Moody’s Investors Service has downgraded Riverhead Town’s credit rating, meaning the town will have to pay higher interest rates on any future borrowing involving municipal bonds, according to a summary report listed on the credit rating agency’s website.
The downgrade, from an Aa2 score to an Aa3 score, was attributed to the town’s steady depletion of its reserves.
Riverhead Town, which has a population of about 33,500, carries $112 million in debt, the report reads — good for $3,343 per person in town.
Moody’s noted the town could get back in better graces if it expanded its tax base, enhanced “socioeconomic indicators” and managed to operate at a surplus, with the extra money being used to replenish its reserves, according to the report. However, the report also says the rating could fall further if the town’s 2014 fiscal audit’s figures are worse than estimated, if a deficit for 2015 reduces the town’s financial flexibility even further, or if a structurally imbalanced budget in 2016 relies on surpluses.
Supervisor Sean Walter said the downgrade didn’t come as a surprise, though he said the town has no plans to go out to bond and that the rating doesn’t affect any existing debt.
“The town has buttressed itself against this downgrade,” Mr. Walter said. “The Town Board has been very frugal. We have not authorized any bonds, nor do we intend to authorize any bonds, so the downgrade has no negative consequences for the taxpayers of Riverhead because we don’t have to hit the streets to borrow money.”
He also said the town did not budget to pull from its reserves in 2015 and won’t do so in 2016.
The town’s financial administrator, Bill Rothaar, said the town is currently looking at a $1 million deficit for 2016.
“So the supervisor, for the 2016 budget, has to either figure out what other revenues are coming in, or what he’s cutting,” he said.
Mr. Walter said the town will continue to raise taxes but stay under the tax cap while cutting expenses. He said Moody’s “formula” would be to re-stock surpluses by increasing taxes even further — something he’s not willing to do.
“That’s not the formula for the taxpayers,” he said. “We’ll be looking to cut another $850,000 to $1 million in salaries next year. Everything is on the table to get to this $1 million. We’ll have a balanced budget without” relying on land sales at the town’s Enterprise Park at Calverton’s property, he said.
“That’s my goal,” he said.