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Overcast Glen Cove's Moody rating rises from stable to positive
Glen Cove’s credit outlook improved from stable to positive, according to a report released in May by Moody’s Investors Service, a credit rating agency. The last time the city earned a positive outlook was in 2017 and was maintained until 2018.
The improved outlook fiscally affects Glen Cove’s bonds issued for its capital borrowing needs. The better the rating the lower the interest rate the city will receive in the bond market. A lower interest rate ultimately results in less interest to pay on the amount borrowed, so therefore, there is effectively less cost to residents.
Glen Cove’s comptroller, Michael Piccirillo said that over the past two years, the city has tremendously reduced its fund balance deficit due to improved budgeting practices, fiscal discipline and aggressive oversight which has resulted in a fiscal 2022 operating surplus. This is the second consecutive year the city has realized an operating surplus. In just two years, the city’s deficit has gone from $5.4 million to just under $1.9 million, and long-term liabilities have decreased significantly compared to prior years.
Mayor Pamela Panzenbeck is pleased with the Moody’s upgrade. She said it reflects the hard work she’s put into changing the course of the city’s financial condition.
“The city is continuing to conservatively budget revenues and expenses while stabilizing taxes for our residents and our debt position continues to be manageable,” Panzenbeck said. “And, in fact, has decreased over the past two years as a result of paying down debt at a greater rate than the issuance of new debt.”
Glen Cove’s credit rating outlook was revised from a stable outlook to negative in 2020. But it changed from negative to stable in 2022. The report stated that the improved outlook was a partial reflection of the city benefiting from a growing tax base in Nassau County, and an improvement in serial bonds. Moody’s noted that management in the city was working to bring the budget into balance and a growth in reserves. It also indicated that long-term liabilities were manageable and fixed costs were declining.
“Due to the pandemic, the city’s state and local aid revenue was reduced,” Piccirillo said. “Therefore, when the 2021 budget was developed, it was done so conservatively, insomuch as budgeting certain revenues, with the expectation that they would be lower than normal because of the impact of the pandemic on the city’s finances.”
According to Piccirillo, in 2021 the city’s state and local aid was restored to normal pre-pandemic levels. The city’s conservative budget practices aided in the city receiving more aid than was budgeted. Piccirillo added the excess amount had no offsetting costs, and therefor fell in line for an operating surplus for the 2021 fiscal year.
“Managing the financial responsibility of the city takes time and patience,” Piccirillo, said. “That success is achieved in small steps and the city is headed in the right direction.”
The credit profile of the city has historically suffered from weak reserves and imbalanced budgets. The report states management has implemented various initiatives that have brought the budget into structural balance and started to replenish the accumulated deficit in the General Fund. The positive trends the city is experiencing is expected to continue through the end of 2023 and into 2024.
The improvement to positive, is primarily due to the city’s significantly reduced fund balance deficit, which resulted from improved budgeting practices, fiscal discipline, and aggressive oversight. Fiscal year Dec. 31, 2022, ended with an operating surplus and helped to reduce the city’s accumulated deficit by approximately $3.5 million since its highpoint in 2020. Additionally, long-term liabilities have decreased considerably compared to prior years.
