Moody's cuts Amityville rating one notch

Credit rating agency Moody's Investors Service cut its rating on Amityville's debt by a notch last week, saying the village's finances are "very weak" and expected to deteriorate further.

Moody's cited the statewide property tax cap and growing fixed expenditures.

The downgrade, the third in three years, comes two months after a state audit critical of village officials found that Amityville's spending routinely exceeded tax revenue.

"We're struggling with reduced revenues and increasing costs," Mayor Peter Imbert said Monday, with few signs of immediate relief. But he said the downgrade could have been avoided, and many of the state's concerns allayed, with a sizable tax hike -- a move he opposes.

"This is the worst possible time to hit people with taxes, when they're barely able to stay in their homes," Imbert said.

And while the downgrade could make it more expensive for the village to borrow money, no major capital projects are planned for the near future, he said.

In recent years Amityville, like many municipalities on Long Island, has grappled with swelling employee pension and health insurance obligations. Revenue from mortgage taxes and building and alteration fees has fallen far short of expectations.

The tax grievance process, where property owners dispute the village assessor's findings, has eroded the tax base, Imbert said. Moody's also warned that the planned demolition of the former Brunswick Hospital, currently the village's largest taxpayer, would cut into revenue until the property is sold and new development begins.

Meanwhile, the general fund, used to pay for day-to-day village operations, has fallen over the last three fiscal years from a one-time $1.9 million balance to a deficit Moody's pegs at $300,000, citing village officials. That's up from a deficit of $678,000 at the end of the 2010 fiscal year.

The downgrade, from A2 to A3, is still investment grade. Amityville carries $9.1 million of outstanding debt.

Amityville's 2011 budget included a 9.7 percent tax hike. The $14.5 million 2012 budget includes a 4.82 percent increase in property taxes officials said is driven partly by employee benefit obligations including pension costs for 98 full- and part-time village employees and a health plan covering 52 retired employees. They are expected to cost $3.8 million, up from $3.3 million budgeted last year.

In recent months, both Nassau and Suffolk counties as well as Oyster Bay Town and the City of Long Beach have also had their debt downgraded by ratings agencies.