Moody’s Investor Services upgraded Southold Town to its highest-ever bond rating Thursday, a move that town leaders said validates their prudent financial policies.
Moody’s, a major financial firm that provides credit ratings and risk analysis, changed Southold’s rating from Aa2 to Aa1 on Wednesday thanks to the town’s “strong fiscal management.”
Town Supervisor Scott Russell said he is proud to receive the upgrade.
“Wall Street recognizes our unwillingness to spend money we don’t have,” he said in an interview.
Moody’s listed several other factors for upgrading the town, specifically, “the town’s stable operating performance, sound reserve and liquidity levels, sizable tax base, strong resident wealth indicators, and low debt burden with a manageable capital program.”
Going forward, the new rating should lower interest rates as the town looks to refinance some of its debt, Mr. Russell said.
Mr. Russell cited several efforts that he believes contributed to the rating change. For one, Southold built up its fund balance to $8.7 million as a reserve of cash available in an emergency. The town also cut certain programs to decrease overall expenditures.
“We’ve had to do things that weren’t popular, like eliminating the brush pickup in the fall,” he said. “Those things weren’t popular with the public, but when you’re trying to reduce the payroll, you have to cut some things.”
Looking forward, Moody’s cited reasons that the town’s bond rating could go either up or down in the future. Reasons it could improve include: increase in reserves and expansion of tax base. Reasons it could decrease include include: erosion of operating reserves and liquidity, material contraction of tax base and deterioration in socioeconomic indicators and a significant increase in debt.