As part of the annual financial review of Lower Makefield Township (Township), on February 14, 2019, Moody’s Investor Services (Moody’s) announced that they have downgraded the Township’s general obligation rating to Aa2 and assigned a negative outlook. This rating action applies to approximately $40.2 million in debt outstanding.
- Obligations rated as Aa are judged to be of high quality and are subject to very low credit risk. (Source: https://www.moodys.com/sites/products/ProductAttachments/AP075378_1_1408_KI.pdf )
As part of the analysis, Moody’s conducted a review of the Township’s 2017 audit. As a result of that review, Moody’s requested detailed information regarding the 2018 and the 2019 budgets. Moody’s did agree that many of the concerns that they had with the 2017 audit were addressed as part of the 2019 budget process. Based on this analysis, and as discussed by the Board of Supervisors during the 2019 Township budget process, Moody’s identified that the Township “recorded a material operating deficit for fiscal year 2018 after appropriating general fund reserves to clear negative fund balances in the golf course and capital reserve funds.”
Township staff and the Board of Supervisors are well aware of and share Moody’s concerns with past budget practices and Township finances. The implementation of new budget practices as part of the 2019 budget process was the first step toward addressing these concerns. Moving forward, Township staff and the Board of Supervisors will work to further improve the budget practices over the long term.
Moody’s also noted that the primary areas of concern, in their opinion, are associated with sewers, particularly related to long term capital costs, and the debt associated with the golf course. As discussed during the 2019 budget process, Township staff and the Board of Supervisors share these concerns and are actively engaged in addressing both issues in both the near and long term.
Moody’s Profile of Lower Makefield Township
Lower Makefield Township is located in Bucks County (Aaa negative) on the Pennsylvania (Aa3 stable) side of the Delaware River directly across from Trenton (Baa1 stable) and 25 miles northeast of Philadelphia (A2 stable). The township is within 1.5 hours commuting distance to New York City (Aa2 stable), and 25 minutes to downtown Philadelphia. The township provides police, public works, planning and zoning, sewer, libraries, parks and recreation, and general administration services to its residents. The town also provides a community center with four swimming pools and an 18-hole municipal golf course. As of the 2016 American Community Survey, the township had approximately 32,662 residents.