As is often the case in an election, the village's financial situation is an issue. This election is no exception. Like most other issues, the candidates for mayor of the Village of Mineola disagree when it comes to the village finances.

Candidate Jack Martins calls the village's financial situation "murky" as he is concerned with a debt that has reached $32 million while candidate and current mayor John P. Colbert believes the village is healthy financially and points to its A2 bond rating.

"I think that we're in excellent condition. We've increased the fund balance. When I took office, it was $106,000. It's now over $440,000," said Colbert, who has been mayor since 1994. "I think that we have looked for grant monies and have been very successful in restructuring our operation downtown."

Mayor candidate Maryanne Warnecke believes that when she served on the board, it was able to hold the line on or cut taxes for the general fund while making many improvements to the village's infrastructure, but now it is time to refinance the village's debt.

Martins is concerned with the village's debt level per capita debt. He believes the debt level per capita of North Hempstead to be about $1,100 while the Village of Mineola's is about $1,600.

Colbert believes the village under his administration has been conservative as far as tax increases go. The average tax increase during his nine years as mayor has been about four percent. "The way in which I've run the village is as if this is my own personal bank account and it's not my own personal bank account. It belongs to over 20,000 residents of this village who work very hard to pay their taxes. Having that stewardship, I look at that and try to make sure we are able to get the most for the buck," the mayor said.

Martins, however, questions the village's fiscal health considering a $32 million bonding debt, a number Martins and Colbert both agree on. Colbert's view is that the money has been used to make improvements to the infrastructure of the village.

Those improvements were made while either cutting or holding the line on taxes for the general fund, points out Warnecke. However, the former trustee believes the mayor and the board have lost sight of fiscal responsibility. "When I was on the board, we renovated the pool, library, and the parks, built a new village hall, hockey rink, and community center and upgraded equipment for all our volunteer services. We improved our water and sewer systems. We did all this while holding the line or even cutting village general fund taxes. These infrastructure improvements are the single most important contributing factor in the skyrocketing property values in Mineola. The current mayor and board forgot what fiscally responsible government is," she said.

According to Colbert, most of the $32 million bonding debt came from capital improvement projects such as a $4,143,304 debt incurred from the library referendum, which was approved by the voters, $3,463,938 from a newly renovated firehouse and $2,800,000 for a new village hall. Capital projects during Colbert's tenure as mayor (from 1994 to 2002) amounted to $26,285,962 and the mayor points out that included in the $32 million debt, there is $5,450,000 needed to make tax certiorari payments.

But Martins disagrees in how the village has been paying out tax certioraris. In the 2002-2003 village budget, the village allocated $500,000 for tax cert payments. It then borrows money if payments need to exceed that amount. "The tax cert is really the biggest and most flagrant problem we have now. If we know from our certiorari attorney that we are going to have to spend about a million dollars a year on tax certs and we only have half a million dollars in our budget to cover tax certs, we're already acknowledging we are going to have to borrow half a million dollars to make those payments each year. For every million dollars you have out there in debt, it's approximately $80,000 in debt service," Martins said, pointing out that the greater the debt service is in the future, the more cumbersome it will be for the board to deal with problems and emergencies in the future.

Colbert believes the village issued the majority of its BANS and Bonds to make capital improvements. "What you've gotten out of the deal is a village hall with a community center, a new pool, an expanded and refurbished library. You've gotten a class-one hockey rink, a refurbishment of all your parks in the village. We've completely redone two water wells; we've done one water tower and we've bought numerous amounts of fire equipment and ambulances. We've gotten baseball fields. You can go out and see that sanitation truck in front of your house four days a week and say that's money in action. You can see the sweeper coming down your street. That's money in action. You can go to the pool three months a year. You can go into the library. You can be in a number of groups that use the community center," Colbert said. "We're talking about some major reconstruction. The regular day-to-day operations have not been bonded."

