WHEATFIELD—The town’s financial structure has taken another serious body blow, as Moody’s Investors Service downgraded its credit rating.

The change — from “A2” to “Aa3” — means the town will have to pay more interest to borrow money.

“We dropped two full notches on our credit rating,” Supervisor Robert B. Cliffe said, describing it as “one more painful” blow to the town’s frail financial state. “It will make credit tougher to get and means we will have to pay more interest for nothing. Absolutely nothing.”

Also last week, a long-awaited state comptroller’s audit revealed the town ran in the red each year toward the end of previous Supervisor Timothy E. Demler’s tenure. The deficits could total as much as $2.7 million.

Cliffe succeeded Demler as supervisor in January.

The reason for the downgrade is not new. Late last year, an independent audit came to the same conclusion: For four years, Wheatfield spent more money than it took in.

That, according to Moody’s, brought “the combined operating balance at the end of fiscal 2009 to negative 10.9 percent of operating revenues, along with an extremely low cash balance of $300.”

Moody’s, which issues credit ratings for corporations and municipalities, blamed the downgrade on a “significant deterioration of the town’s financial position after a multi-year trend of operating deficits.”

The town’s financial losses have been building since at least 2005, according to the credit agency. The town management’s failure to “match recurring revenues with ongoing expenses is evident in the town’s four consecutive years of operating deficits.”

In 2008, for example, operating revenues totaled $979,000 less than projected, “primarily due to aggressive budgeting of sales tax and license and permit revenues, along with the budgeting [of] a sale of property — for $389,000 that did not take place.”

The agency also reported that last year ended with a $427,000 operating deficit because of a $1 million dollar budgeting error. A $1.2 million bond anticipation note was budgeted as Highway Fund revenues to finance $700,000 in transportation projects. This created another shortfall of $500,000, according to the Moody’s report.

Criticisms also covered the handling of the deficits from 2005 to 2008.

“During this period, the town had continued its historical trend of levying zero property taxes despite above-average wealth levels and unlimited taxing authority. (The report put the median household income in Wheatfield in 1999 at $61,315.)

One of Demler’s claims to fame has been avoiding tax rate increases or reducing taxes in each of his 14 years in office. The report does not name him or any other current or former town official, referring only to “town management” or the “town board.” Demler could not be reached for comment.

Since taking office, Cliffe repeatedly has stressed that cleaning up the mess will take time. Even though the board has “made drastic changes,” it still has “a lot farther to go,” he said last week.

niagaranews@buffnews.comnull