This is a printer-friendly version of an article from Zip06.com.
10/24/2017 12:00 AMThe absence of a state budget has made municipal budgeting a challenge for towns all across the state. The challenge is greater for towns that rely heavily on state funding—and count Clinton, which has received more that $7 million annually, in that latter category. That reliance—and the possibility that that funding may disappear altogether—has led credit rating firm Moody’s Investor Services to assign the town, along with 28 others, with a negative outlook.
It could be worse—in the same release, Moody’s placed ratings of 26 Connecticut cities and towns and three Connecticut regional school districts under review for downgrade. A downgrade to a municipality’s credit rating can increase the cost of borrowing for a town.
Currently Clinton is rated Aa2, the firm’s third-highest ranking; town bonds are “judged to be of high quality and are subject to very low credit risk,” according to the firm.
Clinton shedding its negative outlook listing appears to hinge on the state budget.
In a press release, Moody’s Investor Services said in part, “Connecticut has been operating without an approved budget since the beginning of the current fiscal year on July 1...Under the executive order currently in effect, state funding of local governments is lower than it was in the last fiscal year by a total of $928 million.”
As a result of that drop in state funding, “[W]e have assigned negative outlooks to 11 local governments and 1 regional school district which, in the absence of other revenue measures or cuts in expenses, would need to raise property taxes by 10 percent or more to make up for the decline in state funding from fiscal 2017 to what is provided under the executive order currently in effect,” the release continues.
Clinton’s 2017-’18 budget derives approximately 16.5 percent of its funding from the state.
Clinton First Selectman Bruce Farmer (R) has spoken out to say that recent rumors and reports that have stated Clinton’s credit rating has been already downgraded by the credit agency Moody’s Investor Services are “premature.”
“This is just one credit agency’s viewpoint,” said Farmer. “Our ratings have not changed since the spring.”
Farmer said that he had seen reports stating that the town had already been re-rated, and heard of people on Facebook saying the same thing. A post in the All Things Clinton… Facebook group received questions from users question the veracity of the report from Patch.com.
Farmer said that if Governor Dannel Malloy’s executive order stands, then a number of towns could be in trouble.
“It’s all a big maybe at this point,” Farmer said. “I think we’ll be OK.”