New Haven Credit Score Downgraded

NEW HAVEN, CT — S&P has downgraded New Haven's credit rating to BBB+ with a negative outlook for the future as the city contends with some serious fiscal woes.

The downgrade reflects our view of New Haven's sustained structural imbalance, stemming from optimistic revenue and expenditure assumptions, contributing to misaligned revenue and expenditures over the past three fiscal years, including a projected $13 million to $15 million deficit in fiscal 2018," the ratings agency wrote in its report.

The S&P rating is a downgrade, but still classifies New Haven's bonds at investment grade. S&P ratings of BB and lower are considered non-investment grade.

The agency added that it's unlikely the city's rating will rebound in the near future as it would have great difficulty absorbing a drop in state funding.

There is at least a one in three chance that the city's rating would be lowered again within the next two years.

The report also noted that the city has a high percentage of tax-exempt properties, which makes it difficult to raise revenue. However, it does have a strong local economy. The presence of Yale University and Yale-New Haven Hospital means there is a lot of nontaxable property, but the institutions serve as an anchor in the local economy, according to the report.

New Haven has had a weak management environment over the past three fiscal years with overly optimistic revenue and expenditure expectations and sustained structural imbalances.

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