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City finance director: Moody's keeps Newark's rating but changes outlook to negative
Summary
Acting finance director Benjamin Guzman told the council Moody's kept Newark's bond rating at Baa1 but shifted the outlook to negative, citing regional inflation and rising health-care costs; he said deducting schools and utilities leaves a $260 million net debt figure.
Benjamin Guzman, acting finance director, briefed the Municipal Council on a recent Moody's Investors Service update that maintained the city's Baa1 rating while changing the outlook from stable to negative.
"They maintained the city's rating at a B, double A, one," Guzman told the council and said the outlook downgrade reflected higher inflation and health-care costs that have reduced city reserves. He said Moody's also identified strengths, including declining debt over five years and the city's anchor institutions such as the airport and local universities.
Guzman explained that the $640 million quoted as gross authorized debt includes school district and water/sewer utility debt; after deducting qualified school debt and self-liquidating utility debt, he said the city's net debt is about $260 million. He said the finance office has filed the 2024 annual financial statements and is working toward completing the 2025 audit, with the state's extended due date of August 31.
Councilmembers asked for a more detailed breakdown by due date and by the portion of gross debt attributable to schools, utilities and city obligations; Guzman and the administration agreed to provide a debt schedule and to consider a special meeting to review Moody's concerns and the city's audited statements.
The council discussed possible responses, including improved audit timeliness, debt-management strategies and identifying one-time revenues from planned property sales to close budget gaps. The administration said it expects property sales to generate part of the revenue required to address a budget gap and will provide further details at a requested follow-up meeting.
The council did not adopt immediate policy changes at the session but directed the administration to prepare further debt and audit detail for members' review.
