U.S. PUBLIC FINANCE
3 OCTOBER 21, 2013SPECIAL COMMENT: KEY CREDIT DRIVERS FOR NEW YORK LOCAL GOVERNMENTS
Multi-Notch Downgrades 2008-2013 Q2
State Number of Downgrades
*California is overrepresented due to a change in law which caused all rated tax allocation bonds in California to be downgraded to belowinvestment grade.
Source: Moody’s Investors Service
Credit Driver #1: Slow Economic Growth Across the State, Challenges Vary byRegion
The pace of economic recovery in New York has been uneven, with each region experiencing its ownset of economic drivers. For the purpose of generalizing economic trends, we split New York into twodistinct regions: “Downstate” (the area around New York City and much of the Hudson Valley) and“Upstate” (the balance of the state).
Upstate Region Experiences Long-term Economic Transformation
Upstate New York has a long history of decline in industry and population, and relatively weak wealthand income indices, particularly in the major cities (Exhibits 4 and 5). The area suffered during theGreat Recession, but upstate tax base valuations have remained relatively stable because the region didnot experience significant real estate value increases during the boom. Economic activity has started topick up in some metropolitan areas, including Albany (A1 stable) and Rochester (Aa3 stable). In thesecities, as well as in Buffalo (A1 stable), a strong higher education presence has brought stability to theeconomy. Rochester has long benefited from the presence of two major universities and, for many years, maintained a relatively stable manufacturing presence anchored by the Eastman Kodak Company and the Xerox Corporation (Baa2 stable). Although Kodak has significantly downsized overthe years, and filed for bankruptcy in early 2012, the company has spun off many high-tech firms inthe area that have contributed to the local economy.
Long-term Change in Rank Among Top U.S. Cities by Population
Rank 1920 1930 1940 2010
1 1 1 1
11 13 14 72
23 22 23 100
37 40 41 170
Source: U.S. Census Bureau