Poughkeepsie reports progress in deficit struggle
Poughkeepsie, New York, reported progress in trimming a more than $13 million general fund deficit that sent the city into junk bond status nearly four years ago.
The city released 2018 audited financial statements Monday showing that its deficit was trimmed to $7.1 million at the end of last year from roughly $13.2 million seen at the end of 2015. Weak finances marked by a negative fund balance cost Poughkeepsie its investment grade credit rating, with Moody’s Investors Service downgrading the city’s general obligation bonds to Ba1 from Baa3 in January 2016.
“This is the third consecutive year the City has out-performed when it comes to the important function of managing to our revenue and expense projections,” Poughkeepsie Mayor Rob Rolison said in a statement. “The City’s Deficit Reduction Plan is a three-pronged approach toward rebuilding our fund balance by unwinding inter-fund receivables and payables, limiting non-essential borrowings, and crafting realistic budgets each year.”
Moody’s revised the outlook on Poughkeepsie to stable from negative in July 2017 citing an improved cash position and expectations for future surpluses. Poughkeepsie City Administrator Marc Nelson noted that reserve accounts have been established for snow removal emergencies, employee benefits and legal judgments. He also attributed the deficit improvement to the city reducing its self-insured retention from $1 million to $500,000, closing a transit fund that had operated at a deficit for years and successful collective bargaining outcomes with unions.
The audit, which was conducted by RBT CPAs LLP, noted that Poughkeepsie’s overall government-related debt decreased by $3.27 million last year and as of Dec. 2018 stood at $39.33 million. The city’s total revenue increased to $63.86 million in 2018 from $61.32 million in 2017.
“In addition to the very favorable audit findings, the City’s debt-service costs drop by more than $1 million next year,” Poughkeepsie Finance Commissioner William Brady said in a statement. “It would not be overstating things to say that we are witnessing one of the most remarkable turnarounds in a local government’s financial condition.”
Auditors credited Poughkeepsie with a “significant” refunding of the city’s long-term debt this year that resulted in present value savings of over $700,000. The audit also projected an expansion of the city’s tax base through major development projects in the works.
Poughkeepsie is around 70 miles north of New York City in Dutchess County along the banks of the Hudson River. The city’s population was an estimated 30,500 as of 2017, according to Moody’s.