City Keeps AA+ Rating from Fitch - Outlook Revised
Annapolis, MD (5-15-13) Annapolis Mayor Joshua J. Cohen announced that the City maintained their AA+ rating from Fitch rating agency.
Fitch has affirmed the AA+ rating for sale of up to $54.6 million in general obligation bonds and $15.4 million in general obligation public improvement bonds. The rating agency revised the City’s outlook from stable to negative, citing a low Annual Required Contribution (ARC) to the City Police and Fire pension.
“The determination is really about whether Fitch agreed with our style of accounting,” Mayor Cohen said. “During the first two years of critical cost savings, we chose to funnel money into our reserves rather than into the ARC only putting aside $200,000 a year for the Contribution. However, in FY 2012 and FY 2013 the City set aside $1.6 million for the Contribution and it is now that we get downgraded.”
Meanwhile, Standard and Poor’s Ratings Service released their report last Friday and upgraded the City’s rating from AA to AA+ with a stable outlook, saying:
“Standard & Poor's considers Annapolis' financial management practices "strong" under its Financial Management Assessment methodology, indicating practices are strong, well embedded, and likely sustainable.
Moody’s also assigned high ratings to the City, in their report released last week, with a rating of Aa3 and a positive outlook saying:
“The Aa3 rating reflects the City's sizable and diverse tax base, satisfactory reserve levels, narrow but improved liquidity position, as well as a manageable debt burden. The positive outlook reflects the City's proactive measures and expected future commitment to raising revenues and reducing expenditures to maintain the City's reserve position going forward.”
“Over the past three years, we did not strive to make the politically popular decisions, but rather rolled up our sleeves and did what was right.” City Manager Michael Mallinoff said. “This has resulted in our ability to reduced expenses while increasing revenues, build our fund balances, repay all of our short-term lines of credit, and begin to seriously fund our pension plans."
Fitch's outlook is not expected to have a negative impact on the City’s ability to sell bonds this month. The bond proceeds will finance several capital improvement projects in Annapolis.