Poughkeepsie Takes a Hit

Moody’s Investors Service downgraded Poughkeepsie, N.Y.’s debt to Baa2 from A2.

Tuesday’s three-notch downgrade of the city’s general obligation debt affected $53.4 million. Moody’s retained a negative outlook on the bonds.

The debt is secured by the city’s unlimited ad valorem property tax pledge.

Moody’s downgrade was due to the city’s residents’ below-average wealth levels, the city government’s high debt burden, and poor financial position, Moody’s lead analyst Valentina Clark said.

Poughkeepsie’s per capita-income was $23,192, or 85% of the United States average.

The city debt burden is “above average” at 2.5% of full valuation, Clark wrote. When overlapping obligations are considered, the debt burden rises to 3.3%.

The city is running its sixth annual deficit in 2012, projecting use of $300,000 from its fund balance. The fiscal 2011 operating deficit cut the general fund balance to a “deeply negative” $9.5 million, minus-22.9% of general fund revenues.

Poughkeepsie benefits from a moderately sized tax base of $2 billion. Clark expects it to decline in the near term but increase in the medium term.

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New York
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