Glen Cove won't see $3.1M in direct sales tax after waiver fails, credit downgraded

Glen Cove is scrambling to fill a $3.1 million budget hole after a revenue plan the city counted on failed to materialize, a setback that triggered a downgrade to the city’s credit rating and raised fresh doubt about its financial recovery.

The city budgeted the anticipated sales tax revenue this year after voting to change how it receives the money. But the plan required approval from Nassau County that never came, city officials said. It left Glen Cove without a key revenue source that officials used to balance the city's $69.3 million budget without raising taxes. The city froze property taxes in the fall, days before holding an election for mayor and city council.

The shortfall is a setback for Glen Cove, which came off the state comptroller's list of most fiscally stressed municipalities in 2024 for the first time in seven years.

Moody’s, the credit rating agency, said the missing revenue exposed a deeper problem: Glen Cove lacked the financial flexibility to absorb the loss and had relied on a revenue source that remained uncertain.

  Robert Weber, a Moody's anal ys t, said the city used the sales tax projection to balance the budget despite doubts.

“The revenue sounded like it was at risk from the beginning, and yet they budgeted it anyway,” Weber, who is Moody's vice president of public project and infrastructure finance, said in a phone interview.

The rating, according to the Moody's report, "is a reflection of years of poor operations and structurally imbalanced budgets."

City officials did not identify any specific revenue sources it planned to tap. Glen Cove Controller Michael Piccirillo said in an email the city “is aggressively pursuing new recurring revenue opportunities which are anticipated later this year.” 

Bond downgrades can raise borrowing costs. 

Glen Cove recently approved a $4.9 million borrowing plan that pays for upgrades to two city parking garages as well as a water treatment system that can filter toxic, cancer-causing chemicals from the drinking supply.

Waiver flap

When the Glen Cove City Council voted to directly collect a 1.5% tax on sales last summer, it shifted away from a decades-old arrangement. For years, Nassau County has collected the sales tax revenue directly. It's given Glen Cove property owners a cut through a rebate that lowers their portion of the county tax levy.

Later in the year, the city budgeted $3.1 million in sales tax revenue as part of the 2026 spending plan. But Glen Cove won’t receive a cent of it.

City officials said in order to collect the revenue directly this year, they needed Nassau County to approve a late waiver, which never happened. The city is still eligible for the property tax rebate.

A spokesman for Nassau County Executive Bruce Blakeman, a Republican running for governor, did not respond to requests for comment.

Glen Cove Mayor Pamela Panzenbeck, a Republican who was reelected in November, said in a phone interview that the city would "work hard" to improve its credit rating.

"We're not worried, we're just disappointed," said Panzenbeck, a Republican who was reelected last fall. Panzenbeck said.

Nassau Legis. Delia DeRiggi-Whitton (D-Glen Cove), the chamber's minority leader, said in a statement that the city's plan "is nothing but a shell game aimed at masking a property tax hike."

'Well below peers'

Moody’s cited the shortfall and a dip in reserves in its decision to lower Glen Cove's bond rating last month.

Glen Cove “does not have budgetary flexibility to offset the loss of revenue,” according to the report. Moody's dropped the rating from Baa1 to Baa2, which "reflects a financial position that is well below peers," the report said.

Tip Henderson, the city attorney, said in an email that Glen Cove can begin collecting the revenue directly on March 1, 2027, without a county waiver. A spokesperson for the state Department of Taxation and Finance did not say whether the city had that permission in place.

After city officials proposed the shift last summer, Democrats objected. Some accused Republicans of inflating budget projections and framed the loss of the rebate as a backdoor tax hike.

City officials said the change would be negligible. The revenue, they said, could go to the city's general fund and be used to lower property taxes.

Democrats expressed skepticism about the city's plan to plug the deficit.

“I am confident that we will look for ways to fill this hole, but I am not confident we are going to find them,” Councilwoman Danielle Fugazy Scagliola, a Democrat, said in a phone interview. “Not only is it hard to find new revenue streams, it’s hard to find them on such short notice.”

By Joseph Ostapiuk

joseph.ostapiuk@newsday.com@OstapiukJ