SECAUCUS - Bucking what some observers feared would become a trend across the state, Secaucus has maintained its high bond rating, despite New Jersey's recent Cap 2.0 law.
Moody's Investors Service has announced that it will reaffirm Secaucus's Aa2 bond rating. The score, similar to the credit scores that are given to individual consumers, is one of Moody's "investment grade" ratings issued to municipalities that are considered to be a "very low credit risk." An Aa2 rating is the third highest score Moody's gives.
Earlier this year, Moody's downgraded the bond ratings of several New Jersey municipalities, including Westfield and North Haledon, citing the state's new tax cap law - known as Cap 2.0 - as "credit negative."
The law, which caps annual municipal tax increases at two percent and had been pushed by Gov. Christopher Christie, was signed by the governor in July to stem rising property taxes. But after Moody's downgraded the bond ratings of several municipalities, citing Cap 2.0, several public officials called the decision an unintended consequence of the new law.
In September, Secaucus Town Administrator David Drumeler told the Reporter, "We are concerned this could affect bond rates for municipalities, because that two percent cap makes it harder for municipalities to raise funds in general, and that's what the bond agencies look at when they're establishing their bond ratings. Your ability to raise revenue can greatly impact your ability to pay. And whenever you limit a municipality's ability to pay, you have the potential to affect their bond rating."
Cap 2.0, however, appears not to have had any effect on the Secaucus rating.
Secaucus' bond rating was reviewed as part of the town's plan to restructure $3.2 million worth of debt from the Secaucus Municipal Utilities Authority.
Secaucus, which was given an AA/Stable rating by Standard & Poor's in March, has one of the highest bond ratings in Hudson County. - E. Assata Wright