Moody's Investors Service has downgraded to A1 from Aa3 on the town of Lewiston's, (NY) outstanding general obligation limited tax bonds, affecting approximately $14.8 million of outstanding debt.
“The outlook is negative,” Moody wrote in a recent report.
Concurrently, Moody's has assigned an A1 rating to the town's $6.195 million Public Improvement Refunding (Serial) Bonds, 2015.
“The downgrade to A1 reflects the town's weakened financial position following several years of fund balance draws that are expected to continue through fiscal 2015; significant reliance on economically sensitive revenues; moderately-sized tax base; manageable debt and moderate pension burden.”
Town formerly had an AA3 which is a single notch above A1.
A1 is highest level within its grouping and the next level up is the AA3.
The town of Lewiston has a population of 16,262. The Town provides police protection, street maintenance, parks and recreation, water, sewer and general government support.
For the 2014 fiscal year, budgeted appropriations totaled approximately $17.4 million. Expenditures are funded primarily by property taxes, sales tax, State aid and user fees.
The bonds are secured by the town's general obligation pledge as limited by the Property Tax Cap-Legislation of the Laws of the State of New York, 2011.
The purpose of the Moody rating is to help investors decide if they want to lend the improvident people of Lewiston who continue to elect politicians who spend more money than they take in on a raft of things and hence must borrow and be in debt.
The town is in debt.
And the whole purpose of the Moody rating is that the town wants to borrow and offer new bonds to pay off old bonds going back to 2006 and 2008 at hopefully a lower interest rate.
The town officials think the anticipated savings will be approximately $316,000 or 5.6% over the life of the bonds.
Many investors rely on Moody credit ratings to decide whether to lend and at what rate of interest they will lend at; the higher the credit rating the lower the interest rates is a general rule of thumb.