Martins, however, questioned how responsible incurring a $32 million debt was. "The perception is that these things have been built and are an asset to the community. I don't think you're going to get argument from anyone as to the need to have rebuilt the infrastructure of this village. The library had to be done. The pool had to be done. The village hall renovation needed to be done. The firehouse needed to be renovated. The extent to which they were done is an open question. The amount of money that was spent in doing them is an open question and then the amount of debt they assumed to do these things is in question."

Martins fears what may happen to the tax rate when the bond anticipation notes (BANS) are rolled over into bonds since bonds have a higher interest rate. "I'm very concerned as to what's going to happen to the tax rate when these things come due," he said. "The problem is going to come when you roll all that stuff over into bonds. Instead of paying two percent, you're going to be paying four and a half to five percent. You have these annual notes that come do every year and every year you pay down the interest on it and a small portion of the principal. But after the fifth year [when BANS must be rolled over into bonds], you have to roll them into a 20-year mortgage basically. Once these things [BANS] all roll into Bonds, we're going to be servicing these things for on average 20 years. That means we're going to have a debt payment. Our debt service is going to be roughly two and a half million dollars a year. That's a significant portion of our tax base."

Colbert said the debt is being addressed and points out that last year, $1 million was paid back off the principal debt as well as $1 million in interest out of the 2002-2003 budget. "I wouldn't have an A2 bond rating if I didn't have a plan," he said. "I don't see any problem financially with this village. There is no worry for anyone that their taxes are going to go up in excess because of a financial obligation."

As of June 1, 2002, the village had a bonding debt of $12,887,304 and a debt of $18,149,600 for bond anticipation notes (BANS). A BAN gives the village a low interest rate of around two percent but most be rolled over into a Bond within five years of being issued at an interest rate of possibly four to five percent. By issuing BANS, the village is taking advantage of a lower interest rates to pay for needed capital improvements, according to the mayor. "I know I have $32 million in bonds and BANS out there, but the BAN is only a limited instrument which allows me to get about two percent less in savings," Colbert said. "There is no fire in this theater. We've only borrowed 28 percent of what we can borrow. If I were a homeowner, we've only borrowed 28 percent of our value."

Martins, however, is concerned about the village's debt level since BANS only have a five-year life span and must be converted to bonds. "If you were to ask a resident whether or not we've started paying for the pool or whether or not we've started paying for the library or whether or not we've already started paying for the firehouse improvements or the skating rink, I think everyone is going to think we've already fully absorbed those items into our budget, which isn't the case," said Martins. "The reality is we've absorbed a portion of it because of the way it's been laid out. Unfortunately, there is no plan to introduce these things into our budget. We're going to have to allocate each year for the next three or four years to offset the debt service as it comes due as we convert these bond anticipation notes to bonds. We should be reviewing our debt levels and our outstanding debt levels and interest payments always with an eye on refinancing these things to try to cut our expenses."

Warnecke believes the village should refinance its debt at a lower interest rate. "My issue with the current mayor and board is simple. They should re-finance the debt of the village to what are now historically low interest rates, just as many of us have recently refinanced our homes. They have not," she said.

Warnecke also warns against bonding for items that can be considered short term needs and relying on one-shot revenues. "My issue is also simply that the mayor and board are not bonding for [capital improvement] projects but rather for short term needs. These budget games just like one-shot revenues are what got Nassau County into trouble. Our Mayor has brought Nassau County budget games to Mineola. This must stop. If they cut all the political patronage jobs that are paying as much as $110,000 in salary to one individual employee with no defined job responsibilities, they would not have to borrow. It is time we stop the political deals woven into the budget and finances of the village. It is time we run the village finances like a business. It is time to put Mineola first," she said.

The mayor points out the village is paying 14 percent of the budget for indebtedness and the money is going to pay for items in the community that make Mineola a desirable place to live. "I think people look at the village as a nice place to live," Colbert said, pointing out that residents can see everything the village has paid for except for tax certiorari payments. "One of the goals is to continue to make it affordable for all our residents to live here and enjoy the quality of life that they deserve."