Bond Rating For Dunkirk Takes Major Tumble

DUNKIRK — Serious concerns about Dunkirk’s recently publicized cash crunch has forced S&P Global Ratings to lower its rating on Dunkirk’s general obligation bonds three notches to BBB-, the lowest investment grade that also included a negative outlook.

S&P Global Ratings, in a report this week, said it lowered the rating from A- due to the city’s “imbalanced operations, which have led to a deterioration of its budgetary flexibility with negative available fund balance at fiscal year-end 2021, the last audited fiscal year.” In addition, the firm noted, there are risks related to the city’s financial management policies and practices, “which we now consider vulnerable, and its inability to maintain structural balance as highlighted by auditor findings in its fiscal years 2020 and 2021 audit and its inability to produce the fiscal 2022 audit on a timely basis.”

The negative outlook reflects ongoing uncertainty and limited visibility around the city’s budgetary and cash-flow position and the potential need for state support to ensure ongoing operations.

“To maintain our ratings in accordance with our applicable criteria and policies, we require additional reliable and timely information from the city, including audited fiscal year-end 2022 financial information,” said S&P Global Ratings credit analyst Felix Winnekens.

Within the last three weeks, the city has been mired in a fiscal crisis. Late last month, Assemblyman Andrew Goodell, R-Jamestown, led state efforts to help the city and its $26 million 2024 budget through its looming shortfall by making up to $18.5 million available.

Mayor Kate Wdowiasz, who took office Jan. 1, has told department heads and Common Council members the city has to slow its spending. She has also noted she thinks the city’s American Rescue Plan Act funding was misspent. There have also been questions how the city was budgeting as state aid following the closure of the NRG power plant were phased out.

Goodell introduced the City of Dunkirk Fiscal Recovery Act (A.9589) in the state Assembly March 25 to authorize the city of Dunkirk to issue bonds to liquidate certain actual deficits, impose on the city additional fiscal accountability requirements, and provide for the establishment of a Special Debt Service Fund for the city to be held by the state comptroller in order to restore the City’s fiscal integrity and improve its ability to market bonds.

“The fiscal health of the city of Dunkirk has significantly worsened in recent years due to the closure of the NRG electric generation plant,” Goodell wrote in his legislative justification. “This has created a substantial imbalance between revenues and expenditures, resulting in a deficit for the city.”

One financial analysis pegged the city with $198,000 cash in hand and $16.29 million in debt. City officials backed Goodell’s measure on March 29 during a special meeting.

S&P Global Ratings has more than 150 years of experience and leadership that helps promote universal benchmarking, transparency and business growth.


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