Moody’s Investors Service has downgraded the City of Trenton

Trenton Mayor Reed Gusciora’s prospects for re-election took another nose dive as Moody’s Investors Service downgraded the city’s outstanding general obligation bonds to Baa2 from Baa1, which affects about $252 million in outstanding municipal debt.

The bond rating agency’s outlook has also been changed to negative from stable, suggesting that more bad financial news is on the horizon.

That means Trenton has been so badly mismanaged by Gusciora that it will cost taxpayers more to borrow money and some of the top financial accounting professionals in the nation think things are likely to get worse.

Gusciora is seeking a second term in November.

Trenton’s election for mayor will be held on November 8, with a runoff election scheduled for December 6, in the event that no candidate gets more than 50 percent in the first round of voting. The deadline for filing petitions to be a candidate is tomorrow, September 6.

At least 22 candidates have taken out petitions to run for the seven council seats up for grabs and among Gusciora’s challengers are Council President Kathy McBride and West Ward Councilwoman Robin Vaughn.

McBride received fewer than ten percent of the votes cast for mayor in 2014 while Vaughn was the top vote-getter in the 2018 city council election.

“The downgrade to Baa2 reflects the city’s recently worsening governance issues which are now weakening the city’s credit quality,” said Moody’s, one of three top credit rating agencies. “Although the city’s reserve position is quite healthy, even excluding the $73.8 million in ARPA funding, city council and the mayor have not only been unable to pass a budget for 2022, they were unable to agree to authorize debt service.” “

“The mayor publicly appealed to the state for assistance, which came in the form of a directive from the Division of Local Government Services (DLGS), ordering debt service to be made on time and in full,” said Moody’s. “The city has already been working with DLGS to switch its fiscal year (which was incentivized by the promise of additional state aid).” “

“The mayor has requested further state assistance and oversight. Although timely debt service payments were never at risk due to DLGS intervention, the city’s inability to budget nor authorize debt service payments represents a significant negative inflection point,” said Moody’s. “Apart from the recurring and worsening governance issues, the city’s fundamental credit quality remains pressured due to a stagnant economy, weak resident wealth and incomes, and elevated debt.”

“The negative outlook reflects our expectation that although city’s finances will remain satisfactory and while the state will ensure that debt service is paid, governance will remain a source of negative pressure as city council and mayor remain deadlocked,” said Moody’s.

“The pigs are winning Battle of Trenton,” said Trentonian columnist LA Parker, a frequent critic of Gusciora.

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