North Hempstead Town will end the practice of amortizing its pension payments in 2017, a practice that had been criticized by Moody’s Investors Service, according to town officials and a new report released by the bond credit rating agency.
Credit rating agencies have criticized local governments for the practice of scheduling pension payments over multiple years. North Hempstead’s payments have steadily decreased in recent years, from $990,946 in 2015 to $202,265 in 2016, according to the report issued last week by the Manhattan-based bond credit rating agency.
Carole Trottere, a town spokeswoman, said “the town decided in 2014 to reduce and eventually end amortizing our pension costs.”
The Town of Huntington amortized its pension payments for one year after superstorm Sandy brought added costs in 2012. Town spokesman AJ Carter says the town has no plans to amortize pension payments again.
Moody’s, in a 2013 report, criticized Huntington Town for the practice and threatened to downgrade its rating to Aa1 from Aaa, the agency’s highest possible rating.
Moody’s Investors Service assigned North Hempstead an Aa1 rating for its debt, the second-highest rating that can be awarded by the agency. Moody’s has awarded North Hempstead the Aa1 bond rating five consecutive times in two years, officials said.
The rating covers $67.3 million in Public Improvement Serial Bonds, 2016 Series B and C bonds. The credit rating agency also affirmed the Aa1 rating on the town’s outstanding general obligation limited tax and said the outlook on the debt was “positive.”
Creditors wrote in the report that the town was working toward a “declining debt burden.” North Hempstead, after the sale of bonds, “will have approximately $340 million of debt outstanding,” officials wrote. That figure is expected to fall as the town implements a “conservative debt management plan,” according to the report.
The agency wrote that credit challenges for the town also include “some reliance on economically sensitive sales tax and mortgage tax revenues.”
North Hempstead Supervisor Judi Bosworth said in a statement that the rating “enables us to keep low interest on our debt, lowering costs for taxpayers.”