In 2011, Standard and Poor’s (S&P) issued a AA/Stable rating to Galloway Township, and said it didn’t expect that to change “anytime within the next two years.”
That statement has held up for at least one year, as S&P issued a AA/Stable rating to Galloway Township’s Series 2012 general obligation (GO) refunding bonds, and reaffirmed its previously-rated GO debt, according to the report provided by the township to Patch on Friday, Dec. 21.
The report was issued on Dec. 3, prior to the township issuing final layoff notices and entering into a settlement agreement with former Township Clerk Lisa Tilton, who filed a lawsuit with the township in May.
S&P rated the township’s financial management practices as “good,” and said the township’s debt burden is low at $1,800 per capita and 1.8 percent of market value. Fund carrying charges are at 12.8 percent for 2012, which S&P considers moderate, as the number historically ranges between 10 and 15 percent.
No long-term debt is in Galloway’s near future, and the township has cancelled roughly $6 million of bond ordinances approved over the last few years, S&P states in the report.
In the report, S&P states its rating reflects its view of the following aspects of the township:
- strong wealth and income levels;
- broad, largely residential property tax base;
- strong financial position, despite ongoing budget pressures; and
- low debt burden, coupled with limited capital needs.
S&P considers income levels good, despite the presence of a “notable student population.” It placed the effective buying income of Galloway households at 120 percent of national levels.
In the same report, however, S&P expressed concern about the township’s elevated unemployment rate (11.5 percent) and a contracting tax base due to fallout from the real estate downturn and ongoing appeals.
The unemployment rate is lower than that of Atlantic County as a whole, which stands at 12.9 percent unemployment. However, Galloway’s unemployment rate was higher than both the state and national averages, which are both at 9.3 percent.
The report also references the township’s plan and its intention to issue about $1.5 million in tax appeals, stating that neither series of notes will be issued a rating.
“Both series of notes mature one year from the date of issuance,” S&P states in its report. “The township is authorized to renew the special emergency notes (for the reassessment) on an annual basis for five years and the tax appeal refunding notes for three years, subject to required annual installment paydowns.”
According to the township, there were over 2,000 tax appeals last year. S&P states in its report that the township has indicated a majority of these appeals will be settled, while other outstanding appeals will be settled via future assessments.
S&P states that market value has decreased, but “remains strong at near $90,000.”
“The township’s finances have been pressured over the past few years, though reserves remain at a level we consider strong,” S&P states in the report.
In 2011, the township incorporated a $400,000 emergency appropriation deferred charge, as a result of self-insured health costs overrun. That charge is being paid this year, S&P reports.
The township expects the fund balance at the end of the year to be equivalent to that of 2011, and reported a good financial performance to S&P this year due to tightened spending practices.
According to the report, the growth of the Richard Stockton College of New Jersey, the Federal Aviation Administration (FAA) Tech Center and AtlantiCare Regional Medical Center helps the township. The township also benefits from employment opportunities throughout Atlantic County and the Greater Philadelphia and New York City metropolitan area, according to the report.
The report makes mention of Stockton’s purchase of the Seaview, and that the college is currently up-to-date on its “payment-in-lieu of taxes” program.
Galloway passed an emergency resolution to fund storm clean-up costs following Superstorm Sandy, but S&P expects the township will only incur up to $200,000 of that. That money is likely to be reimbursed by the state and the Federal Emergency Management Agency (FEMA).
The report states it doesn’t expect any change within the next two years, as it expects the township to make the necessary adjustments within the budget to maintain strong reserves and liquidity.
However, S&P stated the rating could be lowered if additional appeals pressure the tax base and finances, or if reserves must be reduced because of an inability to maintain a balanced budget. It also said the potential for an upgrade is limited because the township will be challenged to significantly improve its financial position, and achieve tax base growth in the near future.