Moody’s Investors Service renewed top-tier credit ratings for the City of Middletown, New York, in early August, citing strong economic growth and a healthy fund balance.
The city’s short-term debt was assigned the highest rating of MIG 1, and its long-term borrowing retained the rating of A1, a middle grade within the highest-ranking tier.
“Not only did we maintain our A1 ratings, but there were also many positive comments in the report regarding the city operations, including the spending that we’ve been closely scrutinized over the years,” Mayor Joseph DeStefano said at the latest city council meeting.
Strong ratings make city bonds more attractive to bidders and bring about modest interest savings, according to Middletown City Treasurer Leonora Liz.
In the report, Moody’s attributes the city’s healthy fund balance—essentially a rainy-day account in which unspent revenue accumulated over the years—to its strong budgeting practices.
Ms. Liz said the city currently has a fund balance of nearly $11 million.
As for economic growth, the report cites ongoing commercial, residential, and educational institution development in the city, with new water and sewer lines along Route 17 and a future downtown trail linking three urban colleges in the planning.
The three colleges—Orange County Community College, Touro College of Osteopathic Medicine, and Fei Tian College—form an education triangle enclosing downtown.
Moody’s report also lists two areas that, if improved, will further enhance the city’s credit ratings: relatively low resident income and high levels of employee benefits and pension obligations.
The city’s poverty rate was 17 percent in 2021, about four points higher than the state and national averages; its market value of taxable properties per capita was $58,500, compared to the national average of $64,697, according to the report.
As for employee pensions and benefits such as health insurance, they account for a significant portion of city obligations and fluctuate with market conditions as well as the number and age of retirees.
Ms. Liz said she had been shopping around for alternative employee health insurance providers under the mayor’s direction in the hope of bringing down the costs.
“We cannot control the market, but we can try to mitigate,” she told The Epoch Times.
Middletown currently carries a debt of $35 million, which is less than one-third of the credit limit set under the New York Constitution.
By law, local governments and school districts in the state can’t incur debts above certain percentages of a rolling five-year average of the full valuation of taxable properties within their jurisdictions.
For cities of Middletown’s size, the limit is 7 percent.
Most debts carried by the City of Middletown were incurred to improve water and sewer infrastructure, with repayments supported by user fees, according to Ms. Liz.
Last month, the city council authorized $3 million in long-term debts to finance the reservoir dam upgrade project to bring three century-old dams up to new state standards.
