Moody’s Investors Service has revised Glen Cove’s credit outlook to negative from stable due to a potential budget hole if state and county aid are slashed this year.
“There are up to $900,000 in budget risks in state and county aid expected later in the year,” Moody’s said in a report last week. “Absent federal support for the state and county, these revenues are not likely to materialize, punching a hole in 2020 operations.”
The city receives more than $4 million in aid from the state and Nassau County, according to Moody’s.
Glen Cove controller Michael Piccirillo said in an email that the city is bracing for an estimated 20% reduction in two aid programs: New York State’s Aid and Incentives for Municipalities and Nassau County’s Local Assistance Program.
“This is a risk to our state and local aid as per our estimates based on guidance received from those authorities and information published publicly on the loss in sales tax revenues from both the state and county,” Piccirillo said. “We receive aid from those authorities and it comes from their revenues, sales tax collection being a major source.”
Moody’s rates Glen Cove Baa2.
The New York State budget office expects to cut its spending on local assistance by at least $8 billion, but the details of those cuts — which will first be submitted to the State Legislature — have not been announced. Nassau County reported in May that revenues in 2020 are now projected to come in $437.8 million lower than budgeted due to the state-ordered shutdown. More than half of the drop is from lower sales tax revenues, which the county projected will decline by $261.7 million from what was budgeted, a 20% drop.
Moody’s report said the city will “struggle financially over the next three years following a significant decline in reserves” last year. The rating agency said the city’s finances aren’t expected to experience direct strain due to the pandemic because additional expenses incurred by the city will be mostly offset by funding from the federal CARES Act and the Federal Emergency Management Agency.