Will Lowering Surplus Affect Town's Credit Rating?

At the , the mayor and council voted to allocate $130,000 of almost $500,000 from surplus to the revenue portion of the budget.

However, at Monday's work session, Councilman Austin Ashley pushed to have an additional $143,000 in surplus allocated to pay for the entire cost of the borough's tax reassessment. 

Mayor Ann Subrizi said that $143,000 on top of the $130,000 already allocated would diminish the surplus and potentially affect the borough's credit rating. She said that bond companies determine a municipality's credit rating based upon the amount of surplus they have. 

Agreeing with Subrizi, Council President Howard Berner added, "I can't see taking additional money out of surplus to pay for the reassessment and lose our borrowing power."

Instead, Berner proposed paying for the entire reassessment by moving $14,000 from surplus and adding it to the $130,000 that had already been allocated to revenue, leaving enough money in surplus to protect the borough's borrowing power. 

Ashley did not agree with Berner's proposal and, citing that he wanted to "change the culture of government," and "give the people of New Milford their money back," pushed to have the lump sum cost of the reassessment, $143,000, withdrawn, leaving $171,750 in surplus.  

Subrizi said that taking the surplus to such "dangerously low levels" is "fiscally irresponsible" and is the lowest the surplus has been in five years. 

"While I admire your wanting to lower the tax increase for the homeowner," Subrizi said to Ashley, "we still have a responsibility to preserve our bond rating."

In a recent report in northjersey.com, Englewood Cliffs' bond rating dropped after the borough dipped too low into their surplus. 

According to northjersey.com, Moody’s Investors Service downgraded Englewood Cliffs' bond rating based on the spending down of surplus in 2011 and the high number of tax appeals.

According to New Milford's tax assessor, Maureen Kaman, New Milford is also facing a high number of tax appeals this year--approximately 200. There were 123 tax appeals in 2011. 

Regarding Englewood Cliffs' downgrade, Moody’s spokesman David Jacobson told northjersey.com, “They have been depleting their reserves to a level that’s lower than their peers.”

In November, from Aa3 to A1 based on narrow financial position with limited revenue raising flexibility, deteriorating liquidity and reliance on cash flow borrowing, and tax base declines. 

Berner made a motion to vote on moving only $14,000 from surplus, but in the absence of Councilman Diego Robalino, and with only Councilman Dominic Colucci supporting the vote, it did not pass. 

That motion was followed by Ashley's motion to vote on moving $143,000 from surplus which, with the supporting votes of Councilwomen Randie Duffie and Hedy Grant, passed.