The Wall Street ratings agency Standard & Poor’s upgraded the Town of Hempstead’s bond rating, citing the town’s surpluses for the past three years.
The town’s bond rating, used to gauge interest rates for borrowing, was upgraded Thursday from A+ to AA- with a positive outlook, the fourth highest grade the bond agency offers.
“During the past three fiscal years, the town has generated multimillion-dollar surpluses,” analysts wrote. S&P also noted “strong budgetary performance.”
The town made a $37.2 million turnaround from a negative $13.7 million in reserves in 2014 to a projected $23.5 million in reserves for 2017. The review was based on the town’s audited 2016 finances.
Analysts said there is a “1 in 3 chance” they could raise the town’s rating if the town were to maintain reserves and keep balanced budgets.
The upgrade was based on the town’s “focus on controlling expenses through numerous internal controls,” such as the town’s “implementation of several levels of approvals for purchases, as well as inventory control to prevent extraneous purchases.”
Analysts said they expect the town to continue to balance increased expenses with a stable revenue stream, increasing reserves maintaining at least 15 percent of expenditures. The town generated an additional $20 million in revenue through tax increases.
S&P said the current administration is implementing new approvals for purchasing and reducing expenses.
“I’m confident that the fiscally responsible measures, along with the economic development strategies my administration has been putting in place, will move us toward even more secure footing in the future,” said Supervisor Laura Gillen, who took office in January.
Former Supervisor Anthony Santino said the economic turnaround was spearheaded during his two-year tenure and by Supervisor Kate Murray before him.
“During my first term as town Supervisor, I committed my administration to running America’s largest township like a business — with accountability to taxpayers as the unwavering goal,” Santino said in a statement. “I am proud that my cost cutting efforts and strong fiscal management have been recognized by Wall Street and resulted in this upgrade in the town’s bond rating.”
Gillen argued that the analysis didn’t reflect Santino’s tenure, when he failed to refinance the town’s debt under new tax laws and increased salaries before leaving office.
“He also added $2.4 million in unbudgeted salary costs and a burdensome no-layoff clause while he had one foot out the door,” Gillen said. “That’s not very good business.”
S&P downgraded the town’s bond rating three levels in 2015 for “continued fund balance deterioration,” which included using reserves to balance budgets and a $22 million tuition settlement with the Fashion Institute of Technology.
The town’s bond rating has also been downgraded three times by Moody’s Investors Service, which stands at Aa3.