When a village board borrows money, it isn’t a blank check to spend as they please.. In December 2019, the Village of Wappingers Falls took out a $350,000 loan ( a Bond Anticipation Note) that was legally restricted and explicitly earmarked for one single purpose: repairing the village dam.

But the Village Board never even started the repairs. Instead of keeping that loan money safe in a dedicated capital account, the money was quietly raided and used to pay off the village’s everyday operational employee retirement bills to the State.  

The state caught them doing this over two years ago. Yet, as of this 2026 audit, the board still hasn’t returned the money to the capital account.  

What Does “Paying It Back” Actually Mean?

The State Comptroller is ordering the village to repay the capital account. Because municipal loan money is protected, the board cannot just shrug their shoulders and erase the debt when they spend it on the wrong thing.  

The village board must physically find $350,000 in cash to put back into that dam fund. But because the original money is already gone, spent years ago on routine expenses, the village board has to pull that $350,000 from somewhere else.  

How Will This Payback Affect Taxpayers?

Money doesn’t materialize out of thin air. Because the board used a loan as an unapproved piggy bank to keep daily operations afloat, village taxpayers are now facing a severe double-whammy:

 1. Reduced Services or Higher Taxes: To scrape together $350,000 to replenish the raided account, the board may be forced to either slash the current operating budget (meaning cuts to DPW road maintenance, park services, police services or village staffing) or raise local property taxes to cover the $350,000 deficit they created.

 2. Paying Interest on Nothing: Taxpayers have been paying interest on that $350,000 loan since 2019. We are paying out-of-pocket for a loan meant to fix a hazardous dam, but we don’t have a repaired dam and we don’t have the cash anymore.  

 3. Destroying Our Credit Rating: The Comptroller explicitly warned that when a village uses loan proceeds for the wrong purpose and refuses to return them, it ruins the village’s reputation with investors. When Wappingers Falls needs to borrow money in the future for actual emergencies, like water main breaks or road collapses, interest rates will skyrocket because lenders now view our local government as a high-risk gamble.  

Connecting this to the Village Boards upcoming vote on their Water/Sewer Takeover

This exact type of shell game is why the community should be terrified of the board’s upcoming vote to abolish independent citizen oversight and dissolve our Water Board. If the Board of Trustees was willing to break state law to raid a restricted $350,000 dam fund just to cover their daily operational bills, imagine what they will do when they eliminate citizen eyes and gain total, centralized control over millions of dollars in water and sewer infrastructure funds.  

The board proved they cannot be trusted with restricted capital funds. Their response to getting held accountable isn’t to fix the books—it’s to remove the watchdogs.