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Moody’s review could threaten Saratoga County, Halfmoon credit ratings

Thursday, January 16, 2014
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— Saratoga County and the town of Halfmoon are among communities with strong credit ratings being considered for a downgrade in their bond rating, according to Moody’s Investor Services.

Both appear on a list of 256 local governments nationwide Moody’s said it is reviewing, based on a new methodology that puts a greater weight on pension liability and debt, and less emphasis on local economic factors.

The high credit ratings Saratoga County and Halfmoon currently hold — Aa1 for the county and Aa2 for the town — can lead to lower interest rates when they borrow money. A lowered credit rating would likely mean higher interest rates on borrowing.

Saratoga County Treasurer Samuel Pitcheralle said such reviews are done periodically, and don’t mean there will be a change recommended.

“Just the fact they are doing a review to downgrade doesn’t give me great concern,” he said.

Another ratings agency, Standard & Poor, did a similar review in October but didn’t change the county’s rating, he noted.

In a statement Wednesday, Moody’s said it is changing its review methodology because it is finding local governments aren’t necessarily willing to take the measures needed to increase revenue when the economy improves.

The reviews now underway could result in either no ratings change or an adjustment of “one or two notch movements,” and should be completed within the next 90 to 180 days, the ratings agency said.

“The scorecard is not intended to produce a final rating, only a starting point for analysis,” said Matt Jones, Moody’s senior vice-president.

Saratoga County already had been assigned a “negative” ratings outlook by Moody’s before the review was announced Wednesday. That outlook was assigned in January 2012, based on the decline in the county’s reserves as it poured its rainy day funds into covering losses at the Maplewood Manor nursing home,

Pitcheralle said it’s possible Moody’s doesn’t know about the county’s pending sale of Maplewood Manor or doesn’t want to credit the change until the deal actually closes, which could take another year.

Pitcheralle said he’s comfortable the county is doing what’s necessary to cover future pension obligations.

The Aa1 rating is the second-highest Moody’s can give, and indicates very strong credit-worthiness, according to Moody’s. Halfmoon has a rating of Aa2, which is slightly lower but still strong. The town has been among the region’s fastest-growing, but went through turmoil last year with an FBI investigation and subsequent indictment of former town supervisor Mindy Wormuth, who was also the town’s chief financial officer.

The town of Stillwater, on the other hand, is under review for a possible upgrade in its bond rating. That would appear to be due to increased revenue the town is receiving because of the GlobalFoundries’ computer chip plant and new housing.

Stillwater has an A2 rating, lower than the county and Halfmoon’s rating. Moody’s said there is currently no ratings outlook for the town, and the review will consider whether to give it a “positive” outlook.

 
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