By JIMMY LAWTON

OGDENSBURG -- Continued borrowing for cash flow, growing debt, and a weak tax base are just some of the reasons Ogdensburg has been downgraded to junk bond status by Moody’s Investor Service.

Moody’s Investor Service is one of several companies that rate bonds and other debt based on perceptions of perceived risk. A decline in a rating can have negative impacts on borrowers, such as higher interest rates.

In this case, the city is expecting the rating drop to bump interest rates by 1.5 percent. According to a public update issued by the city, the 2017 budget did not account for the higher interest rate.

That presents a problem for Ogdensburg officials who are struggling to stay within a strained budget that is low on fund balance and facing overages in various areas of the budget. The city tax rate is already more than $19 per $1,000 of assessed property value and city officials are eying an increase in the 2018 budget.

In her presentation to the city council Monday, City Manager Sarah Purdy said the city needs to address structural financial imbalances that continue to put Ogdensburg in a tough financial spot.

According to her report, expenses are increasing faster than revenues, the tax rate is increasing faster than the tax base, the city continues to borrow for cash flow purposes and capital expenses are being deferred until they are in emergency status.

Purdy told city council they need to start reducing operational costs now and that waiting until budget time would likely mean an additional bond downgrade from Moody’s.

According to Purdy, city employee costs are 75 percent of the general fund. The most expensive services are public safety, which makes up 69.88 percent of general labor costs. Public Works follows at 12.91 percent and General Government Services trails slightly behind at 12.53 percent. Recreation comes in at just 4.72 percent.

Purdy says the city can’t address its structural problems without tackling employee costs. In a recent council meeting Councilor Daniel Skamperle brought up the possibility of layoffs or cuts, however the topic was not formally discussed in any detail.

Purdy says she intends to meet with department heads to continue to find ways to reduce costs for all departments.

On July 10 city council will receive an update on the capital plan and set budget dates to begin working on the 2018 budget.