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Controller Jones: “Conservative” policies rewarded.
The city’s finances are in the black and likely to stay there, according to recent assessments from three bond ratings agencies.
Mayor Toni Harp ascribed the positive results to her administration’s “conservative” fiscal policy at a City Hall press conference called Thursday afternoon to announce the results. Last year, the Harp administration eliminated a $4.7 million general-fund deficit from the year before — one of the factors in this month’s ratings boost.
In the past 18 months, the city has been “building an operation for a strong, sustainable financial future,” Harp said. “Today, we can report that others are beginning to take notice.
Standard & Poor’s upgraded the city from a BBB+ to an A- rating Wednesday, with a “stable” outlook. Thursday, Fitch and Moody’s maintained A- and A3 ratings, respectively. Fitch changed its outlook from “negative” to “stable” and Moody’s kept a “stable” outlook.
Click here to read the final Standard & Poor’s report.
Higher bond ratings mean New Haven can borrow money at lower rates of interest, ultimately saving the city money.
Controller Daryl Jones said city leaders have “worked together to be what we call fiscally conservative,” putting in place “conservative budgeting practices” expected to continue this fiscal year.
The Standard & Poor’s report named several favorable factors for New Haven, including New Haven’s strong economy, City Hall’s strong budgetary performance, and access to internal and external liquidity.
The reports reflect a reversal of fortune for the city.
Between April and October 2013, agencies downgraded New Haven’s ratings five times, Jones noted. Moody’s maintained a negative outlook for the city until 2014. In the last year, the city has “single-handedly changed every single rating agency upward,” Jones said.
Harp said developers will be attracted to New Haven knowing it has a ” conservative, accountable government they can rely on.”
The Standard & Poor’s report cited the city’s “reduced overtime costs following the hiring of 68 police officers and 87 firefighters as well as favorable revenue variances in building permit fees and licenses due largely to $7.5 million in fees for the new residential college at Yale University.”
Still, according to the Standard & Poor’s report, the city still has “very weak budgetary flexibility,” with perilously low reserves. The Harp administration inherited a rainy day fund that was in the red; the Harp administration has slowly added to the fund, which is now in the black, but just barely (at $22,000). The administration did that without relying on “one-time revenue or significant or projected expenditure savings contingent on labor group concessions,” two practices the previous DeStefano administration relied on, to the consternation of ratings agencies.
The report also noted that the city has benefited from increased tax collection. (The DeStefano administration, too, had improved tax collections over the years.)
The last time all three agencies gave New Haven positive ratings was prior to 2010, according to Budget Director Joe Clerkin.
I believe the headline is incorrect. One agency (S&P), upgraded its rating, one (Fitch) upgraded its outlook, and one (Moody's) made no change.