The tiny oceanfront Village of West Hampton Dunes was among the small percentage of villages throughout New York, and the only one on the East End, that state officials labeled as being in a state of fiscal distress in a report released last week.
State Comptroller Thomas DiNapoli utilized a grading system he developed to examine the finances of 535 villages for the 2013 fiscal year, classifying them based on a number of indicators, including their year-end fund balances, as well as practices of operating with a deficit and short-term debt issuance. He recently used the same system to examine the finances of school districts, towns and counties, as well.
Mr. DiNapoli’s report gave each village an overall fiscal stress score based on a weighted point system, with those municipalities receiving scores of 45 percent to 54.9 percent classified as being “susceptible to fiscal stress,” those receiving 55 percent to 64.9 percent scores as having “moderate fiscal stress,” and those earning scores of 65 percent to 100 percent as having “significant fiscal stress.”
With a score of 59.2 percent, West Hampton Dunes received the second-worst rating of “moderate fiscal stress,” along with three other villages, including one in Nassau County and two upstate. Three villages in western Long Island and one in upstate New York received the most severe rating of “significant fiscal stress” and seven, including two western Long Island villages, were pegged as “susceptible to fiscal stress.” The rest were classified with “no designation.”
The report showed that West Hampton Dunes, which had a $1.5 million operating budget for 2013, also had a negative fund balance of $148,000, while the state recommends keeping fund balances at above 10 percent of gross expenditures, meaning that West Hampton Dunes should have about $147,000 in that account at all times.
The village also accumulated unwanted points for operating at a deficit the past three fiscal years—it was $183,000 in the red in 2011, $108,000 in the red in 2012, and $122,000 in the red last year—and for issuing $200,000, or 14.8 percent of its $1.35 million in total revenues, in short-term debt in 2013. Mr. DiNapoli’s office recommended limiting such debt whenever possible.
On Monday, West Hampton Dunes Mayor Gary Vegliante downplayed the rating system for using the same standards for villages of all sizes and without accounting for contributing factors, such as damages from Hurricane Sandy. He explained that his village, located entirely on a barrier beach island, had no option but to use its reserves to replace beach fencing and make repairs after the 2012 storm, all while it was still recuperating from Hurricane Irene in August 2011.
“By my definition, it’s a small snapshot of a very, very [unusual] period of time in our history,” he said of the state report, saying the conditions were an anomaly. “We’re not at financial risk whatsoever. I’m very proud of the job my trustees do in maintaining a conservative and frugal government.”
Mr. Vegliante added that the village has yet to receive a few hundred thousand dollars in aid from the Federal Emergency Management Agency, which will beef up its fund balance and pull it out of the red.
Brian Butry, a spokesman for Mr. DiNapoli, said state officials were somewhat surprised that West Hampton Dunes received the fiscal stress classification, given its waterfront location and multimillion-dollar homes. The total assessed value of properties in the village was well over half a billion dollars in 2013, according to the village website.
“It’s a rather affluent community,” Mr. Butry said. “The common observer wouldn’t associate it with having financial issues.”
He explained, however, that in smaller villages, “any type of hiccup is going to throw those numbers off,” and agreed that Hurricane Sandy played a role in the village’s poor grade.
The report, Mr. Butry added, is designed to put in place a system of warnings that creates transparency for taxpayers while giving government officials the opportunity to address problems early on. Though the report doesn’t offer any specific remedies that address the fiscal issues, local governments can use the information provided to make more conservative assumptions in their long-term budget planning and also improve their short-term budgeting, Mr. Butry said.
“Being in the middle level gives you an opportunity to reduce the level of stress that you’re in and does highlight some troubling signs for a community,” he said.
But while West Hampton Dunes saw signs of trouble, the neighboring villages of Westhampton Beach and Quogue received pats on their backs from the state comptroller’s office. Quogue, which had an operating budget of $7.7 million for 2013, did not accrue any points, receiving a score of 0 percent.
Westhampton Beach, which had an operating budget of $9.7 million for 2013, received a score of 5 percent. Mayor Conrad Teller credited the Board of Trustees, as well as Village Clerk/Treasurer Elizabeth Lindtvit, for keeping a tight rein on the municipality’s finances.