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Supervisor's Update October 2014

posted Oct 30, 2014, 6:15 AM by Web Master   [ updated Oct 30, 2014, 9:14 AM ]
Hello Tuxedo,

I want to inform you on where we stand on several items, as we close out the third quarter and head into the final quarter of 2014.  We are busy working on the 2015 budget, while navigating through the challenges of getting through 2014 with the available funds remaining in our account.  Had it not been for the $1.5M negotiated payment from the Genting organization, we would have been forced to seek a tax anticipation note to bridge the shortfall in revenues versus expenses of approximately $1.7 million dollars. I have detailed the cause of the negative balance, below. Fortunately, the payment from Genting is guaranteed and not contingent upon the awarding of the casino license.

There has been much spirited discussion surrounding the board’s decision to expand the scope of work of our consultants, Alvarez and Marsal, to conduct a thorough review of the Town’s operations. The decision to sole source them the project was out of necessity and was only made after counsel vetted the decision as being lawful.  They will review and benchmark our organizational structure, salaries, security, financials, policies, union contracts and our various processes.  They will build a financial model that looks forward to the future and reflects the changes we expect to see in our town with the development of Tuxedo Farms and the continued growth of non-tax paying entities, such as the WatchTower Group.  This project will be funded from the $1.5M we received from Genting, at no cost to the tax payers.  The information we gain from this process will prove invaluable for this board, as well as future boards, since we will have a sound financial plan and foundation to build on. 

The town board has recently outsourced the handling of the town’s payroll and installed security cameras at several facilities to safeguard town property.  This is the first step in a process to improve controls and to meet State audit requirements.

The State Comptroller’s office is finishing its review of the town, and will be sharing their findings with the board members before publishing the report.  This should take place within the next 30-days.  Additionally, for the second straight year Tuxedo has been placed on the State Comptroller’s list of municipalities that are susceptible to fiscal stress.

Our long term relationship with the independent town accountant has come to an end, as the board voted to bring in a fresh set of eyes to review our books.  Ted Eglit has served the Town well over the past 17 years, but we feel it is time for a change.  We wish Ted the best in his future endeavors. 

We met with the operators of the mulch facility and that was followed by a board meeting to receive legal counsel.  The lease was terminated due to their continued violations and fines that become the responsibility of the Town.  There will be more meetings to come as we work on a strategy to manage down the material from our property.

Our final 2015 budget must be submitted by November 20th, and much work has been done already.  Staying below the 2% tax cap will be challenging and difficult decisions will have to be made.  All options are on the table as we look to cut costs and increase revenue. 

I feel it is important to point out a series of facts: The town was thought to carry a positive fund balance of $950,000 into fiscal year 2014.  In reality, not only did we not carry any reserves forward into 2014, but we also had to pay $750,000 of 2013 bills with 2014 revenue.  When I took office on January 1st, I assumed a $1.7M cash shortfall.

Much has been made about the Annual Update Document,

that is filed with the State Comptroller’s office each year,  stating we had a negative fund balance to close the year.  People have asked, “Where is the money?”  The fact is that we never had the money.  Just two weeks after submitting the final 2014 budget stating that we would carry nearly $1 million into 2014, our bank account was empty because the 2013 budget over estimated our tax revenue and under estimated our costs. That is a lethal combination when it comes to a town or family budget.   

The link below will take you to our budget web page.

I invite to you to become familiar with the many expenses that the town must cover, and hope you will understand the difficult planning that must be undertaken and hard choices that lie ahead. Since nearly 80% of Tuxedo is protected parkland, we do not have a lot options for raising revenues beyond our property tax rolls. I also welcome your suggestions in dealing with our fiscal situation.

The problems are real but, together with the town board, we will find lasting solutions to move Tuxedo on a firm financial footing.


Michael Rost

Supervisor-Town of Tuxedo