As We Look Forward, What We See is Distressing

The following letter was published in this week’s issue of the Gazette.

To the Editor,
Among Democratic Chair Richard Masur’s many accomplishments, he is an historian, reaching back in time to pluck tidbits from the past in an attempt to demonstrate that Croton’s Democratic Village Boards are fierce defenders of the public purse. We should not criticize Mr. Masur for such actions; after all, that’s his job. So let’s take a page from his book and stroll down memory lane to see how those Boards performed.

Under Croton’s previous Democratic Mayor Leo Wiegman, whose administration included Trustee Ann Gallelli and, towards the end of his term, now-Mayor Brian Pugh, Croton’s debt rose from about $17.3M in May 2008 to $32.6 M in May 2015, an increase of nearly 90%.

Not satisfied with that, for FY 2015/2016, the Dem Board’s adopted budget included new borrowing of $11.6M, more than a third of the already existing total. Their forecast anticipated more than $20M in additional borrowing over the subsequent three years.

Mercifully, the voters turned the Dems out of office in November 2015. But by the time Croton United took control in December 2015, much the money from the proposed borrowing had already been committed by the Wiegman Board. Nonetheless, Croton United was able to cut about $3M from the total. It was this sequence of events that resulted in the debt numbers that Mr. Masur ballyhooed in his letter last week.

Appreciating that no one on the board was a fiscal expert, one of Croton United’s first actions was the appointment of the Financial Sustainability Committee (FSC), a group of fiscal professionals who volunteered to assist the board in navigating the rocks and shoals of municipal finance. Among the FSC’s first tasks was the creation of a Debt Policy to bring the village’s massive debt under control. That policy was adopted by Mayor Greg Schmidt and his colleagues and is still listed on our village website.

Working with the FSC, the Schmidt Board was able, for the first time in many years, to actually reduce the debt significantly in FY2016/2017. In the following year, a further reduction in outstanding debt was achieved despite the fact that the village purchased the building that is now our new village garage. Again, the FSC was invaluable in this effort. Are you following all of this, Mr. Masur?

FSC Report Cover.png

When the Dems won back control of the board in 2017, Mayor Pugh and his colleagues continued with the FSC’s recommended Debt Policy, and in their first year, the debt once more declined. We were encouraged. Perhaps the Dems had got religion and we could rely on a steadily declining debt load as the years went by, as envisioned by Croton United and the FSC.

But ominous signs first began to appear during the mayoral debate in 2017, when Mr. Pugh publicly stated that he would not be bound by the Debt Policy. Mayor Schmidt firmly avowed that he would.

But that, as they say, was then and this is now, and as we look forward, rather than back, what we see is distressing. The Dems’ recently adopted FY2019/2020 budget includes over $4M of new capital projects of which $3.1 million represents new borrowing. And this is after deleting $1.5M for the ill-advised Croton Point Avenue Project. The FSC was intentionally excluded from the Board’s deliberations and our debt is projected to rise for the first time since the adoption of the Debt Policy. And that increase would have been greater had they not increased the amount taken from the Fund Balance from $441K in the preliminary budget to $711K.

The Pugh Board’s projections for the next two years call for additional capital expenditures of about $8.3M. Considering that these days we typically pay off about $2.5 M in existing debt each year, the amount we will owe is sure to increase . . .

And if that wasn’t bad enough, the Pugh Board’s projections for the next two years call for additional capital expenditures of about $8.3M. Considering that these days we typically pay off about $2.5 M in existing debt each year, the amount we will owe is sure to increase again and again.

The Board projects the debt on May 31, 2020 to be $34.9M. That’s over $4,200 for every man, woman, and child in our village. Debt service will be about $3.3 million (~17% of the total budget). Interest represents more than one-third of the total. By contrast, in 2010, total debt service was $2.1M.

The real danger in all of this is what will happen if there is a need for millions of dollars in unanticipated emergency funding. We will be forced to borrow it, regardless of the impact it wreaks on our municipal finances, and ultimately, on our taxes.

I am told that, since the Dem Board has declined to consult with the FSC, several key members have resigned. On behalf of all of us in the village, except perhaps, for the Board and Mr. Masur, I’d like to offer our sincere thanks for the countless hours you have all devoted to putting our village on a sustainable fiscal course. The value of your input is incalculable and there is no way the village could have afforded it if we were to retain you at your normal commercial rates. It is profoundly disturbing that what seemed so promising a few years ago has ended like this.

Joel E. Gingold