City’s credit rating good news, but it will take work to keep it

Published 9:52 am Thursday, March 17, 2016

Vicksburg has retained its A-2 bond rating and that’s good news.

As with an individual’s credit rating, Vicksburg’s bond, or credit rating, is an important indicator of its ability to pay its bills and shows the city is financially sound; that is able to meet its loan payments and continue to provide the necessary services to the public like police and fire protection, sanitation and utility services.

In its report reaffirming the city’s rating, 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.

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The city’s total full value of $2.2 billion is stronger than other Moody’s-rated cities nationwide.

There was a time it wasn’t so. In 2012, Moody’s Investment Service, a New York-based provider of credit ratings and risk analysis that just reaffirmed city’s bond issue, pulled the city’s then AA rating for a lack of financial information because the city had incomplete audit reports.

By June 2014, one month short of the present board’s first year in office, Moody’s gave the city the A-2 rating, not only because the city was current on its audit reports, but because the board took other steps to get its financial house in order. The board erased a $477,000 deficit. It approved refinancing two outstanding bond issues, and established a $3 million reserve fund.

Mayor George Flaggs Jr. said the board’s ability to erase the deficit was a major component in restoring the city’s rating. He believes the city’s financial picture is bright.

“We have clearly created a path to a financial future for this city, it is not my intention to do anything different,” Flaggs said. But he said that path can have its rough edges.

“However, given what has happened to other cities that are bring downgraded, it could easily happen to us,” he said. “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.”

He’s right. We congratulate the city on its achievement in these tough fiscal times, but like Flaggs, we realize our good fortune could slip if we get careless.