Cross post from HatCityBLOG
In wake of tonight’s widely unknown, largely unannounced special city council meeting where the city will take two million dollars out of the fund balance to pay for the storm, this article in the Connecticut Post should sound alarm bells at city hall.
One of the major credit ratings agencies warned Monday that October’s nor’easter might have taken a toll on municipal credit ratings as towns head into winter with budget shortfalls.
While not issuing any official downgrades, Moody’s Investors Service said the impact on credit ratings will vary by town, but overall it’s a challenge.
“The prolonged delay in the restoration of electrical service is credit negative for many Connecticut local governments given the budgetary pressure of cleanup and other costs that are due early in the winter season,” the Moody’s report said, citing overtime costs and the need to open emergency shelters as contributing to budgetary stress.
The costs Moody’s is particularly concerned about include: the depletion of winter storm budgets; the need to extend the school year due to lost days; and the lag in payments from federal and state sources that might create a liquidity problem for the municipalities.
Colleen Flanagan, a spokesman for Gov. Dannel P. Malloy, said he understands the problem.
“Municipalities have incurred a number of expenses following Tropical Storm Irene and last month’s nor’easter, which is why Gov. Malloy has been so aggressive in pursuing (Federal Emergency Management Agency) funding for cities, towns, and homeowners,” Flanagan said.
Given the fact that in their Aa1 rating of Danbury, Moody’s was rather critical of the mayor’s use of the fund balance to balance the city budget, and the fact that we at the start of the winter season, hopefully members of the council will ask questions regarding tonight’s move to use two million dollars to cover costs from the storm.