In recent discussions about an improved bond rating, Colonie officials said preliminary estimates show the town is still close to $16 million in the hole.
Mahan said an earlier debt estimate of about $10.8 million was based on available data before the economy took a turn for the worse. She said an audit currently under way should provide a more accurate picture of the town’s debt.
She pointed to recent news that Colonie has shed its negative outlook bond rating as a step in the right direction.
`We are pleased that we have succeeded in our primary goal of having the negative outlook we inherited removed from the town’s bond rating,` said Mahan.
She said Moody’s Investor Services, an independent financial group, briefly gave the town an A1 rating with a negative outlook, but returned it to Baa1, without a negative outlook, due to the financial challenges the town is facing, such as decreased sales and mortgage tax revenue. An official report was never filed under the A1 rating.
Mahan said the town essentially refinanced its 2010 bonds ` totaling $4.5 million ` at a lower rate, which will save more than $150,000.
Republican Councilman Dan Dustin has been critical of the administration, including a `one-time` tax, which was levied in early 2009 to help reduce the deficit. Dustin said the revenue actually went toward 2009 operating costs instead. He pointed to early estimates indicating the town’s deficit was $16 million as of 2009’s end, an 18 percent reduction from 2007, not the 45 percent touted by Mahan’s administration.
The report Dustin was referring to, the annual update document, is not an audited number, Mahan said.
Comptroller Craig Blair said the 2009 audit has just recently gotten under way by Bollam, Sheedy, Torani and Co. He said the 45 percent reduction was an estimate based on 2009 projections.
Town officials said a large problem they encountered when dealing with the deficit is the inaccurate figures dating back to 2006, which are still affecting the numbers. Figures from the comptroller’s office indicate the deficit may have been as high as $22 million in the recent years.
Mahan said she does not want to play politics with the numbers, which she accused Dustin of doing.
`Dustin works on politics,` she said. `My administration is going to work on solutions.`
Moody’s knocked Colonie rating down twice in 2007, and Colonie Town Supervisor Paula Mahan said the Baa1 rating with a negative outlook is something she has worked hard to improve upon during her administration.
`Removal of the negative outlook reflects our expectation that the town’s management team may build on two consecutive years of favorable operational and budgetary results; however, we believe that the town will remain challenged over the medium term to reduce the accumulated deficit fund balance given a significant reliance on economically-sensitive sales and mortgage tax revenue sources,` according the report from Moody’s.
According to Moody’s rating scale `obligations rated baa are subject to moderate credit risk. They are considered medium grade and as such may possess certain speculative characteristics,` further, ` money market funds and bond funds rated baa are judged to be of an investment quality similar to baa-rated fixed income obligations ` that is, they are considered as medium-grade investment vehicles.`
Mahan said things are looking up under her watch.
`This rating will reflect positively on our bottom line as we continue with the hard task of completely eliminating the budget deficit created by the previous administration,` said Mahan.
In a recent interview, former Supervisor Mary Brizzell said the lowered bond ratings in 2006-07 had a lot to do with the financial environment.
`A lot had to do with the economy,` she said.
She said she also questions the current Democratic town officials’ claims about the financial problems they say they inherited.
`The current administration has overexaggerated the deficit from the beginning,` she said.
The town briefly experienced an A1 bond rating, but when Moody’s recalibrated their scale prior the release of the early June report, it changed back to Baa1.
`The downgrade to Baa1 reflects the town’s significantly deteriorated financial position evidenced by an accumulated combined operating, general, highway, and town outside village fund deficit of negative $8.7 million as of fiscal 2009,` according to the report.
It is, however, an improvement over the negative $11.8 million, or negative 21.1 percent of revenues, in 2007.
Moody’s downgraded the rating to Baa1 and eliminated the negative outlook on the town’s $76.7 million of `parity` debt.
According to information from Moody’s, the current management team inherited an inaccurate 2008 budget and cut expenditures by $1.6 million, sold property for $2.7 million to offset excess employee benefits of $1.4 million and debt service costs of $272,000. It also addressed underperforming mortgage taxes of $500,000 and emergency medical services and golf course fees of $600,000.
This created an operating surplus of $2.6 million, improving the `combined negative fund balance` to negative $9.2 million in 2008, better than the negative $11.8 million in 2007.
`We are grateful to Moody’s for working closely with the town and for suggesting ways in which we can make our financial improvement plan even better. By removing the negative outlook, Moody’s has recognized that the Town of Colonie is moving in the right direction. While we understand that there is still much hard work to be done, I am confident that building on our success over the past two years, we will achieve our ultimate goal of eliminating the deficit completely,` said Mahan.
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