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Moody’s downgrades Hempstead Town’s credit rating

Anthony Santino at Mirelle's Restaurant as Republicans await

Anthony Santino at Mirelle's Restaurant as Republicans await election results, Nov. 3, 2015. Photo Credit: Johnny Milano

Hempstead’s credit rating has been downgraded for the second straight year, with Moody’s Investor Services giving the town a negative outlook for its accumulating debt and financial forecast.

The Wall Street bond rating agency downgraded the town’s credit rating from Aa1 to Aa2, which is the third-highest rating Moody’s provides.

The Moody’s report, released Friday, said the bond rating was downgraded due to “three years of structurally imbalanced operations which have led to deterioration in available fund balance.”

While the report notes the town’s large, diversified tax base, high wealth and income levels and manageable debt, it said the negative outlook “reflects the expectation of additional declines in the town’s reserve and liquidity position across all operating funds in fiscal 2016.”

The town, Long Island’s largest, passed a $436 million budget for 2016 while freezing the town’s $269.6 million tax levy and borrowing $18.3 million in reserves.

Town board members also carried over a 2014 $30 million budget note to next year to help cover $21 million owed to the Fashion Institute of Technology for Nassau County student tuition payments paid by Nassau.

Town Supervisor Kate Murray and her successor, Supervisor-elect Anthony Santino, have campaigned on multiple years of fiscal stability but have received three downgrades in the past two years from Moody’s and Standard & Poor’s.

Murray’s office issued a statement through town spokesman Mike Deery, but Santino declined to comment Friday.

“Hempstead Town has put taxpayers first by not raising taxes for four of the last five years. At the same time, a difficult national economy has impacted governments at all levels,” Deery said. “Our town’s credit ratings remain at solid investment grade, recognizing Hempstead’s strong financial position. We will continue to aggressively control costs within our discretion while delivering high-quality services to residents.”

The town was most recently downgraded three levels from AA+ to A+ by Standard & Poor’s in March, citing the town’s use of $24.9 million in reserves to balance the 2015 budget.

The 2016 report said the town should focus on “replenishment of reserves and return to compliance with formal fund balance policy.” The town could improve its bond rating by also fulfilling its pension payment obligations.

The town could face additional downgrades if board members do not maintain a balanced budget, have a greater 2015 fiscal decline than its current forecast and do not replenish its 2016 appropriations.

Nassau County still owes Hempstead $18.8 million that the town previously paid to local utilities.

With Stephen Levine

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