Moody's assigns Aaa, negative outlook to $13.4M bonds
Moody's Investors Service has upheld an Aaa rating with a negative outlook for $13.4 million in capital improvement bonds the Town of Huntington is putting up for sale Thursday.
The ratings agency said that outlook reflects the town's amortization of about 33 percent of the required pension contribution in 2012.
"The practice of deferring current operating expenses to future period is inconsistent with our view of strong financial management," a Moody's report said. "Continued amortization of annual pension payments could result in a downgrade to Aa1."
Town Supervisor Frank Petrone, a Democrat, said Thursday the town had a cash-flow problem as it awaited reimbursement from the Federal Emergency Management Agency after superstorm Sandy. To free up cash, he elected to use the amortization as a one-time option instead of short-term bonds, which would've been costlier.
"Our first priority was public health and safety," Petrone said.
Moody's said the Aaa rating reflects the town's solid financial position with healthy reserves, a wealthy tax base and low debt burden.
Town board member Gene Cook, an Independence Party member who is running for town supervisor this fall, said the report raises concern about Petrone's budgeting.
"When we start getting potential downgrades in the future if we don't do things right, you need someone ready to rock and roll, step up to the plate and get it done," Cook said.
Competing ratings agency Fitch this week gave the town an AAA rating for the same bonds, and for its $83.9 million in outstanding debt.