LaCorte Says Deficit Bond Not the Way to Go

BY DAGAN LACORTE, Suffern mayor and candidate for county executive
Property taxpayers are stretched to the max by a 100 percent increase in property taxes imposed by the Rockland Legislature and Executive over the past few years. The current proposal to radically increase the county’s debt with a deficit bond will only further strain the county’s finances and saddle property taxpayers with the costs of the county’s disastrous fiscal decisions for years to come. The New York State Legislature should reject the proposal.

Rockland County’s long-term accumulated budget deficit stands anywhere from $96 to $114 million dollars.

Rockland’s Baa3 bond rating from Moody’s Investors Services is the lowest in New York State. One of the reasons for the horrid rating is the deficit in operating expenses. Proponents of the deficit bond say  Rockland can improve its bond rating by borrowing at low interest rates, wiping out the operating deficit and replacing it with debt. They say that would relieve the short term pressure on the budget that is crippling the county’s bond rating.

But borrowing $100 million does nothing to bolster the county’s finances. All it does is turn a current deficit into heavy, long term debt that will crush another generation of homeowners and depress property values. In Suffern, the Board of Trustees took the opposite approach– thoughtfully reducing debt service costs while increasing investment in roads and infrastructure that maintain property values.

While Rockland is below its New York State Constitutional debt ceiling, almost all municipalities operate below their debt limits. The relevant question is where does Rockland currently stand in terms of debt and how would another $100 million in borrowing affect the county’s fiscal standing in the state.

With over $500 million in current long term debt, Rockland has the ninth highest debt ratio of New York’s 62 counties. Not exactly anyone’s idea of debt-free.

An additional $100 million in borrowing and debt would make Rockland the fourth biggest debtor — behind only Broome, Nassau and Monroe counties in debt levels. Nassau County required a state-run fiscal control board. Debt-stressed counties are not attractive to businesses –  we need to create jobs.

So the notion that becoming “deficit free” at the cost of the fourth biggest debt load in New York will somehow dazzle the bond rating agencies and lead to financial health is disingenuous. What’s the real deal?

Legislators hope and pray that by borrowing the $100 million this year, the economy will dramatically improve by the time payments on the bond are due to be paid next year. They are borrowing money to buy a goose and hoping for golden eggs in 2014.

This same reckless strategy of deficit, debt and delay resulted in the legislature overestimating revenues by $250 million since 2006 and got Rockland into this fiscal mess to begin with. It simply makes no  sense to continue such a discredited approach.

The solution is to implement a deficit reduction plan within Rockland’s budget as part of a comprehensive plan to restructure and modernize county government.

Rockland families know how to responsibly handle mortgage or a credit card debt. You put money aside each month to pay your debt down until its paid off. You don’t borrow from Peter to pay Paul and claim victory.

A self implemented and sustained deficit reduction plan would demonstrate to the state and the bond rating agencies that Rockland’s government is committed to digging itself out of the hole it created. This is the approach we’ve taken in Suffern with respect to long-term deficits in our water and sewer plants and will be deficit free in both by 2017.

Numerous state mandates make Rockland’s financial situation more difficult, and dramatic reform is needed. Our state representatives should focus their time and political capital on getting Rockland meaningful mandate relief rather than carrying the dirty water of a broken county government up to Albany.