COLONIE — S&P upped the town’s bond rating from an “A” to an “A+” with a positive outlook.
“The rating action reflects our opinion of the steps the town has taken to improve its finances, as well as its ability to achieve positive operations over the past six fiscal years,” said S&P Global Ratings credit analyst Steven Waldeck in a statement. “And the positive outlook reflects our view that Colonie’s budgetary flexibility will continue to improve due to an expected windfall payment from the town’s private landfill operator, boosting its available fund balance, which has grown to $687,000 in fiscal 2017 from a negative $348,000 in fiscal 2011.”
While strides were made, the “rating continues to reflect our view of the tow’s weak budgetary flexibility, which currently caps the rating, despite recent fund balance growth, due to a prolonged structural imbalance before fiscal 2011,” Waldeck said.
Furthermore, Waldeck said, “given the positive outlook, there is at least a one-in-three likelihood that we will raise the rating over a one-year outlook horizon.” Contributing to that, he said, are the actions taken to rectify the structural imbalance, the landfill payments that will continue to help balance the budget and the “town’s very strong economy, defined by its growing population and rising market values.”
In 2018, the state Department of Environmental Conservation allowed the town to expand the landfill off Route 9 which, according to the multi-year contract, guaranteed a one-time payment by the private contractor, Waste Connections, and the annual fees for potentially another two decades.
The “A+” rating is not the highest possible grade like in elementary school. It puts Colonie at the top rung of the “upper medium grade” one step below “AA-“ which is the first rung of three in the rating of “high quality.” After “AA+” a municipality reaches the pinnacle of fiscal health “AAA.”
A bond rating is more than an arbitrary indication of a municipality’s finances, it determines how much interest it will pay when borrowing money for infrastructure improvements and other big ticket items every city, town, state, school district and fire district has to purchase.
“It was a long hard road regarding the finances so to get this rating, and be in a position to get this rating, is as good of news as you can get,” said Supervisor Paula Mahan while giving her State of the Town address on Thursday, Jan. 17. “We were downgraded four times, and if it happened again the town would have been basically bankrupt. This is excellent news to come from where we were, and everyone has worked so hard and I would like to thank everyone in town government. This cannot be done alone.”