Paterson's Financial Woes: Moody's Review Raises Concerns

Paterson, a city in New Jersey, has found itself under the scrutiny of Moody's, a prominent credit rating agency, due to the city's delinquent 2022 audit. This development has raised concerns among local officials and residents, as Moody's ratings can significantly impact the interest rates Paterson pays when borrowing money.

Uncovering the Challenges Facing Paterson's Finances

Moody's Puts Paterson on Review

Paterson is one of 37 local governments across the country that Moody's has placed "under review" due to insufficient financial information. This move by the credit rating group could have far-reaching consequences for the city, as Moody's ratings directly influence the interest rates Paterson receives when borrowing funds.

Delinquent 2022 Audit Triggers Moody's Action

The primary reason for Moody's decision to review Paterson's finances is the city's delinquent 2022 audit. This delay in the financial analysis has raised concerns about the city's fiscal management and transparency. Paterson's administration has acknowledged the issue, citing the COVID-19 pandemic as a contributing factor that disrupted the city's audit schedule.

Potential Impact on Paterson's Borrowing Capabilities

While Paterson's administration has assured that the Moody's review will not affect the city's day-to-day finances or its ability to borrow money, the situation remains concerning. The city's Business Administrator, Kathleen Long, has stated that the delay in the 2022 audit is a "timing issue," but the potential consequences of Moody's actions cannot be overlooked.

Concerns Raised by City Council Members

The Moody's decision has also sparked concerns among Paterson's City Council members. Councilman Shahin Khalique has described the review as "deeply concerning," reflecting a "lack of confidence in our fiscal management" and calling for better accountability and transparency to protect the city's financial future.

Paterson's Credit Rating History

Just five months ago, Moody's had upgraded Paterson's credit rating to Baa3, indicating a moderate risk level. This was seen as a "pivotal moment" for the city by Mayor Andre Sayegh. However, even after the upgrade, Paterson's credit ratings remained relatively low, leading the city to conduct all borrowing through the Passaic County Improvement Authority to secure lower interest rates.

Ripple Effects on Paterson's Grants and Programs

The delinquent 2022 audit has also had a ripple effect on Paterson's grants and programs. The New Jersey Health Department has previously frozen some of the city's grants, including funding for childhood lead prevention programs, due to the audit delay. While the freeze has since been lifted, the incident highlights the broader implications of Paterson's financial challenges.As Paterson navigates these financial hurdles, the city's administration and local officials must work diligently to address the concerns raised by Moody's and restore confidence in the city's fiscal management. The stakes are high, as Paterson's ability to secure favorable borrowing terms and maintain essential services could be significantly impacted by the outcome of Moody's review.