Standard & Poor's yesterday dropped the town of West New York, N.J., to BB from BBB-minus, as the municipality has yet to adopt a budget for fiscal 2009, which ends June 30. The town remains on CreditWatch with negative implications.
West New York, located across from Manhattan over the Hudson River, has $37.1 million of outstanding debt. Moody's Investors Service and Fitch Ratings do not rate the credit.
Town officials anticipate authorizing a proposed $74.4 million fiscal 2009 budget in time for the state's Local Finance Board, a division of the Department of Community Affairs, to sign off on the fiscal plan at its April 8 meeting. In New Jersey, all municipal budgets must receive state approval.
To help raise roughly $40.6 million of needed revenue, the town increased fiscal 2009 property taxes by 27%. Town administrator Joseph McConnell said that $40.6 million amount would decrease with anticipated extraordinary aid from the state and savings derived from contract negotiations with labor unions on benefits for city employees. Officials plan to mail out fourth-quarter property tax bills April 15, depending on the budget's approval.
Meanwhile, West New York will have debt service payments totaling $530,000 in the first two weeks of April. If town commissioners fail to approve the fiscal 2009 budget by April 1, West New York will issue tax anticipation revenue notes to meet cash-flow needs, according to John Mosca, a financial adviser who is assisting interim chief financial officer Fred Tomkins.
"We're ready to go if we have to. If our cash flow is impeded by a late billing then, yes, we might go with tax anticipation notes," Mosca said. "However, if our schedule stays the same for the budget adoption, we might get our tax bills out by April 15, which would not cause us to go out on Tans."
Standard & Poor's cited the town's limited liquidity as a challenge, with West New York in need of an approved budget or note financing to retain the BB rating.
"If a budget is not approved and enhanced revenues or short-term cash-flow borrowing is not secured in the next several weeks, the town's ability to fund operations and debt service could be strained and the rating would likely be lowered further," according to Standard & Poor's.
Since August, the town has been without a permanent CFO after Mayor Silverio Vega and the town's four commissioners suspended Darren Maloney from the position for alleged fiscal dishonesty and mismanagement.
Tomkins, who is a certified public accountant with Donohue, Gironda and Doria, has been serving as CFO since then. Permanent removal of Maloney would come from DCA.
"On the financial side, there is not a permanent management team to manage the budget and the financial operations," said Standard & Poor's analyst Robin Prunty.