Moody’s downgrades Hempstead's credit rating

For the third year in a row, Moody’s Investor Service, one of the three major credit rating agencies, has downgraded the Town of Hempstead, this time from an Aa2 rating to Aa3.

Aa1-Aa3 investment grades still are defined as high-quality, with very low credit risk. A “C” is the lowest rating that Moody’s awards.

The Feb. 2 announcement was tempered somewhat by Moody’s also upgrading the town’s fiscal outlook to stable, after downgrading it to negative in December 2015.

Town of Hempstead Supervisor Anthony Santino said on Monday that he was “encouraged” by the report, despite the downgrade.

Moody’s “has acknowledged that I have presented the first structurally balanced town budget in many years, and that I have slashed overtime costs, reduced the township’s payroll and instituted other fiscal reforms,” he said. “Moreover, the upgrade in the town’s credit rating outlook assigned by Moody’s signals that my budgetary reforms are having a positive impact for local taxpayers.”

In 2015, Moody’s report said that the second downgrade came about after “three years of structurally imbalanced operations which have led to deterioration in available fund balance.”

According to the new report, however, although the town’s available fund balance position remains “narrowed,” Moody’s projects that the town’s fiscal obligations are likely to stabilize and its fiscal balance is sustainable.

If the town sustains material growth in its available funds or maintains a balanced budget or “surplus operations,” the rating agency may upgrade the town’s rating, according to the report.

Another downgrade could be forthcoming if the town were to rely too heavily on non-recurring revenues or maintain significant operating deficits.

Town of Hempstead Communications Director Mike Deery said that the town’s first balanced budget in five years, as well as cost-cutting measures, staff reduction and overtime management, contributed to the town’s outlook upgrading to stable.

“Moreover, Supervisor Santino’s administration is committed to continued solid fiscal reforms,” said Deery, “as well as improvement in both the town’s already solid credit ratings and its ratings outlook.”