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S&P Lowers Town of Westfield's Credit Rating

The rating company made the downgrade based on "the town's deteriorated financial performance."

It was announced Monday that Standard & Poor's Ratings Services has lowered its long-term rating from 'AAA' to 'AA+' on the Town of Westfield's existing general obligation bonds.

The bonds, general obligations of the town, are secured by a pledge of the full faith and credit of the town for the payment of principal and interest thereon.

Simultaneously, S&P's has assigned its 'AA+' long-term rating to the town's GO . Proceeds from the series 2012 issue will be used to refund two prior bond issuances of the town. At the of the Westfield Town Council, the council approved a special ordinance that will provide for the refunding of outstanding bonds which will save the town and the swimming pool utility just over $182,000

In spite of this savings, the outlook is negative, according to the ratings service.

"The town of Westfield had several years of financial challenges that caused the fund balance to erode," said Standard & Poor's credit analyst Steve Tencer. 

The unreserved fund balance, which represents available and expendable resources, has declined 95 percent to $198,494 in fiscal 2011 from $3.89 million in fiscal 2007, according to S&P's data. 

"Finances for the town have been strained in our opinion," the attached report states. "The town has experienced a net operating loss each year since 2006."

Tencer referred to Westfield's new , which will generate $1.7 million in anticipated revenue, as "a step in the right direction," but noted that expenses have been exceeding revenue for the past several years.

The new rating will be placed on future bond issuances as well, Tencer confirmed. 

Other rating factors include S&P's opinion of the Westfield's:

  • Affluent, mature, residential community that has a lower-than-average unemployment rate stemming from access to the diverse labor markets in New Jersey and New York City;
  • Extremely strong wealth levels;
  • Large tax base with no concentration, although there has been some slight declines; 
  • low debt burden with limited future capital needs.

Town Administrator Jim Gildea and Councilman Sam Della Fera, finance committee chair, were unavailable for comment. 

Sally McBride July 05, 2012 at 04:49 PM
where did I mention spending? Just saying that people are trying to make people think that this is a disaster and that the current council should be strung up for it. I guess I see where you made the mistake. You read what you want to read and assume that you are correct
Sally McBride July 05, 2012 at 04:51 PM
so $3.89M is the "correct" number to have? Why does it matter that a number dropped 95% when you do not know what they number stands for? Maybe that number was because of some one time income? I have no idea, but it seems like you think you do.
Westfield Taxpayers July 23, 2012 at 04:08 PM
The Town should cut spending, and pay down its debts. I think the headcount is far too high. So high, they can't seem to manage who is legally allowed into the state pension system. So we're paying higher state taxes as well! Lower the spending please!!!
Westfield Taxpayers July 24, 2012 at 01:15 PM
Rusty Cut, Printing paper dollars deflates the value of the currency, simply a default by a different mechanism. 50% drop in value by inflation or default is still a 50% drop in value. It makes the debt more risky to own, and investors are cheated just the same. This is not a good or honorable outcome.
Westfield Taxpayers August 07, 2012 at 09:19 PM
Yes, Sally, if $3.89 Million is required to maintain "AAA" rating, then that is what is required. Unless you are offering to pay the incremental $1,200, any reckless spending is a concern. Having $4M in the bank earns interest income rather than credit rating expense! It would be nice to have that $1M for a new fire truck in the "Rainy Day" fund instead of having to BOND for it. So your knee-jerk analysis is WRONG again!

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