Moody’s re-affirms city’s credit rating
Strong financial and credit positions and low debt liability were among the reasons cited by Moody’s Investment Service, a New York-based provider of credit ratings and risk analysis, to re-affirmed the city of Vicksburg’s A2 credit rating, city officials learned.
The rating was continued after an annual survey of the city’s finances by Moody’s, Mayor George Flaggs Jr. said.
Bond ratings are used to determine a borrower’s ability to pay off a loan or bond issue. The ratings go from AAA to C, with AAA being the highest and best rating and C the lowest. Moody’s rating service also has a “WR” designation, which means the rating has been withdrawn.
An A2 rating means the city has more than a sufficient financial ability to pay off a loan.
“This is good news for the city of Vicksburg and its financial future,” Flaggs said. “Given the city of Vicksburg’s financial situation, coming into this term, I think it speaks volumes for the board’s decision to implement some (financial) discipline and fiscal responsibility.
“However, given what has happened to other cities that are bring downgraded, it could easily happen to us. If we start spending out of the $3 million reserve or start taking money out of the ($9.2 million) bond money and spending it for anything other than an emergency or it was intended for, we can be back in the same situation.”
Moody’s called the city’s financial situation “robust,” saying its fund balance (or surplus) of 41 percent of its operating revenues is materially higher than the U.S. median.
The city’s total full value of $2.2 billion is stronger than other Moody’s-rated cities nationwide.
“The ability to generate (a) positive operating margin is a component of strong financial management,” according to Moody’s report. It added, “Favorably, on the average, Vicksburg ran surpluses over the past several years while the tax base generally expanded.”
Flaggs said he wants to improve on the city’s financial picture by ensuring the board spends within its limits and there is no increase in the city’s debt ratio.
“The other thing is continue to control spending by not increasing employment in the city which increase benefits,” he said. “We should continue to provide oversight and accountability from the division heads and department heads for the next 16 months, and that will be the end our term.
“We have clearly created a path to a financial future for this city, it is not my intention to do anything different,” Flaggs said. “It is my intention to provide the very best leadership as related to financial responsibility to the board. It is absolutely imperative this city continue to prioritize its general fund money. You’ve got to prioritize the general fund money, and never borrow from the bond money to pay a general fund obligation.”
He still believes the city can find an extra $1 to $1 1/2 milion in savings if some areas of the city charter were change to improve oversight and accountability over city departments.
“We’re going to have to be able to be open to change as it relates to oversight and accountability,” he said.
The city has had its A2 bond rating since June 2014, when Moody’s restored it after pulling the city’s bond rating in 2012 for insufficient financial information caused by a backlog of incomplete audit reports. Flaggs credits the board’s decision to refinance two outstanding bonds totaling $7.78 million and set a $3 million reserve fund.
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