The Glen Cove City Council’s approval of a $4.9 million borrowing plan last month has reignited debate over the city’s finances, after a May Moody’s Ratings report downgraded Glen Cove’s credit rating to Baa2 and warned that the city faces a projected budget gap tied to delayed sales tax revenue.
The report concluded that the city is expected to remain in a negative financial position through at least the end of 2026, citing structurally imbalanced budgets, a negative reserve position and elevated leverage as key challenges.
At the May 26 City Council meeting, Councilwoman Danielle Fugazy Scagliola said the downgrade highlighted concerns she raised during last year’s budget process. Referring to the council’s decision earlier in the month to delay the vote on the borrowing plan until late May, Fugazy Scagliola said that elected officials have a responsibility to fully review major financial decisions before taking action.
“We did rush into our budget vote in November,” she said. “And again, where that’s left us now with a deficit, I don’t think that we could be too careful in reviewing how we’re spending the city’s money.”
Fugazy Scagliola pointed to roughly $3 million in anticipated sales tax revenue that Moody’s said will not arrive until 2027.
Later, she added that the report was not unexpected. “We have a hole in the budget,” Fugazy Scagliola said after the meeting. “If you don’t have $3 million, you can’t spend $3 million. So then what happens? You have to cut things.”
Mayor Pamela Panzenbeck acknowledged the challenge, but expressed confidence that the city would successfully address it. “We will have a hole in our budget,” she said during the meeting. “We are working on several things to correct that, as we have every single year that I’ve been the mayor.”
Councilman John Perrone, who supported the borrowing plan, said that Moody’s’ concerns about the missing revenue stream deserve attention. “It was the reliance on that revenue stream that balanced this budget,” he said.
Perrone said he questioned the speed with which the 2026 budget was adopted last fall. “Maybe perhaps it should have been reviewed a little longer,” he said. “When they pushed that budget through, they rushed to vote on that.”
Still, he said, the city must now focus on finding solutions. “This was a tough call to make,” Perrone said. “The money is not going to be there. And how does that affect us? We have to now look at where are we going to make up that deficit.”
He said that discussions were already underway about potential new revenue sources.
Anthony Basile, a professor of accounting at Hofstra University, said the rating downgrade appeared to be tied largely to the city’s growing debt burden and budget challenges. While he acknowledged that Glen Cove’s finances have improved since 2021, he said that Moody’s was concerned that the city’s cash position improved partly because it took on additional debt, increasing its leverage ratio.
Basile pointed to Moody’s’ conclusion that the city’s Baa2 rating reflects “years of poor operations and structurally imbalanced budgets,” and said the city is now facing both a budget deficit and rising debt obligations. Municipalities should be cautious about taking on additional debt to address temporary budget shortfalls, he said, particularly when revenue is delayed. Referring to the sales tax revenue that will not materialize until 2027, he noted that once it begins flowing regularly, “there may not be a need to raise taxes.”
“The message really should be that, if it’s not necessary to borrow money, don’t,” Basile said. “Especially if it’s just a short budget shortfall.”
City Controller Michael Piccirillo defended the administration’s financial management, and characterized the situation as temporary. “The City believes this is just a minor setback and one-time occurrence as certain revenue expected to be received in 2026 has been delayed until 2027,” Piccirillo wrote in an email to the Herald.
The city, he said, is pursuing new recurring revenue opportunities, re-evaluating fees, renegotiating contracts and closely monitoring expenditures.
Piccirillo attributed the decline in reserves largely to unanticipated snowstorm response costs, overtime, pension contributions and staffing shortages in the city’s EMS and fire dispatch departments.
He also highlighted Moody’s’ positive assessment of the city’s water fund, noting that reserves grew slightly in 2025 and are projected to continue increasing this year, marking what would be the eighth consecutive year of reserve growth.
