The credit quality of New York State's local governments and school districts has stayed stable the last eight years, as rising real estate values made up for a slow economic recovery and increased pension costs, according to S&P Global Ratings.
Property value growth has helped municipalities strengthen their base for raising revenue in recent years, S&P analyst Rahul Jain wrote in an Oct. 13 report.
"In particular, school districts have benefited not only from property value growth but also increases in state school aid above the rate of inflation and a restoration of statewide school aid cuts in the 2017 state budget," Jain said.
While property value growth has fueled revenue in many localities, Jain said the state's property tax cap and flat unrestricted local aid have also limited gains in local governments' revenue. Counties and cities that rely more heavily on sales taxes have been hurt by lower-than-expected growth in those revenues, Jain said. Pension and other postemployment benefit expenses in the state are expected to be stable the next two years, though Jain said municipalities that choose to defer these costs when the economy is expanding could face additional budgetary pressure in a downturn.
S&P along with Fitch Ratings and Kroll Bond Ratings Agency rate New York State debt at AA-plus. The Empire State is rated Aa1 by Moody's Investors Service.
