Moody’s Says No To Bond Rating Upgrade

By John Voket

Moody’s Investors Service, the agency that sets Newtown’s municipal bond rating, announced Thursday morning it was holding the line and would not grant an upgrade to the town from its current AA2 to AA1 status.

Finance Director Robert Tait looked at the decision as a blessing in disguise, saying the conveyance of an upgrade would come with the expectation that the town would infuse its undesignated fund balance in relation to overall budget increases going back retroactively to 2002.

“It would have put a great deal of pressure on the town to find the money in this tight budget cycle,” Mr Tait said, adding that otherwise, the preliminary advance from Moody’s had glowing reviews of Newtown’s financial practices and oversight.

The agency is expected to issue that report publicly by Friday, January 23.

Mr Tait said Moody’s general guideline for a community like Newtown dictates an undesignated fund balance be maintained at between 10 and 14 percent of revenues. He said the fund balance has been unchanged since the town’s last rating upgrade in 2002.

“To ensure the fund balance remains in line with the increasing annual budget, it should be funded in the budget as an annual expense,” Mr Tait said, adding that he would take that aspect of the town’s financial practices up with local officials before the 2010 fiscal cycle.