By MIKE RUSSO
The AAA rating is the highest credit rating issued by Standard and Poor's, and was issued largely because of the strong financial standing of the Town of Hempstead's general obligation (GO) bonds, which are used by the town for infrastructure upgrades and capital projects.
According to Town Supervisor Kate Murray, the town's success can be largely attributed to their ability to foresee the economic slowdown, which has taken its toll on many other local governments. Murray said that the town reduced their expectations on the amount of mortgage tax revenue they would receive by 30 percent last year, in anticipation of the housing market crisis. By budgeting conservatively, the town was able to take less of a hit when mortgage tax revenues dipped by 50 percent this past year.
"I've worked very closely with the town comptroller, assuming that this was going to happen," said Murray. "It's that foresight I believe that has really earned us this rating. Fiscal management is really a painstaking task, but the reward to our lovely taxpayers really make it worthwhile."
In a report issued by Standard and Poor's, the agency states that the town's financial profile has been consistently strong, as they have maintained very strong reserve levels despite fluctuations in the economy over the past decade. In addition, the agency rated Hempstead's management practices as "good", indicating that practices and policies exist in most areas, although not all may be formalized or regularly monitored. The agency also recognized the town's ability to anticipate the reduction of mortgage tax revenue while at the same time keeping the property tax rate low.
Murray said that the town has helped control costs by instituting work shifts to reduce overtime and has even met with special district commissioners to discuss cost reduction goals.
"It's basically looking at the bottom line every single year and as you are crafting your budget for next year, being very conservative in your revenue projections," said Murray, who added that money could be taken out of their healthy surplus to compensate for "rainy-day" situations.
The upgrading of the town's bonds is a major step forward in keeping the cost to taxpayers as low as possible. The higher the rating of a bond, the more favorable interest rate the town will receive. Murray said the town practically gets their money for free because so many banks want to do business with them due to them being such a stable partner. Murray said that when the housing market and overall economy was hot several years ago, it would be easier for a bond's credit rating to receive an upgrade. She said it makes this accomplishment all the more rewarding.
"To actually get an upgrade in lean times, it just makes it that much more gratifying," said Murray.
Comments about this story? MRusso@liherald.com or (516) 569-4000 ext. 283.
