Moody’s Investors Service last week downgraded Johnson City two notches to A3 from A1 due to a declining general fund balance. The rating action affects $8.1 million of outstanding debt.
The upstate village’s general fund balance has declined to $234,000, or 1.6% of revenue, in fiscal 2009 compared to $929,000, or 5.9% in fiscal 2008.
Moody’s assigned the credit a negative outlook, citing “the potential for further downward rating pressure given ongoing expenditure pressures, the uncertainty of pending tax appeals, and the village’s limited ability to absorb these events or other contingencies given its already narrow financial position.”
Johnson City ended fiscal 2009 with a $1.1 million operating deficit due to the reclassification of $831,000 of bond anticipation note proceeds that had been improperly budgeted as general fund revenue in previous years, Moody’s said.
The village is located adjacent to Binghamton and had a population of 15,535, according to 2000 Census data.
It faces near-term revenue decline due to a successful tax appeal by a Macy’s store valued at $270,000, though that will be partially offset by the recent opening of a Wal-Mart.
