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Agency affirms Huntington's AAA rating, but revises outlook to 'negative'

A sign outside Huntington Town Hall is seen

A sign outside Huntington Town Hall is seen in an undated photo. Photo Credit: Alexi Knock

Fitch Ratings has affirmed the Town of Huntington's AAA rating on its $80.9 million in outstanding debt, but revised the town's outlook to negative from stable.

Huntington's "uneven" financial performance is to blame for the downgraded outlook, given the $10.5 million deficit posted in 2013 and a projected $3.2 million deficit for 2014, the credit agency, which is headquartered in Manhattan and London, reported Wednesday.

"These deficits will leave the town's fund balance well below its fund balance policy," the report concluded. "The town may be challenged to rebuild fund balance to adequate levels . . . in the near term."

Huntington drew from its reserves in prior years to balance the budget, and to invest in open space and park acquisitions, but Fitch reported that was "a reasonable use of fund balance."

The preliminary 2015 budget proposal from Supervisor Frank P. Petrone does not include plans to draw on the general fund's balance as it has in the past two years. In addition, the 2015 budget proposal's 2.9 percent increase in the property tax levy is helping the town's outlook, Fitch said.

The town is also considering an early retirement incentive program that hasn't been factored into the budget. Town officials told Fitch that they estimate $1.5 million in savings from the anticipated 15 to 30 employees expected to take the retirement deal. The town doesn't expect to roll out the plan and offer details on which employees will be eligible until the end of the year.

The town's debt is "moderate" overall, and the ratings agency praised Huntington for using incoming money for ongoing capital investments in roads and other projects. The practice has given the town financial flexibility and helped it maintain a low-debt profile, Fitch reported.

Fitch also applauded Huntington's aggressive approach on debt; paying down 88 percent of its outstanding financial obligations in 10 years.

"I am gratified that Fitch continues to recognize that even in the face of difficult economic times, Huntington continues prudent management of its debt and that taxpayers and investors can continue to be confident in the Town's fiscal policies," Petrone said in a release.

Fitch's analysts added that Huntington is well-positioned due to its proximity to New York City and the "affluent local economy."

Moody's Investors Service also upheld the Aaa rating for Huntington in April.

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