Fiscal Caution Needed Before Taxpayers Approve $80 Million
The Rye City School Board recently announced a Capital Bond Proposal for a staggering $80 million. This is by order of magnitude four times larger than any previous Rye bond. For Rye, the proposed bond includes an extraordinarily long list of infrastructure projects that unfortunately is not supported by any detail that is related to better student outcomes. In addition, the enormity of the bond is best characterized as flouting several principles of sound fiscal management.
Some, including myself, are concerned that committing Rye taxpayers to such an astonishing amount for the next 30 years is ill-timed considering fiscal developments in New York City, New York State, Westchester County, and Rye itself. In the past several decades, Rye’s prosperity has rested upon a rather narrow base: its proximity to New York City – particularly the financial services industry – and the reputation of Rye public schools, both of which underpin and support real estate values and tax revenue. Today, home values have decreased in Rye and inventory is up (as well as Scarsdale and Larchmont, year-over-year). Such statistics are counterintuitive in the face of generally good economic times and suggest fiscal caution is needed.
A few things are in play in the broader context that Rye voters should be thinking about. New York City has a confidence crisis, resembling the outset of its bankruptcy 44 years ago. Westchester County recently lost its AAA credit rating with County Executive George Latimer saying the County is in “serious financial stress.” Businesses and wealth are leaving the state with New York’s population decline in 2018 the largest of any state, a sobering fact that will likely result in losing two congressional seats between 2020 and 2022. Our city must pay particular attention to responsible fiscal management in these uncertain times. The bankruptcy tips here by this legal expert is what you should have a look at to understand what needs to be done when one is in financial trouble.
Despite all of this, as a community, we support great education for our children. Not only because it is a moral imperative, but equally important, it is sound municipal policy. Unfortunately, an $80 million bond proposal is not sound fiscal policy. The bond proposal has a kitchen sink list of dissimilar projects and by lumping them together over 30 years violates the principle of sound fiscal policy: that debt should mimic the useful life of the project.
The way to address this important issue is for the School Board to take a cue from Rye City and its very effective Finance Committee. Organizing a committee of independent financial expertise would not be a rubber stamp, but rather it would help prioritize all projects and identify those that directly impact the quality of our children’s education. This could result in a restructured bond with tranches to match asset lives. It’s worth noting that through prudent and thoughtful analysis and assessment, the Rye City Finance Committee helped prioritize $11 million of urgent projects, down from an initial estimate of $55 million.
We all want to see school improvements, but we urge the Rye Board of Education to move forward more thoughtfully and prudently. By voting “NO” on March 12, taxpayers have time to get more information in order to feel more confident to vote “YES’ in the very near future.
- Peter Larr