Evan Vitale Consulting: Tuxedo hires consulting firm to help manage finances

Thursday, August 14, 2014

Tuxedo hires consulting firm to help manage finances – Times Herald-Record

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$1M budget deficit, credit downgrades prompt decision

Published: 2:00 AM – 08/14/14

Faced with a $1 million budget deficit and two credit rating downgrades this year, Tuxedo has hired a consulting firm to help deal with the fiscal management of the town.

Supervisor Mike Rost said the consultants were needed, especially because Genting Americas’ proposed casino might become a reality, bringing millions of dollars into the town. Town officials do not have a background in finance and need training in the best practices to handle the possible influx of cash, he said.

On Monday, the Town Board voted 4-0, with one abstention, to approve the hiring of New York City-based Alvarez & Marsal. The consulting firm has already been working with the town as financial consultants on the Genting project.

According to a preliminary proposal, A&M will analyze current policies, establish proper controls, make cost-saving recommendations and assist with police and highway contracts. It will also help the town with financial planning for one-, two-, five- and 10-year outlooks, both with and without the casino.

In April, Moody’s downgraded the town’s rating from A1 to A3 with a negative outlook. Rost said at the time the primary reason was that the town had a $1 million budget shortfall.

The town responded to the crisis by implementing a hiring freeze, tightening overtime, appointing a fiscal advisory committee and cutting seasonal spending. Later that month, Genting proposed a casino in Tuxedo.

“If we don’t have the control and we get the casino, it’s going to be a mess,” Rost said after Monday night’s meeting. “That’s my fear.”

Town Board member Clifford Loncar raised objections to A&M’s hiring, saying the consulting firm was being retained to essentially write the budget.

“I think the Town Board was elected to do the budget, not to farm it out,” he said.

Loncar abstained from the vote. He said he hadn’t been provided enough information about the financial situation, and that no other consulting firms were invited to make bids.

It wasn’t clear how much the A&M hiring would cost. Details would be available once A&M presented its final plan, Rost said, but Tuxedo’s bill would not exceed $100,000.

A portion of the cost would be paid out of the $1.5 million Tuxedo is set to receive from Genting as the first installment of the host community agreement. Tuxedo will use $1 million of that payment to plug its budget deficit, Rost said.

heasley@th-record.com

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