The state Legislature’s lack of action on deficit borrowing for Long Beach negatively affects the city's credit, Moody’s Investors Service said this week in a report. Long Beach and Rockland County both sought legislative approval to borrow money to close multimillion-dollar budget gaps, but neither passed both houses of the Legislature.
“Now that the state legislature has not approved the bonds, city officials expect to significantly increase the property tax rate to tackle the deficit,” Moody’s report said.
The city anticipated that it would get approval to sell long-term bonds to close a $10.5 million deficit in its budget. Without a property tax increase, the city will likely face cash flow problems and continue to rely on short-term borrowing, Moody’s said.
Had the Legislature approved the debt, it would have mandated oversight by State Comptroller Thomas DiNapoli’s office.
“Such legislation also brings a greater level of state oversight, which we regard as positive for troubled municipalities, including a requirement to present annual budgets to the state comptroller prior to formal adoption,” Moody’s report said.
The Democratic-led Assembly approved the borrowing, but it died in the Republican-led Senate. Moody's rates Long Beach's credit Baa3 with a negative outlook.