PJ Council Enacts Contingency Plan to Avoid Financial Ruin
By Dakota Hendricks
Port Jervis- At the June 23rd Common Council meeting, Councilwoman Misty Fuller urged immediate action to correct the city’s 2023 financial records or risk losing its bond rating with Moody’s, a major credit rating agency.
Fuller read from a prepared statement, informing the Council that Moody’s had issued an email giving the city 30 days to correct outstanding issues from 2023. Failure to do so would result in the suspension of the city’s bond rating. The email, received on June 18th, set the countdown in motion.
Fuller described the situation as an “inherited” problem, citing financial mismanagement in 2022 and 2023 involving the previous City Clerk Treasurer, Laura Quick. Fuller detailed the ongoing efforts to assess and repair the damage, including hiring RBT Accounting to correct the city’s books before the regular audit. She requested $40,000 from the city’s contingency fund to help pay for the necessary accounting services. Fuller said, “It will cost us so much more in the long run if we don’t get this behind us.” 3rd Ward Councilman Gerald Oney said, “If the Moody’s rating goes down the tank, it’s financially devastating to the city.”
What Is Moody’s—and Why Does It Matter?
Moody’s is one of the world’s leading credit rating agencies. While its website is filled with corporate buzzwords and slogans like “advancing business through insights” and “being the global rating agency of choice,” its core function is straightforward: Moody’s evaluates how reliably businesses, governments, and municipalities manage debt.
For cities like Port Jervis, a Moody’s rating is crucial. It helps investors determine how safe it is to purchase municipal bonds or lend money. A high credit rating signals that a city will pay its debts on time, lowering interest rates and borrowing costs. A low or suspended rating, on the other hand, drives up interest rates, may deter potential investors altogether, or cause those who have already invested to pull out.
Communities often go into debt for legitimate reasons, such as covering costs early in the fiscal year before tax revenues come in, responding to disasters, or investing in critical infrastructure. A strong credit rating helps keep those debts manageable. If Moody’s suspends the city’s rating, that could trigger a cascade of financial consequences, including skyrocketing interest rates, loss of investor confidence, loss of grant funding, and potentially even bankruptcy.
The Council has less than a month to act, swiftly voting unanimously to approve the additional funding. Acting Mayor Michael Hockenberry said, “Unfortunately, it is the hand we were dealt. We have to act on it. It’s not money we have lying around, but...”
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