The Suffolk County, N.Y. legislature approved a budget for 2014 on Wednesday that includes tax anticipation notes equal to 14.3% of 2014 expenditures.
It authorizes the sale of up to $410 million in tax anticipation notes. A source at the county's comptroller's office said the county expects to sell that amount on Dec. 11. The notes would be expected to mature in mid-August 2014. These dates are preliminary, she said.
The legislature made some small but significant changes to the county executive Steve Bellone's budget before approving it.
On Monday the legislators chose to reject Bellone's proposal to refinance $33 million in debt repayments in 2014. The legislators rejected it because it would have required the approval of state government and would have required the county pay even more to pay off the debt in 2015, according to Newsday.
Instead, the budget specifies that the $33 million in debt be retired by drawing on a sewer reserve fund. After the draw the fund would still have $102 million.
On Wednesday the legislator approved two budget amendments to the budget.
With these approvals the budget for the county's operating funds is expected to be $2.8 billion, up 0.8% from 2013.
In October, Suffolk County Budget Review Office director Robert Lipp said the county budget had a structural imbalance primarily due to its delay in paying growing pension costs.
The county will pay $150 million to New York's pension system towards the county's pensions in 2014, Lipp told The Bond Buyer.
However, the state is allowing it to not make $87 million of payments that would normally be due. Instead the county will have to make these payments in the next 12 years with interest, he said.
Lipp said there was a risk in the budget's assumption that the county will be able to get $17 million from the sale of a nursing home. It is unclear if the county will be able to sell the home when it expects and at the price it hopes, Lipp said.
Lipp also mentioned five other possible risks to the budget, each of which would amount to at most a few million dollars.
Lipp's areas of concern with the budget "do not represent a deficit, but rather a risk of a deficit," Lipp said. However, it does have a structural deficit, mainly due to its deferring payment of the pension obligations, he said.
The adopted budget anticipates making about $136 million in debt service payments, 4.9% of the budget.
The budget includes a general fund tax freeze and a 2.34% increase in the police district tax for Suffolk's five western towns.
Bellone could veto parts of the legislature's Wednesday actions. However, legislative spokesman Michael Pitcher said he thought was unlikely.
Suffolk County is rated A by Fitch Ratings, A-plus by Standard & Poor's, and A2 by Moody's Investors Service. In September New York Comptroller Thomas DiNapoli named Suffolk the third most fiscally distressed government of the roughly 1,050 New York local governments that he had reviewed.
Suffolk has been selling about $124 million in bonds a year for capital projects in recent years and will probably continue at this pace in 2014, Lipp said.
The county has roughly $1.4 billion in outstanding debt.