Rockland County will ask the New York Legislature for authorization to issue up to $80 million of bonds to cover its operating deficit, and to raise its sales tax by three-eighths of 1% to cover those bonds.
Tuesday night’s vote by the county Legislature to make the request came one week after Moody’s Investors Service placed Rockland’s A1 general obligation rating on review for possible downgrade, affecting $240 million of GOs.
Rockland is located about 25 miles north of New York City.
Tuesday night’s vote followed debate over whether to bond only $62 million. Legislators Edwin Day, R-New City, and Christopher Carey, R-Bardonia, offered an amendment to earmark the lesser amount, which the lawmakers defeated.
Debate centered around whether a property tax hike in the 2012 budget would cover the $18 million in question.
"What I see happening is that they're using the extra money to hedge some bets," Day said in an interview. "The [$18 million] note was already added in the 2012 budget, and they resubmitted it as part of the actual deficit."
Under the plan approved Tuesday, the county would pay the money back over 10 years.
The county recently raised property taxes nearly 30%. Sales tax revenues will help keep Summit Park Hospital and Nursing Care Center in Pomona open. Moody’s, in addition to citing the deficit, pointed to Rockland’s inability to sell Summit, upgrade its operations, or make it more cost-effective.
Moody’s had also placed Rockland’s $45 million of Series 2011 revenue anticipation notes, $55 million of Series 2011 tax anticipation notes, $13 million of Series 2011A bond anticipation notes, and $10.5 million of Series 2011C Bans on review.
“Negative rating actions are always a wake-up call. It’s difficult to have to explain to residents and taxpayers why the cost of borrowing is going up,” said Todd Miles, a partner at Hawkins, Delafield & Wood LLP, who has advised the county. “There’s now a growing awareness about the importance of rating agencies perceptions in addressing the county’s fiscal distress.”
Rockland lawmakers fear that unless the county plugs the budget gap, a state-appointed oversight board could step in.
Miles praised the county for taking proactive steps.
“To the credit of Rockland County, unlike other fiscal distress situations I’ve seen over the years, by raising the county’s property tax by 30% and adopting a local law requiring annual preparation of a multiyear financial plan, they have taken two major steps forward before state intervention that you typically don’t see until after state oversight is in place,” he said. “Rockland has on its own taken steps, even though they are painful steps, to restore fiscal balance.”
The county overrode the new state property tax cap, generating enough money to pay off the deficiency note issued in 2011.
Moody’s plans to complete its review within 90 days.