‘Affluent’ Montclair Gets Good Financial News From S&P Global

MONTCLAIR, NJ — Montclair recently received good financial news that may save taxpayers some money, town administrators say.

Earlier this week, S&P Global Ratings affirmed its “AAA” rating on the township's existing general obligation bonds. The company also assigned its highest short-term rating, “SP-1+,” to Montclair's 2026 bond anticipation notes.

Read the full announcement from S&P Global Ratings here.

Each rating has a different purpose, township administrators said:

• An AAA rating is S&P's highest long-term credit rating, indicating an extremely strong capacity to meet financial commitments and placing Montclair among the highest-rated municipalities in the nation.
• The SP-1+ rating is S&P's highest short-term rating, signifying a very strong capacity to repay short-term debt obligations.

What does it mean for local residents? The ratings can help reduce borrowing costs for capital projects, allowing the township to finance infrastructure improvements more efficiently – potentially saving taxpayer money.

“While bond ratings may seem like a technical financial measure, they have a real impact on our community,” township manager Stephen Marks said.

“These ratings reflect the work we do every day to be responsible stewards of taxpayer dollars,” Marks said. “A strong credit rating allows the township to borrow at lower costs, helping us make smart investments in roads, facilities, and other community priorities while protecting taxpayer resources.”

S&P Global Ratings said Montclair has an “affluent and growing economic base” with a robust reserve position – despite recent draws.

“We expect additional tax base growth as residential and commercial projects are underway, which will support continued growth of property taxes: the township’s main revenue source (72% of budget),” the company reported.

S&P Global added some caveats about the town’s finances:

“Based on the unaudited fiscal 2025 results, the township did not fully regenerate its appropriated surplus. Certain revenues came in slightly above budgeted levels but expenditures outpaced revenues. The township has a new management team that examined and tightened its expenditure budget. Additionally, the township left the state health benefit plan, resulting in savings in health care costs. We expect Montclair will incrementally increase its fund balance in future fiscal years by levying taxes up to the 2% cap, exploring different ways to cut expenditures while increasing revenue growth through payment in lieu of taxes, and expanding its tax base.”

The company also referenced a controversial school referendum that recently took place in Montclair:

“The township is also issuing a tax anticipation note (TAN) in conjunction with the other short-term debt. Montclair school district voters approved a $12.6 million tax increase, beginning July 1, for the district’s 2027 fiscal year. As the school district operates with a different fiscal year-end than the township, the township is issuing the TANs to cover the first six months of the increased tax receipts required for the school district. The township is not experiencing liquidity issues, and the TANs are the result of a timing difference between the school’s and the township’s fiscal year-ends.”

“After this issuance, Montclair will have about $73.8 million in debt outstanding, with a portion of this debt deemed self-supporting,” S&P Global noted. “Although the township’s debt amortizes rapidly, which we view as a credit positive, its elevated pension and other postemployment benefit costs negatively affect our view of its growing debt and liability burden.”

“If the township were to continue to draw on reserves to levels no longer consistent with those of peers due to elevated fixed or other costs without a timely plan to restore them, we could lower the rating,” S&P Global added.

>> RELATED: Montclair School, Town Budgets Get Green Light (See Tax Impacts)

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