LOCKPORT – The credit outlook for the city is improving unless the newly elected Common Council makes undesirable changes, in the opinion of a Wall Street rating firm.
Standard & Poor’s, in a report issued last week, kept the city’s bond rating at BBB – which is one step above “junk bond” status – but changed the future outlook from negative to stable.
“They view it as a significant improvement,” Mayor Anne E. McCaffrey said.
“The stable outlook reflects Standard & Poor’s view of Lockport’s significantly improved budget practices that have included both revenue enhancements and expenditure reductions to restore structural balance,” the report said. “Although the current conditions are much improved, we believe the January turnover of nearly the entire Council creates some uncertainty around the corrective measures taken to date and implementation of additional measures.”
Five of the six Council members either lost in the November election or didn’t run. The only survivor was Alderwoman Anita Mullane, D-2nd Ward.
Standard & Poor’s said that it might consider a rating upgrade if the city produces “a trend of structurally balanced operations that are sustainable.”
On the other hand, “A return to structural imbalance or the use of reserves, either due to retroactive labor settlements or capital spending could result in a negative rating action,” the report said. It also said, “It is unclear whether the new (Council) members will continue to support the corrective actions – which have included tax increases and layoffs – that were implemented to right-size the city’s budget.”
Some of the candidates elected last month ran on platforms envisioning new spending. For example, R. Joseph O’Shaughnessy, the Democrat elected alderman-at-large, promised voters that he would restore the Fire Department ambulance, which McCaffrey and the outgoing Council abolished for financial reasons in September 2014.
O’Shaughnessy wasn’t backing down. “We want to look into this and find out true facts,” he said. One of those facts, he said, is whether the ambulance service was profitable or can be made so.
“We’re going to take baby steps,” O’Shaughnessy said. “We’re going to look at the reality for the safety of the community.”
Scott A. Schrader, director of finance, said Standard & Poor’s new report might tempt more bidders into the ring when the city attempts to borrow money.
“Hopefully, the second part is, we get better interest rates,” he said.
The city went from being on credit watch, to a negative outlook, to a stable outlook in less than a year, McCaffrey said.
The S&P report says Lockport still has a “weak economy” and also cited “weak management,” but all the examples of the latter dated from the problems cited in state audits that focused in 2012 and 2013, when Michael W. Tucker was mayor, the Council overspent the budget and City Treasurer Michael E. White failed to deliver timely or accurate financial statements.