Bond ratings in NJ Municipalities are getting downgraded faster than any other state according to this article from bloomberg.com.
From the article it appears that Irvington is one of the strongest downgrades.
Moody’s also lowered its rating on $71.3 million in debt issued by Irvington, a suburb of Newark where a fifth of schoolchildren between five and 17 live in poverty and the unemployment rate is 1.4 percentage points above the state’s 9.7 percent rate.The firm on Dec. 17 cut the debt rating to Ba1, one level below investment grade, from Baa3, and said it may lower it further, citing concerns over how the town will close a $12 million budget gap and make up for a $50 million, or 1.7 percent, decrease in its tax base over the past two years.
“This is a reality that cities are facing across the country,” said Irvington Mayor Wayne Smith, 52, a Democrat who serves as president of the state’s urban mayors association. He said the city plans to cut the deficit in half by furloughing about half of its 600 employees once a month until the end of the fiscal year and selling a shuttered hospital.
What about Newark?
Newark, New Jersey’s biggest city, hasn’t had any of its $293 million in long-term debt downgraded even after losing $2.2 million of the $118 million in state aid it was scheduled to receive this year. Funding from New Jersey comprises 17 percent of the city’s $77 million budget. Municipal officials plan to hold a conference call with Moody’s raters to discuss the loss of assistance and how that will alter the current year’s financial plan.“This is something everybody is aware of right now,” said Linda Landolfi, Newark’s chief financial officer. “It’s a big deal because it’s costly to have your interest go up.”
Let’s hope that the conference call doesn’t change the minds of the people at Moody’s. Newark has a lot going for it right now and a lot going against it. Higher lending rates are one obstacle the city doesn’t need.