Controller Matthew Agresta told the Common Council on Tuesday that Standard and Poor had completed a review of the city’s finances and issued a change in the city’s rating. The city’s rating since 2012 has been an “A” with a negative outlook. The rating was changed to an “A-” with a stable outlook.
“From A to A- is still the same investment grade, there is no real loss there. The big benefit is going from a negative outlook to a stable outlook,” said Agresta. “Investors, if they see a negative outlook are going to be much more unlikely to purchase any of our debt. The stable makes it much more palatable for them to actually do that.”
Agresta said that the completion of the 2011-2012 state audit report (AUD), preliminary information on the 2012-2013 report, as well as the one time payment from the dissolution of the Montgomery County health trust fund were factors that S&P took into consideration in upgrading the city’s outlook from negative to stable.
Agresta also said that he will ask S&P to review the city’s finances again at the beginning of next year when he hopes to have all past audit reports completed. He said that he still recommends the city wait to see if the credit rating can improve before borrowing money for anything other than emergency situations.
The council will discuss capital projects on Monday, some of which Mayor Ann Thane said are emergency situations.
According to a September 12, 2014 press release on S&P’s web site, the downgrade from “A” to “A-” was because of “the city’s poor general fund performance in fiscal 2012 followed by imbalanced operations.”
According to the 2011-2012 AUD, the city’s fund balance at the end of 2012 was $393,649, down from $646,473 at the end of 2011.
In the same release, analyst Timothy Barrett is quoted as saying,”The stable outlook reflects our assessment of management’s plans to implement certain corrective measures to improve the city’s finances.”
