TUXEDO — After four years of belt-tightening, improved fiscal controls and a healthier fund balance, the Town of Tuxedo has been rewarded by Moody’s Investor Service revising its outlook from negative to positive and affirming a Ba1 rating.
Yet the credit-rating agency was tempered in its estimate of Tuxedo’s fiscal health.
The “ratings reflect the town's modest and stabilizing tax base, strong resident wealth and income, and very weak but improved financial position,” Moody’s said in a December statement. “The positive outlook indicates our expectations that management will successfully eliminate the last remaining deficit positions in all funds and will continue the process of rebuilding reserves and liquidity to healthier position.”
Debt rated Ba is considered to be speculative rather than high quality, and is subject to substantial credit risk, according to Moody's. A Ba1 rating falls at the high end of the Ba category.
Moody’s downgraded Tuxedo’s credit rating twice in 2014, when it faced a $1 million budget deficit, bringing it down to Ba from A1. In 2015, the state Comptroller’s Office faulted the town’s fiscal controls and accounting methods, saying the poor bookkeeping made it impossible to determine its true financial condition.
The town responded to the crisis by implementing a hiring freeze, tightening overtime policies, appointing a fiscal advisory committee and cutting spending. It also hired a consulting firm to deal with the fiscal management of the town and to provide financial planning for one-, two-, five- and 10-year outlooks.
Tuxedo Supervisor Mike Rost said the town emerged from its financial crisis because of improved internal controls and budgeting, and cost-cutting as a result of better contract negotiations. It has also boosted its reserves and expects to have a fully funded contingency fund by the end of 2019.
“They recognize we are on the right path,” Rost said of Moody's. “The road has been long and hard, but we are coming to the end of our financial crisis.”