Sept. 1, 2011 In the short span from June 9, 2010, to July 29, 2011, Supervisor Christopher St. Lawrence and his town board have passed 18 bonds creating more than $85 million in new debt for the Ramapo taxpayers. That’s about $7 million more than the total of the entire 2011 annual budget for the town. What’s going on?

Before we get to possible answers for some really scary questions, here’s a list of the loans (bonds) taken out by the town in a little over a year.

Here are some additional interesting facts.

On November 20, 2010, St. Lawrence and his town board adopted a $78.5 million budget for the year 2011. To be a little more precise, they planned for $78,469,361 in spending for 2011. And they committed the taxpayers to ante up the $78.5 million in taxes and other revenues to balance the budget.

So, in the fall, they commit the taxpayers to ante up the $78.5 million in taxes and other revenues to balance the budget.

Meanwhile, and coincidental to the collection of the taxes, there’s a seeming unending stream of bonds (loans) being taken out that by the time we get to the end of July, this year, the taxpayers owe another $85.3 million. This money is not revenue from taxes, it’s in the form of loans that have to be repaid with interest.

But if the original $78.5m was for running the town government, then why did we need to borrow more than the entire total of the budget in new bonds?

What happened to the original $78.5 million and why wasn’t it enough? Was the $85.3m applied to the costs in the original budget? If revenues were not sufficient for the budget, then wouldn’t this borrowing constitute a kind of Ponzi scheme where we have to borrow this year to cover underfunding and will have to do more to repeat the cycle next year?

If the budget was balanced, what was there beyond the $78.7 that necessitated these really large loans?

Here’s a possible clue. Point your nose to the north, facing Pomona, and listen. That giant sucking sound you hear is the debit pit created by this supervisor and his board, and the reason it creates quite a roar when you get closer is because it almost equals the indebtedness of the entire fiscal year. We estimate the cost of the baseball stadium is about $70 million, right now, and you should keep in mind that the work is not yet done on this monster project. There is expensive roadwork yet to be completed, not to mention all the maintenance and repair going forward that the town, or rather, the supervisor, has asked the residents to take on.

It’s hard to get line-item specific on the charges for this project because there have been, from the beginning, conscious efforts by the supervisor, the town board, and even the town attorney to hide these costs. When resolutions are passed to pay overruns and other charges to the various construction firms, the costs come out of a variety of town budgetary accounts and no longer are the words "Project Grand Slam" said out loud.

For a big-picture view of this fiscal mess consider the following:

1. The largest single loan of all the 18 bonds listed is the $25 million to guarantee the loans for building Project Grand Slam—the ballpark (2011-155).

2. State law requires that the funds for capital projects must be encumbered, that is, reserved, for these projects before they are begun. That didn’t happen here. The ballpark does not show up anywhere in the budget. There is no money appropriated for it, so where did the money to pay for the construction come from? The Ramapo Local Development Corp has no money other than what the Supervisor and Town Board give it, or loan it, or promise it. The account books for the RLDC don’t show sufficient funds for the project.

3. The promise that the ballpark would be built with money from private investors turned out to be both a predictable failure and a notorious lie. Remember the promise made after the referendum vote turned down public funding by a resounding 70% against 30% for? St. Lawrence’s public response was, "I got the message. The stadium will be built with private money. There will be no taxpayer dollars."

As it turned out, Provident Bank was the only private investor that stepped forward to invest in return for naming rights. That’s one investor taking only a very small fraction of the cost of the building. Many believe there was considerable arm-twisting to get this much done, and that opinion has been bolstered by the recent layoffs at the bank--an institution that could hardly afford this kind of risky investment, especially in the face of such overwhelming negative public opinion. The other so-called private investors, the owners headed up by Ken Lehner, have produced no numbers that have been publicly released. The number of owners, though, apparently, has diminished, according to the Web listing.

But even if these two "investors" kicked in as much as $2 million, that would still leave about a $68 million hole kicked in the Ramapo Town finances with no one but the taxpayers to pay the bill.

Most importantly now is the question, "When does that bill come due?" The $85 million might have paid Holt, and Morano, and Turco, and Sony, and all the others who built the stadium, including massive cost overruns and environmental fines, but when do we the residents have to cover that debt?

St. Lawrence and his board can’t raise our taxes more than 2% next year because of the state’s new annual limit, right? Isn’t that what the tax cap is about?

Well, no. Our legal sources believe that a town can raise your taxes more than the 2% prescribed by the state. They only need to get a majority vote of the town board in order to authorize a different number.

But they wouldn’t do that in an election year, right? I mean, that would be political suicide, right?

Well, yes they could. The Town Budget has a quirky calendar. According to town rules for the budget, "On or before the Thursday immediately following general elections, Public hearing is held. Hearing may be adjourned from day to day but not beyond November 15. After public hearing and prior to adoption, Town Board may make final revisions to Preliminary Budget. Not later than November 20 Town Board adopts the budget."

To summarize the lousy grammar of the town’s explanation it’s: Election Day is November 8; First possible date for a public meeting to discuss the new budget is November 11 (it could be as late as Nov 15); November 20 Town Board votes on the new budget—that’s safely almost two weeks after the election.

That twinge you just felt might have been an uptick in your cynicism quotient. Many people experience that when they are made aware of the curious timing of this schedule.

When the new budget (2012) is released, after the elections, it will be carrying the load of normal operations plus the new debt from the ballpark and St. Lawrence’s other Local Development Corporation projects. If you haven’t yet heard, the supervisor has actually begun the planning work for a hotel he wants to build across from the Jos. St. Lawrence Sports Center and a small housing development in Sloatsburg as well. It’s almost as if we have our own little Trump, and he has big plans for your money. It’s not over with just the ballpark.

If circumstances were different, we would suggest that before the election, the media and the residents demand an answer from St. Lawrence and his board about what impact on the new budget the $85 million in debt will have, and how much will our taxes have to be raised to cover this enormous debt. But considering that the answer will be coming from the very same source who just a few months ago said, "I got the message. The stadium will be built with private money. There will be no taxpayer dollars." I would suggest that you ask the question, but then follow up the answer with "How do the bonds get repaid, by whom, and when?"

On March 28, 2011, Moody’s Investors Service issued an announcement titled "Moody’s Assigns Aa2 Rating and Negative Outlook to Ramapo Local Development Corporations’ $25 million Go-Backed Bonds. Concurrently, Moody’s affirms the Aa2 rating and assigns a negative outlook to the town’s $102 million outstanding general obligation debt, which is secured by the town’s unlimited property tax pledge." It’s Ratings Rationale offers the following reason for the downgrading: "The negative outlook reflects deterioration of the town’s financial flexibility resulting from recent draws on reserves and volatility in economically sensitive revenue streams which are expected to continue over the near term."

Anyone else creeped out by that clause "the town’s unlimited property tax pledge?"

Michael Castelluccio
Preserve Ramapo
www.PreserveRamapo.org

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