Citing New Canaan’s large tax base and conservative budgeting, Moody’s last week assigned the town a triple-A credit rating.
Though the town’s tax base has “has contracted slightly” in recent years and “remains smaller than pre-recession peak,” New Canaan’s financial position “will remain healthy due to strong management, stable revenues supported by annual tax rate increases and low fixed costs,” according to a credit analysis issued Dec. 20 by Moody’s Investor Services.
“The town’s long-term liabilities are low and will remain so given moderate capital needs and strong pension funding,” Moody’s said in the analysis.
The credit agency added: “The town’s conservative budgeting is reflected in its multi-year trend of stable operating performance. The town maintains a policy that unassigned fund balance must be a minimum of 10% of expenditures. The town’s long-term liability funding is strong and management adheres to multiple formally adopted debt issuance guidelines.”
First Selectman Kevin Moynihan said in a statement, “The town is very pleased to have Moody’s reaffirm its Aaa rating of New Canaan’s credit which enables the Town to benefit from historically very low interest rates, thereby saving our taxpayers hundreds of thousands of dollars in annual debt service expense.”
The town is taking advantage of low interest rates to save about $750,000 in interest expense over the remaining 10 years of refunded bonds, which had been issued in 2012 and 2015 at higher interest rates, according to Moynihan. He cited the town’s $24.6 million offering in October, consisting of $15 million of refunding bonds and $9.6 million of new issue bonds to fund new capital projects.
According to Moody’s, factors that could lead to a downgrade of New Canaan’s rating include: Significant tax base deterioration and weakening of wealth and income profile; sustained trend of structural imbalance; and increased long-term liabilities.
Here is the credit agency’s full opinion: