NEW BRITAIN -Moodyâ€™s Investors Service has downgraded the cityâ€™s bond rating, according to a report the agency published Oct. 1.
The downgrade drops the cityâ€™s general obligation debt rating to Baa2. The rating was previously Baa1. Moodyâ€™s also revised the outlook from stable to negative.
The downgrade reflects the cityâ€™s reliance on nonrecurring revenues to stabilize its financial position in recent years.
â€śThe Baa2 rating further reflects the cityâ€™s significant sized tax base and challenged demographic profile. The rating also incorporates the cityâ€™s elevated debt profile with rapidly escalating debt service and its modest pension liability,â€ť part of Moodyâ€™s summary reads.
In the rating outlook, Moodyâ€™s wrote: â€śThe negative outlook reflects the near term challenge the city will face to match recurring revenues with recurring expenditures while managing its escalating debt service, which grows rapidly through fiscal 2021.â€ť
â€śWe were downgraded by Moodyâ€™s along with many other cities and towns across Connecticut as a result of the state budget crisis,â€ť Mayor Erin Stewart said. â€śS&P (Standard & Poors), the largest municipal bond rating agency in the nation, upgraded us 4 times, most recently to an A-plus. Iâ€™m not concerned by this.â€ť
Democratic mayoral candidate Merrill Gay blamed the downgrade on financial mismanagement.
â€śMayor Stewartâ€™s poor financial planning will cost New Britain taxpayers,â€ť Gay said. â€śNew Britain needs real economic development not increasing debt despite two tax increases.â€ť
Stewart said, â€śItâ€™s only been four years since we saved the city from the brink of bankruptcy. It takes a long time to get finances in order and it doesnâ€™t happen overnight. Iâ€™m proud of our accomplishments and getting us back on the right track.â€ť
Earlier in October, Moodyâ€™s named 26 municipalities to be reviewed for possible downgrades. Three regional school districts were also reviewed. At that time, Moodyâ€™s also assigned negative outlooks to ratings for three regional school districts and 25 municipalities, including Berlin and Plainville.
Skyler Frazer can be reached at 860-801-5087 or by email at email@example.com.