Moody's Gives Easton Aa3 for Credit Rating

Moody’s Investors, a company which assigns ratings for municipalities for bond usage, has recently rated Easton a Aa3.

The rating, which is the fourth of ten possible ratings with Aaa being the highest, is designed to show the financial feasibility of a government general obligation bond, which in turn allows towns to borrow large amounts of capital to pay for their big projects.

What does this mean to Easton’s tax payers? Well, in a general obligation bond, investors, or bondholders, have the option to compel local municipalities to levy more taxes on residents to raise the revenue necessary to pay off a bond, and the higher the rating, the better chance there is the bond will be issued and less chance for taxes to rise.

The Aa3 rating is considered a Prime 1 rating and is considered by Moody’s as having the “Best ability to repay short-term debt.”

In this case, the rating came from the general obligation bond fund, which the town will use on capital improvement projects such as the Middle School roof repair and street repairs.

Here's a look at what Moody's stated were the good points of Easton in terms of lending and what the town could look to improve upon:

STRENGTHS

-Stable, mature tax base with above average wealth levels

-Manageable debt burden

-Proximity to Boston (Aaa/stable outlook)

WEAKNESSES

-Reliance on reserves to address budget gaps

-Relatively modest size of General Fund balance

WHAT COULD MAKE THE RATING CHANGE UP

-- Improved financial position through an established trend of structurally balanced operations and augmentation of reserves

--Significant tax base growth

WHAT COULD MAKE THE RATING CHANGE DOWN

-- Protracted structural budget imbalance

-- Depletion of General Fund balance and other available reserves

-- Deterioration of the town's tax base