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Bond Rating Hit Yet Again
by Staff | Aug 13, 2013 10:21 am
Posted to: City Hall
Just four months after lowering the city’s bond rating from A+ to A, ratings agency Fitch lowered it again.
The new bond rating is A-. The downgrade comes just five days after another bond rating agency, Standard and Poor’s, lowered the city’s rating.
A bond rating is an evaluation of the trustworthiness of buying city bonds. A lowered bond rating can raise the cost of borrowing money by making investors wary of trusting their money with the city.
The city has about $500 million in outstanding general obligation bonds, and plans to release $39 million more, according to Fitch’s report.
In its latest downgrade, Fitch cites New Haven’s continuing expansion of pension costs, high debt, Board of Ed budget overruns, and low cash reserves.
“The reset to A- is disappointing as the city has diligently worked to reduce costs by resetting pension and medical care costs for city employees, growing the city’s tax base and adopted a budget for fiscal year 2014 that included no one-time revenues,” said city Budget Director Joe Clerkin. “However, the action is understandable due to the city’s fund balance deterioration and, of course, is in line with the financial pressures currently being felt by many jurisdictions.
“As we move ahead, the City will continue to ensure that we enter into labor agreements that the taxpayers can afford, that are fair to employees and that are mindful of current market conditions while continuing to develop our sizeable education, research, bio and life science economy.”
Tags: bond rating, fitch
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I would like to see a mayoral debate dedicated solely to the issue of the city’s long-term obligations, and what needs to be done now to avoid becoming like Detroit.
I’m sure having 40 mini-city halls will relieve the financial burden of a centralized city government and allow us to repair our credit rating.
I’ll say this again, can we please get a comment on this from each of the mayoral campaigns?
Regardless of who’s mayor and what their policies are, a credit downgrade significantly raises the cost of running the City.
Any construction project, or major repair effort requires issuing a bond; and a bad credit rating means we’re going to get hosed on the interest rate. Basically, we’re going have to spend more money for the simple reason that we’re not trusted to pay our bills.
This isn’t surprising since the front runner in the mayoral races doesn’t seem to believe in paying taxes that are owed.
Every individual running for mayor should have a plan for restoring the City’s credit rating. In other words, how does each candidate plan to address the very seriously structural problems in the City’s budget?
I second your request for a debate focused solely on the City’s finances. I’m shocked there hasn’t been one already.
posted by: Nhv.Org on August 13, 2013 10:49am
I love it that there’s a bond rating agency called Standard *and* Poor
If Senator Toni Harp gets elected mayor, it’ll probably go down to a D.
This is a pathetic development and a continuing testimony to the reckless budgeting of John DeStefano and his henchmen and women on the BOA. Too few alders read and understand the budget and those that do, refuse to do anything about it. The chickens that have been hatched for years are coming home to roost. The statement from city hall is worse than lame.
Toni Harp did a fantastic job as Chairman of the Appropriations Committee. She spearheaded the effort to get our state on a sound fiscal platform after the out of control spending done by the Rell & Rowland administration. Under Harp’s leadership the state budget is balanced, the long term pension obligations are in check, and the state now has a surplus. I’m sure she’ll do the same for New Haven. If you believe what I just wrote, I have a bridge in Brooklyn I’d love to sell you.
Bill Saunders, in this case, “D” would stand for “Detroit” or “Devistated.”
I too would like to see a debate as advocaed for by NewHavenTaxTooHigh. I think it would go something like this; Justin would know what he was talking about, and would tell the hard truth. The other candidates would evade and tell fables.
posted by: Christopher Schaefer on August 14, 2013 7:11am
This is precisely why we need to balance the BOA with some GOP alders. The current BOA is represented solely by a party that supports govt. spending to expand govt. programs in an effort to fix various social problems, e.g. more school buildings, more afterschool programs, more cops, more jobs programs, etc., etc.—and lots more staff to operate these ever-expanding programs. While the intentions always are laudable, the total lack of counterbalance means we inevitably will spend ourselves into a hole from which there is no return. When you think of GOP at the LOCAL level, forget ObamaCare, “traditional values”, gay marriage, abortion, gun rights, and all the other issues that make the local Dem majority cringe. Fiscal Responsibility is THE hallmark of LOCAL Republicanism. Before you mention GOP governors who have made just as much a mess of state economies as Dem governors, look at CT towns. Those that consistently end their fiscal years with surpluses are run by a GOP majority or with a significant GOP presence. And yes, they don’t have the multitude of problems that cities face such as poverty or 50% of property occupied by tax exempt entities. But a few GOP alders in New Haven WILL provide the necessary fiscal balance and authentic budget discussions that have been lacking in New Haven for far too long. And because the GOP is such a small presence in New Haven, a few GOP alders won’t have to make taxpayer-funded, under-the-table promises to their cronies in city hall.