NAUGATUCK — Two financial agencies have affirmed the borough’s high credit rating of AA with a stable outlook.
The ratings were affirmed by Fitch Ratings and Standard & Poor’s, which increased the bond last year from AA- because of its general trust in the borough’s economic health and its belief that Naugatuck has had strong budgetary performance in recent years. Both agencies say they believe Naugatuck’s financial status remains strong.
Officials say many positives come from a strong bond rating, including the ability to get better interest rates when bonding for capital projects.
Standard & Poor’s states “the borough maintains a strong capacity to pay principal and interest when the notes come due,” according to summary of the bond rating, which is similar to an individual’s credit rating. “The stable outlook reflects its opinion of Naugatuck’s strong budgetary flexibility, supported by historically strong budgetary performance.”
Naugatuck’s 2015-16 budget is $115.2 million. The borough has approximately $15.1 million in its fund balance, money local officials could use on expensive capital projects such as road repairs or to offset operating expenses. Local officials have resisted the temptation to take too much from that fund so they would maintain a lower bond rating and save money in the long term, and they have kept the fund balance between 8 percent and 12 percent in the past several years.
The adopted 2015-16 budget includes an appropriation of $1.4 million from the reserve, but Standard & Poor’s states that given “the borough’s historically strong budgetary performance, officials do not anticipate using the full amount.”
The report states that it considers Naugatuck’s economy “adequate” and also views its fund management as “adequate.”
Information about the ratings can be found at www.standardandpoors.com.
