S&P lowers Islip Town credit rating outlook
Standard & Poor's Ratings Services has maintained Islip's top notch "AAA" general obligation bond rating but dropped the town's outlook from stable to negative.
"The outlook revision is due to the town's ongoing structural imbalance since fiscal 2008," said Ruth Ducret, Standard & Poor's credit analyst in a statement Thursday. "Despite strong reserves and a demonstrated willingness to raise revenue and cut expenditures in 2012, officials are projecting further drawdowns."
According to Standard & Poor's, the "AAA" rating means Islip has an "extremely strong capacity to meet financial commitments." However, a negative outlook indicates financial circumstances could lead to a lower rating in the next few years.
The town's deputy supervisor, Eric Hofmeister, who is serving in Tom Croci's stead while the supervisor is on active military duty with the U.S. Navy, laid some of the blame on the prior administration.
"What I can say is it has been pretty clearly documented that this administration inherited a structural imbalance when they came into office," Hofmeister said. "The financial position of the town remains very strong."
Blaming what Croci and his administration said was an inherited $26 million deficit, the town dissolved its entire human services department, laid off more than 50 staffers and raised taxes 28 percent in the last year.
"We continue to look to streamline government and get back to core municipal services in these difficult economic times," Hofmeister said. "Have we put a straight-up mandate to cut 20 percent from the budget? No, we haven't done that, but again we have [town commissioners] continually look at their budgets as they move through the year, and spend in an appropriate manner."
He said Friday that the town is in the midst of its budget process; and he would not predict how or whether tax hikes, layoffs, service cuts or further use of the town's reserves would factor into the 2014 budget.
But Hofmeister said that tax stabilization, or not radically increasing taxes, "is always a win for the constituents," though he said he does not speak for the rest of the town board.
Some positives have helped Islip achieve and keep its top-tier rating, according to Standard & Poor's announcement: the town has a strong regional economy; a diverse property tax base "with what we consider very strong wealth and income"; solid reserves "with a demonstrated willingness to raise revenue and cut expenditures"; and moderate debt.