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DeliciousThe East Hampton Town Board has authorized Supervisor Bill McGintee to borrow up to $4 million to cover the town’s bills in anticipation of receiving tax income from the county in the coming weeks.
On Thursday night the board unanimously approved going out to bond on a “revenue anticipation note,” or a short term loan against anticipated income that is due to the town in the near future.
Supervisor McGintee said the loan will probably be about $3 million, though Councilman Pete Hammerle said it could be as much as $4 million.
Supervisor McGintee said on Thursday night that the loan is needed because mortgage tax revenue from the county has been delayed. With the town’s general fund estimated to be more than $9 million in deficit, auditors have told the town that they would likely experience a severe cash-flow problem as the year wore on. Board members had said they hoped they would not run out of cash for paying bills until the fall.
Compounding the town’s cash flow problems, the county announced last week that mortgage tax income is down considerably from last year, due to the struggling housing market. East Hampton has generated 42 percent less in mortgage taxes in the first six months of the year than it did during the same period last year.
East Hampton’s long-term bond rating recently dropped nearly four spots due to the town’s large deficit but its short-term loan rating is still at the highest level set by the Moodys credit rating service.
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