The City of St. Petersburg’s credit rating has been upgraded by Moody’s Investors Services from negative to stable. The upgrade in the issuer rating is based on the city’s large tax base, improved operating reserves and conservative budgeting practices.
The upgrade “reflects the city’s return to positive financial operations.
“My administration is committed to thoughtful fiscal management, rigorous expenditure controls and smart budgeting practices that keep structural balance in our finances and budget,” Mayor Rick Kriseman said.
One of the key factors in the city’s upgrade came from an increase in the city’s reserve fund.
“We have improved and made more healthy our operating reserves by moving $1 million into those reserves this Fiscal Year,” Kriseman said.
Deputy Mayor Kanika Tomalin said the city expected the upgrade and anticipates remaining stable “as the rebounding economy and strong economic activity bolster our fiscal outlook.”
“Appropriately, Moody’s cited a number of proper fiscal actions we’ve taken in their rationale,” Tomalin said. “We are a city on the rise, and as Moody’s has acknowledged, smart budget practices and a rebounding economy benefit us all.”
Another strength cited by Moody’s in its upgrade was the city’s modest direct debt burden.
However, the report also found some challenges for the city including an above average adjusted net pension liability. That means the city is paying more for pension benefits than anticipated.
Moody’s also notes a below-average resident income level.
In order to improve the city’s credit rating even further, Moody’s recommends material growth in available operating reserves, reducing the adjusted net pension liability and improving resident income levels.
The new credit score for St. Pete’s long-term issuer rating is Aa2 and Aa3 for its non-ad valorem rating. A rating of Aa2 is only two rungs below the highest possible Aaa rating.
It puts St. Pete’s credit worthiness in the very strong category in terms of capacity to meet its financial commitments.
“I thank Moody’s Investors Services for their sound consideration of our fiscal and budgetary policies and our own Budget and Finance team for their hard work,” Kriseman said. “The sun is certainly shining on the City of St. Petersburg today. We are on the right track.”