There’s good and bad news for Greenporters in a multi-year financial forecast presented to the Village Board Monday night. On the positive side, Greenport is in good financial shape. But it faces challenges in 2013 to close what’s expected to be a “sizable gap” between anticipated revenues and expenditures, according to financial advisor Noah Nadelson of Munistat Services of Port Jefferson Station.
“Right now, the village looks a lot, lot better than it did three or four years ago,” Mr. Nadelson said.
His report shows village debt of $5.072 million as of the end of May 2010. That has been brought down from almost $10 million when Mayor David Nyce took office in 2007. Debt reduction was achieved through tight fiscal management, avoiding more capital projects and the $1.7 million sale of Clark’s Beach property to Suffolk County, Mr. Nadelson said.
“The bottom line looks good right now,” he said. “However, starting in fiscal 2013, structural changes need to be made in order to prevent a significant deterioration of fund balance.” Using conservative estimates, Mr. Nadelson forecasted that “the natural growth rate of expenditures will outpace the growth rate of the revenues.”
The Munistat figures assume a 3 percent tax rate increase in each of the upcoming fiscal years. In the current fiscal year, which started in June, the tax rate rose by 2.3 percent.
“It would not be in the best interests of the village’s residents to rely on real property taxes as the primary solution to this problem,” the report said.
The document, authorized by the Village Board at a cost of $5,000, is intended to be a fiscal planning guide to avoiding such gaps, according to village treasurer Charlene Kagel. She will be working with the Village Board on a series of measures aimed at closing the gap.
Among the ways to avoid major tax hikes will be cost-cutting measures that could include some contractual agreements, she said. Many of the steps to close the gap will be discussed in upcoming open meetings, but issues affecting contracts will have to be discussed in executive sessions, Ms. Kagel said.
Village Board members will need to work with the plan to determine what future capital projects it can and can’t afford and to prioritize projects to fit specific village needs, Mr. Nadelson said.
“It’s supposed to be a working tool,” he said.
Former trustee Bill Swiskey criticized the expenditure for the report, maintaining that it contained no information the village didn’t already have. But Mr. Nadelson said the report would also serve as the basis for assessment by bond rating companies. Such ratings affect the interest charged when the village borrows money.
Greenport currently has an A1 rating from Moody’s Investors Services, but it’s been about four years since the rating agencies took a close look at the village. Based on the current administration’s ability to cut debt and hold down spending, Mr. Nadelson predicted that the village rating would remain high when its finances are reviewed.
Mr. Nadelson also stressed the importance of village officials updating the report’s findings at least annually to reflect real numbers and actual projects undertaken so that future projections would retain their accuracy.