MOody’s Investor Services (MIS) has upgraded the City of Newburgh’s credit rating from Baa2 to A3. The city moves from being identified as a moderate credit risk to the category of being a low credit risk. This is good financial news for the city, as a better credit rating helps make it more attractive to lenders while improving its image. In announcing the upgrade to the credit risk categories, Newburgh said the credit upgrade will save him, local businesses and taxpayers money as the city tackles needed infrastructure improvements.
The city also received Moody’s highest governance rating, G1, which sheds a positive light on its institutional structure, political credibility and effectiveness along with budget management.
Newburgh Boardwalk from a boat on the Hudson River. Photo via Google Maps.
The city said Moody’s upgraded credit rating reflects an aggressive, multi-year effort by City Manager Todd Venning, Mayor Torrance Harvey and the Newburgh City Council to make the city’s budget process more transparent and accessible while it reduces spending and increases the tax base. Moody’s reported that over five years the tax base has grown from $871.2 million in 2017 to $1.3 billion in 2022.
The city had operating income of $54,666,000 in 2021 compared to $46,359,000 in 2017. Moody’s noted that the city had gone from a fund balance of $7,353,000 in 2017 to a fund balance of funds of $19,939,021 in 2017.
“The reserve position is expected to remain strong in the short term as the city has achieved structurally balanced operations, significant change in budget management and overall governance over several years,” Moody’s said, all and that he added a note of caution. “Its local economy has grown, but its resident income levels remain weak. Its long-term liabilities are high along with fixed costs; however, the city is working to reduce liabilities by changing health care plans and the use of grants to finance projects”.
Moody’s said the city now has a stable financial outlook and expects its financial position to remain at strong current levels despite expected labor costs. Moody’s said Newburgh’s ratings could be further upgraded if there is material growth in the local economy accompanied by a reduction in long-term liabilities and fixed costs. Moody’s noted that the city had 28,856 inhabitants in 2020.
Moody’s said that despite the growth the city is working toward, the city remains socioeconomically challenged with high poverty (22 percent) and median household incomes compared to the state and nation that are only 69 percent of the state average and 75% of the US average. .
Moody’s noted that the city’s poverty rate of 22 percent is an improvement from the early 2010s, when it was close to 30 percent. He also noted that Newburgh has a high crime rate.
Moody’s noted that Newburgh’s fiscal year 2021 revenue turned out to be very strong, as sales tax revenue came in nearly $3 million above budget and property tax revenue was d ‘$1.2 million over budget. He said not only is property tax collection strong this year, but spending is down. Moody’s reported that overtime spending for public safety has declined this year.
Moody’s analyzed the city’s separate water, sewer and sanitation funds. He found that the financial conditions of these funds have been improving in recent years.
Regarding environmental considerations, Moody’s reported that Newburgh is not doing as well as expected and has an overall issuer environmental profile score of moderately negative.
“While carbon transition, water, natural capital, and waste and pollution risks are modest, the city is exposed to extreme weather events such as hurricanes and nor’easters. Favorably, multiple levels of government are involved in projects related to resilience projects to strengthen city facilities and vulnerable areas of the city, such as the riverfront, against future severe weather events,” Moody’s reported.
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