Moody's Investors Service said it has upgraded to Baa1 from Baa2 the rating on the city of Gloversville, N.Y.'s $5 million of outstanding long-term general obligation debt secured by the city's limited property tax pledge.
The upgrade to Baa1 from Baa2 reflects the city's significantly improved financial operations, resulting in increased reserve levels. The city had six operating surpluses in the past seven years and projects a healthy surplus for fiscal 2012.
The Baa1 incorporates the city's ongoing exposure to economically sensitive sales tax revenues, limited tax base, weak socioeconomic indices, and a manageable debt position.
Effective January 1, 2012, all local governments in New York State are subject to a property tax cap which limits levy increases to 2% or the rate of inflation, whichever is lower. While school district debt has been exempted from the cap, debt has not been exempted for all other local governments. Moody's believes that the risks associated with the property tax cap remain unchanged and it does not foresee making a rating distinction between debt subject and not subject to the cap.