Report: Moody’s Won’t Change Debt Ratings Because of Tax Cap

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Moody’s Investment Services took a wait-and-see attitude today with the state’s new property-tax cap, declining to downgrade local governments’ debt but warning that it could hurt some struggling municipalities.

The ratings agency said the risk profile of debt subject to the new tax cap is “unchanged and not warranting a rating distinction.”

Moody’s has raised concerns about the tax cap, which was enacted last year and limits increases in property taxes to 2 percent a year — although can include exemptions.

The report didn’t address the tax cap’s effect on school districts. Residents will vote tomorrow on school budgets — the biggest test so far for the tax cap.

“Although New York state’s new property tax cap changes the process for raising property taxes to support general obligation debt of local governments (other than school districts), we believe that the risk profile of debt subject to the cap remains unchanged,” today’s report said. “However, the cap will pressure the credit quality of all New York local governments, and could result in a reduction of fund balance levels for some. Most vulnerable will be those with reserve levels already below average and without the flexibility to offset the new cap.”

Because local governments can be limited by how much they raise in tax revenue by the tax cap, it could pinch local budgets, the report said.

“Most vulnerable will be those with reserve levels already below average and without the flexibility to offset the new cap,” said Moody”s AVP-Analyst Robert Weber, the author of the report, in a statement.

NY Local Government & Property Tax

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3 Comments

  1. The fact IS that they can’t operate on a budget, ANY budget. Their answer is, and always has been, just raise taxes to pay for whatever profligacy and wages and pensons they want. The chickens are coming home to roost. Amazingly, even liberal, leftist Democrat governors (in NY and California) see the handwriting on the wall.

  2. . . . .and [by the way] Who is going to “rate” Moodys? Anti-Trust Laws of The United States of America? Wake up! Have some shame! How long is “discrediting” of Our Country going to continue? The Republic doesn’t appreciate this attitude . . . .

    First [ The Banya Mantality] and it’s Lovers s#$%^@ the People of America [after the Victory of Europe with American Help] and “established “the Social Security Number” where [ We The People] were made “mere numbers” and “established 3 CREDIT BEAURES” and now [the same INDIVIDUALS ] are engaged in doing that to The Country!

    Can you see? Well! It’s hight of shameful attitude towards Our Nation!

    HABIBHASAN-An American Storyteller

  3. Smartporpoise on

    Moody’s and Standard and Poor’s are together largely responsible for our financial meltdown due to their handing out phony premium ratings to banks, investment houses and stamping their imprimaturs on all their chicanerous games. Suddenly, like Nazi officers after the war, they get religion and they’re downgrading and criticizing everyone but themselves.