S&P Global Ratings (formerly known as Standard and Poor’s) have reaffirmed Newtown’s AAA/Stable rating, due to “good planning” and reflecting the town’s “consistent financial results.”

“We’ve been doing the right things, and continue to do the right things,” said First Selectman Dan Rosenthal at a February 22 Board of Selectmen meeting. “It shows in our ratings.”

Rosenthal noted that a call last week between town officials and S&P representatives “clearly went well” and it was thanks to hard work and preparation put in by Finance Director Bob Tait and Economic Development Director Crystal Preszler.

In a ratings report from S&P, the overview section noted that Newtown is rated “higher than the nation” because the credit agency believes “the town can maintain better credit characteristics than the nation in a stress scenario, based on its predominantly locally derived revenue base and our view that pledged revenue supporting debt service on the bonds is at limited risk of negative foreign intervention.”

“I think it’s a solid report,” Rosenthal said. “They’re happy with how we’re managing things, but not suggesting we can pick up a lot of extra debt. It speaks to a lot of things we’ve been doing.”

The report states that the long-term rating reflects S&P’s views of the residential economy with “very strong economic metrics and a broad and diverse metropolitan statistical area;” “formalized and strong adherence to financial management policies, and strong institutional framework;” “consistent and at least break-even budgetary results and equally steady and strong reserve level;” and “manageable fixed costs expected to stay relatively stable.”

The report notes the town’s Grand List growth of 3.4% from 2020 to 2021, which represents growth in both real estate values and motor vehicle assessments, as well as new construction of single family homes and rental apartments remaining steady.

“We expect our view of the town’s economic profile to remain unchanged over the near term,” states the report. “We believe its wealth and income metrics, as well as underlying tax base, remain stable, further supported by participation in a broad and diverse metropolitan statistical area.”

Newtown was credited with a “strong management environment” in which “formalized policies are consistently followed.” Highlights include the use of three years of historical data to inform revenue and expenditure assumptions; an annually updated budget forecasting tool, which forecasts out 10 years; the Capital Improvement Plan that identifies projects and funding for the next five years and is updated annually; and monthly financial reporting, including revenue and expenditure performance.

Newtown’s debt management policy helped its favorable rating, with debt service of 9% and targeted to get under 8%, as well as its unassigned fund balance that is targeted at 12% of the total budget.

While the report suggests some concern over the town expecting to issue $19 million in new debt over the next two years, it does not expect to revise its “view of the town’s debt profile.” The report mentions the town’s “strong and manageable debt and contingent liability profile.”

“They’re a little concerned about upcoming debt but they’re not expecting to change our rating,” said Tait. “They recognize we are formally planning our debt.”

The report notes the town has “made progress in adopting increasingly conservative assumptions, which we expect to continue.”

Newtown also benefits from a “strong institutional framework,” as the “institutional framework score for Connecticut municipalities is strong,” according to the report.

Qualities of Newtown that contributed to the rating include, “very strong economy,” “strong budgetary performance,” “strong budgetary flexibility,” “very strong liquidity,” “very strong management,” and “very strong debt and long-term liabilities.”

Reporter Jim Taylor can be reached at jim@thebee.com.