Moody's Investors Service yesterday said its Baa1 bond rating for New York City fully reflects the shape of the city's fiscal 1994 budget and other problems relating to New York's multiyear financial plan.
The city's $31.2 billion budget has received criticism from fiscal monitors and watchdog groups for relying too heavily on budget-balancing gimmicks and one-shot revenue raisers.
Standard & Poor's Corp. rates city general obligation bonds A-minus, with a negative outlook. Standard & Poor's is at the moment reviewing the city's A-minus credit assessment.
Moody's, in a four-page statement, expressed many of the concerns recently voiced by Standard & Poor's and the city's fiscal monitors, including an increase in the city's use of one-shot revenue raisers to balance its fiscal 1994 budget. The rating agency noted how these budget remedies cause gaps to occur during the so-called out-years of the city's financial plan, in this case between fiscal years 1995 to 1997.
"As in prior years, the gap-closing plan relied heavily on expenditure cuts and one-shot actions," the report said. "The relative reliance on one-shot actions is indicative of the continued lack of long-term structural balance between expenditure and revenues."
But Moody's added that the city's fiscal 1994 budget contained some bright spots. It said the city's use of refundings for the most part has not "mortgaged [the] future in order the balance the budget."
The city has received criticism from fiscal monitors and other watchdogs for relying on bond refundings that defer debt service payments into later years in order to balance the current year's budget.