Moody’s credit rating for the City of Port Jervis was downgraded on March 16, and for city officials who have watched the decline of the city’s fund balance, the increase in operating costs, and the relatively stable tax rate over the last few years, it was no surprise.
Moody’s downgraded Port Jervis from an A1 to an A3 on a scale that goes from AAA to C, and gave it a “negative” outlook for the coming year.
The report cited the city’s small fund balance (it’s rainy day fund which is currently at $250,000), its lack of cash, and its growing debt burden as some the main factors that contributed to the lowered rating.
Costs, mostly personnel-related, have been rising by 15.9 percent since 2010 while the city’s income has only increased by 9.5 percent. State aid and sales tax revenues have also declined, the report said.
“We believe the city will be challenged to manage future budgets, grow fund balance and manage a material increase in debt burden without finding alternate revenue sources or cutting expenditures,” the report said. “Management’s ability to restore structurally balanced operations and rebuild reserves will be critical factors in future reviews.”
The immediate impact is that Port Jervis is no longer eligible for the Energy Improvement Corporation’s (EIC) Energize NY program, which helps businesses become more energy efficient through financing and other kinds of support.
The city was looking at the program before it got the news of its credit rating downgrade, and while it is currently no longer eligible because of its lowered credit score, it may be in the future.
Valerie Maginsky, the Executive Director of the Port Jervis Community Development Agency (PJCDA) and a proponent of the Energize NY program, said the EIC is developing a way to service cities with lower credit scores like Port Jervis, and she thought it could be available by the end of the year.
