After months of preparation, hours of meetings and pages of new town policies, all that remains to do is wait – wait to hear what credit rating agencies think of the municipality's financial health, officials said.
"It's kind of a grueling process," First Selectman Pat Llodra said.
Town officials held telephone conference calls with representatives from Standard & Poor's and Moody's on Fri., Feb. 3 and by Feb. 9, will expect to hear back from the agencies on whether they intend to revise the town's credit score.
The credit score is crucial, town officials have said, particularly because by the following Tues., Feb. 14, Newtown is looking to sell bonds to help finance its capital improvement budget. The price the town will be able to get for the bonds will depend on the score coming from the rating agencies, officials have said.
Officials have concern about the town's rating because the state recently had and some Fairfield County towns had been . Newtown, however, is expecting to maintain its Aa1 rating, according to Llodra.
The town's credit rating was one reason Llodra recently lobbied the Board of Finance and Legislative Council to enact fiscal policies that she and others believe will lead to a favorable credit rating for Newtown.
For instance, the finance board and council voted to enact a Fund Balance policy, which directs the town to maintain a minimum 8-percent of its budget in undesignated funds, or money that is set aside as a cushion. Other towns with a similar Moody's rating of Aa1 have 10 to 11-percent of their budget in fund balance, officials said.
The town also is seeking to reduce its debt cap ceiling to about 9-percent of its operating budget within several years by slowly curbing the number of capital projects it plans for future years. The council and finance board approved a policy that directs officials to spend up to 2-percent of the town's annual budget for capital expenditures.
Other policies intended to keep the town on a sound financial footing is one that requires no less than 20-percent of money saved through refunding of municipal bonds be used to pay down existing debt or used to bolster the town's General Fund. The other 80-percent presumably would be available for other uses, such as the purchase of vehicles – a .
In conjunction of that policy, is another that directs no less than 20-percent of any increase in the Grand List be used to bolster the General Fund.
Llodra said rating agency representatives had suggested the town last year that it needed to take steps to bolster its Fund Balance and General Fund. Following those directives appeared to have paid off based on the reaction they received during Friday's conference call, she said.
"The feedback was positive," Llodra said.
