Moody's Investors Service assigned a low credit rating to Village of Amityville bonds last week, a sign of continued concern about its finances despite shrinking deficits.
The agency cited the village's "very weak financial position," limited liquidity and continued reliance on short-term borrowing in assigning a Baa1 rating to $2.3 million in bonds to be sold this week. Moody's affirmed the same rating on $8.2 million of outstanding village debt.
The September bond issue will be used to refund earlier bonds, saving the village an estimated $47,000, Moody's said.
But the low rating of village debt is just one notch above "junk" status, and a downgrade to that level could substantially increase the village's future borrowing costs. Village officials have said that major capital projects like road repair will be delayed until credit ratings improve.
Future ratings will depend in part on whether Amityville can erase its deficit, Moody's officials wrote. They predicted that village finances will remain "pressured" over the near term.
The Moody's release came the same week Amityville announced it had closed out its 2013-2014 budget with a $188,000 surplus, cutting its operating deficit to $356,318. Amityville also recorded a surplus for fiscal 2013.
"It seems like we've stopped the bleeding, but this bond rating affirms that the patient is still in critical condition," said trustee Nick LaLota, the village's budget officer. "If we don't continue to make the structural changes that help us make these budget surpluses, we're likely to move backwards."
LaLota has long argued that those changes should include reassessing contracts with vendors and labor unions -- chief among them Amityville's police officers -- that would reduce the village's long-term costs.
Discussions between the village and the Police Benevolent Association about changes to its contract began this summer and are continuing. Police union leadership declined to comment.