman, Rebecca Alesia, published a whiny statement accusing Newsday of having written an editorial about the town (“Plenty of questions about Oyster Bay’s financial mess,” Feb. 3, 2016) “with either knowing falsity or a reckless disregard for the truth.”

Alesia’s charge is utter nonsense.  

Newsday correctly pointed out that the township’s plans to nullify the $20 million of loan guarantees doesn’t explain the town’s past business methods and relationships with Singh, including those in which she participated or consented as a member of the town board.

Finally, Moody’s suspended credit rating remains in place until the town hands over its 2014 audited financials.

Blaming the audit delay on a computer change made 25 months ago is pretty lame.  The real reason may be that the independent auditors were shocked to learn salient information was not disclosed to them and are uncomfortable not only with the 2014 financial statements but perhaps those issued in prior years.  

It may be that the town and the independent auditors are at loggerheads over what to disclose in the footnotes related to either the Singh agreements, the town’s overall liquidity, or even how much to reflect in the financial statements for the tens of thousands of taxpayer dollars spent defending the very elected officials responsible for the situation in the first place.  

An inquiry from the SEC will usually have that effect.

Whatever the outcome of the U.S. Attorney’s criminal investigation, the sad fact remains that Oyster Bay’s overburdened taxpayers will be stuck paying for the GOP’s reckless fiscal shenanigans for decades to come.

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