Moody’s Investors Service downgraded the Village of Valley Stream’s bond rating to Baa 1 with a negative outlook, officials said.
The bond rating was downgraded from A1 on the village’s outstanding $29.3 million in general obligation debt, Moody’s officials said last week in a news release.
The decrease comes after “years of operating deficits and draws on fund reserves” as the village’s fund balance declined below what’s necessary for an A rating, the report concluded. The investors service’s analysts said they believe the village’s financial position “is likely to remain weak in the near term” and required a negative outlook.
If village officials work to have a “consistent trend of annual operating surpluses and increasing reserves,” the bond rating could be upgraded, the report noted.
But Moody’s cautioned in its release that the rating could be further downgraded if the village is unable to meet a projected surplus in fiscal 2017 and continues to decrease its reserves and liquidity.
Village Treasurer Michael Fox called Moody’s downgrade “a little disappointing” and noted that the board of trustees is to vote on its second balanced budget Tuesday.
Valley Stream officials have used the fund balance recently “to pay for some of our heavy winters” instead of raising taxes, he said. The proposed budget will put funds back into the fund balance, Fox said.