OGDENSBURG – Ogdensburg’s reduced credit rating will cost the city an additional $36,000, according to an update from City Manager Sarah Purdy.

In recent years the city has had to borrow money to ensure it has cash flow to meet financial obligations. This is due to the city’s dangerously low fund balance and the delayed reimbursements for state mandated and funded services.

Last year the city borrowed $1.8 million with a 2 percent interest rate. Borrowing that money cost the city $36,000 in interest. The city paid that loan off in 2017, but was forced to borrow $1.8 million again.

However, continued borrowing for cash flow, growing debt, and a weak tax base led Moody’s Investor Service to downgrade the city to junk bond status.

Moody’s Investor Service is one of several companies that rate bonds and other debt based on perceptions of perceived risk.

The city was expecting the rating drop to bump interest rates by 1.5 percent. However in a recent public update the city manager said the city negotiated and interest rate of 4 percent, which is 2 percent higher than last year.

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.

The 4 percent interest rate will cost the city $72,000, which is $36,000 more than it cost the city last year.