Moody’s Investors Service last week downgraded Binghamton’s general obligation rating to Baa1 with a negative outlook from A3. The downgrade affects $42.5 million of outstanding debt.
Moody’s cited the “city’s distressed financial position and extremely limited liquidity driven by operating deficits in four of the last five years” as reasons for the downgrade. The operating deficits were the result of “poor fiscal oversight” that relied on reserves even as state aid increased, Moody’s said.
The city’s population has shrunk by 6% over the past eight years and 16% since 1990 to 44,729 people in 2008. Its tax base is stagnant and wealth levels are below the New York State average — per-capita income is 73% of the state’s per-capita income — while at the same time the city has a high debt burden, Moody’s said.
Binghamton “lacks a plan to return reserves to previous levels” and “will be challenged to rebuild satisfactory reserves and liquidity to provide satisfactory financial cushion, given its vulnerability to continued weak sales tax performance and potential for state budget cuts,” Moody’s said.
The city sold $35.8 million of bond anticipation notes in February.
Standard & Poor’s rates the city A-minus with a stable outlook. Fitch Ratings does not rate Binghamton.
