Moody’s gives Vicksburg A2 rating
Published 10:50 am Tuesday, July 1, 2014
After more than two years since losing its bond rating for insufficient financial information, and one day short of the first anniversary of the Board of Mayor and Aldermen’s inauguration, the City of Vicksburg has received an A2 bond rating from Moody’s Investment Services, a New York-based provider of credit ratings and risk analysis, Mayor George Flaggs Jr. said.
Flaggs said Monday afternoon he received word about the bond rating in an email from Government Consultants Inc. of Jackson, a government-finance consulting firm that helped the city through the process of restoring the rating.
Moody’s pulled the city’s bond rating in 2012 for a lack of financial information caused by a backlog of incomplete audit reports.
“I promise you, this is the best news I’ve heard since I’ve been here,” Flaggs said.
“All of us have to take credit for what we’ve done, (and) for doing what we needed to do in a timely manner to get the rating back,” he said. “I was never in any doubt we would get the rating back, I just knew we were headed in the right direction. We did all the precautions we needed on the hiring freeze and on the budget reserve.”
He commended Aldermen Michael Mayfield and Willis Thompson, Finance Director Doug Whittington, IT Director Billy Gordon and City Attorney Nancy Thomas for their work to get the new rating.
The Board of Mayor and Aldermen filed its request for a new bond rating to Moody’s in late May after receiving the city’s 2013 audit.
According to information from Moody’s, “the A2 rating reflects the city’s low debt profile and healthy reserve levels.” Among the challenges facing the city mentioned in the report are the unreliability of two of the city’s main revenue sources, sales tax and gaming revenue, and Vicksburg’s low median income.
The bond rating clears the way for city officials to renew efforts for a capital improvements program, improvements to the city’s recreation facilities, and the possible construction of a multipurpose recreation program, but Flaggs said city officials need to be cautious about considering borrowing money.
“This doesn’t open the flood gates to start spending,” he said. “This means we have to be fiscally responsible for what we do, and look at our strengths. Those strengths are our low debt profile and our healthy fund reserve of $3 million.”
“Let the real deal begin,” said Mayfield, who represents the North Ward. “I think when you have a lowered bond rating hanging over your head, you never remove the cloud until you get that piece of paper in your hand saying it’s all good.
“To have this in my hand, I can’t stress enough, it’s time to be as for real as you can get,” he said. “I don’t ever want to sit on another board again where the bond rating has been lowered, because it cuts you out of the major projects that you really need to take for residents of this city. I feel good. I really and truly do.”
“It’s a big accomplishment,” said Thompson, who represents the South Ward. “It held up a lot of things, and we missed out on a lot of grant opportunities. Moving forward, there are items we have to address, we can’t fund them out of the general fund. You need a funding source, so it goes back to the bond rating, and to have it done in the first year is a milestone.”
Moody’s in February 2012 pulled the city’s A-1 bond rating, “because it (Moody’s) believes it has insufficient or otherwise inadequate information to support the maintenance of the rating,” according to information released when the company pulled the ratings.
“Vicksburg’s last completed audit is for fiscal year 2008 with only unaudited financial information,” the company’s release indicated, adding. “Vicksburg’s lack of current audited information to be insufficient to effectively assess the credit worthiness of the city.”
The city’s 2008 audit was completed in 2012. The 2008, 2009 and 2010 audit were competed in 2012. The 2011 and 2012 audits were done in 2013, and the 2013 audit in May.
“When you look at what Moody said, we should never take an investor service or a rating not seriously any more,” Flaggs said. “An audit report is important, ratings are important. Anything could have happened, we could have needed some money, and we would have had to borrow money at a higher rate.”