East Hampton Town has made the final payment on $21.2 million in deficit financing issued 10 years ago when the town was in the depths of a financial quagmire during which it had raided its Community Preservation Fund to pay its operating expenses.
The town needed special permission from the New York State Legislature to issue the deficit financing bond, and has since crawled its way back to fiscal health, achieving a Aaa credit rating in 2017 which it has maintained since.
Former East Hampton Town Supervisor Bill McGintee had resigned amidst the controversy in 2009, while his budget officer, Ted Hults, pleaded guilty to two misdemeanor charges and paid a $200 fine the following year. The financial quagmire came at the height of the Great Recession, as Mr. Hults attempted to cover the town’s expenses as revenues from traditional strong sources, like mortgage taxes, dried up.
The controversy also led to tighter controls over the use of Community Preservation Fund money, which is used for land and historic preservation, and, since 2016, for water quality projects, throughout the five East End towns.
Current Town Supervisor Peter Van Scoyoc, Budget Officer Len Bernard and Senior Accountant Neide Valeira gathered last week to celebrate the signing of the final $162,700 payment on the bond.
“This is the culmination of an extraordinary effort on the part of the town and its staff over three different administrations to restore the town’s financial well-being,” said Mr. Bernard, who has overseen the recovery effort.
He added that strict financial oversight, including the implementation of rigorous budgetary controls and procedures, and conservative budgeting by successive town administrations since 2011, have enabled the town to achieve the highest Moody’s Investors Service credit rating possible while paying off the deficit financing bond and systematically retiring more debt than is taken on each year.
“Our strong financial position as evidenced by our past four consecutive years of a Aaa bond rating coupled with significant fund balances have allowed us to weather the financial challenges resulting from the COVID-19 pandemic,” said East Hampton Town Supervisor Peter Van Scoyoc, who took office in 2018. “With ongoing conservative budgeting and oversight, we will be able to continue meeting community needs, and plan for needed infrastructure improvement and capital projects, which can be financed at lower cost due to our positive credit rating.”