City of Newburgh receives positive credit outlook

- Cloey Callahan
Posted 1/20/21

In the beginning of the new year, the City of Newburgh received an updated “positive” credit outlook from Moody’s Investors Service.

The city’s rating remains unchanged …

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City of Newburgh receives positive credit outlook

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In the beginning of the new year, the City of Newburgh received an updated “positive” credit outlook from Moody’s Investors Service.

The city’s rating remains unchanged at Baa2 – which falls at the ninth highest rating on Moody’s scale. Their scale offers a long-term and short-term projection. Baa2 falls under Prime-3 in the short term, which means there is an “acceptable ability to repay short-term obligations.” Long term, Moody’s defines Baa2 as being “subject to moderate credit risk and as such may possess speculative characteristics.” The “2” indicates it is a mid-range ranking, instead of on the higher or lower end.

The City of Newburgh said this credit affirmation “reflects the city’s rebounding tax base evidenced by four years of annual growth, healthy general fund and overall improved operations.”

If the City of Newburgh fell two spots lower on Moody’s scale it would have been considered as not prime under short term and judged as having speculative elements and subject to having substantial credit risk.

Because the score has remained unchanged since 2016 at Baa2, the City of Newburgh is seeing it as a “vote of confidence” for its finances. To head towards a credit rating upgrade, the city would need to see material growth in its local economy, balanced operations in the general fund and a reduction in long-term liabilities.

“The affirmed rating assessment from Moody’s indicates that our local economy continues to stabilize as assessed values grow,” read a press release from the City of Newburgh. “In 2021, the City of Newburgh will continue its way to a stable and positive financial future with ongoing efforts to balance operations and reduce debt. The fiscal credibility of the City of Newburgh is most certainly being restored, and these efforts will ultimately lead to a higher rating of Baa1 as the national financial climate levels out.”

Moody’s summary included how Newburgh’s economy is “showing signs of a rebound with four years of annual growth after several years of declines.” It highlighted the city’s redevelopment initiatives, especially at the waterfront, while also including the city’s struggles of elevated poverty and unemployment.

They highlighted that factors like a decline in tax base and wealth indicators, material growth in long-term liabilities and a return to structure imbalance in any of its operations could all lead to a downgrade in its Moody’s score.

“A positive outlook is certainly terrific news,” said City Manager Joseph Donat at the January 11 City Council meeting. “There are a number of items we need to work on. We’re well aware of it and are already actively working on these items.”

Donat said he feels confident that the city will get to where it needs to be over the next year.