By Greg Goldfarb
Look at it this way: A municipal government’s bond rating is like a person’s credit score: the better it is, the more you can do.
In the case of the city of Suffolk, its credit is excellent, which means that when city officials need to borrow money for community improvements and development, there is no problem.
“Having a strong bond rating allows the city to borrow money for capital improvements at the lowest interest rates available in the financial market, saving the city and its taxpayers millions of dollars in loan payments interest over time,” said Suffolk Chief Financial Officer Tealen Hansen. director “Some examples of capital improvements include school replacements, road improvements and renovations, and maintenance of city buildings and facilities, which add to the quality of life for the citizens of Suffolk.”
For the fourth year in a row, the city of Suffolk’s three bond rating agencies, Fitch Ratings, Moody’s Investors Service and S&P Global Ratings, have affirmed the city’s AAA bond rating, meaning the city has a excellent credit and that your future financial prospects. is stable Fitch Ratings is the latest to confirm this with its announcement at the end of July.
The superior rating also represents the overall credit quality of bonds issued by Suffolk government, according to William Franklin, media and community relations, City of Suffolk. It also guarantees that the city has high-quality bonds with the least amount of risk, and that both the principal and interest on the bonds will be paid on time and in full.
In finance, a bond is a type of security under which the issuer, or debtor, owes a debt to the holder or creditor. The borrower is then required, according to the terms, to repay the principal — that is, the amount borrowed — of the bond on the maturity date, as well as interest for a specified period of time, according to online data.
In his notification to city officials, Fitch said the city’s ability to raise revenue and strong spending flexibility support a higher level of inherent budget flexibility and that Suffolk has healthy reserve balances that support a high level of financial resistance.
“The city maintains a conservative approach to budgeting revenue and expense growth,” Hansen said. “Instead of projecting the best-case scenario for revenue growth in the annual budget development, which may or may not come to fruition, the city is more realistic in its revenue projections. This leads to a better chance of meeting or exceeding the revenue projections and improves the chances of year-end surpluses, which are necessary to maintain a healthy reserve balance in the event of unplanned expenses, economic downturns or emergencies.
“The city also strives to keep spending growth modest within available resources,” Hansen continued, “and does not budget for vacancy savings, which provides flexibility to cover unplanned expenses that occur during the year”.
The Moody’s rating reflects the continued growth and diversification of the city’s tax base, including healthy income levels for residents, according to Franklin. He also noted that Suffolk’s finances are strong and supported formal fiscal policies and conservative budget assumptions.
“The city continues to add new and expanding businesses and residential growth and development, which facilitates a healthy local economy, provides job and wage growth, and increases household income levels,” Hansen said. “The city maintains strict compliance with its financial policies that promote fiscal stewardship.”
Standard & Poor’s recognized Suffolk’s consistent and strong operations that bolster already very strong finances.
“The city strives to be consistent in the level and quality of services it provides to its citizens year after year,” Hansen said. “This means providing the full spectrum of municipal services, such as weekly garbage collection, water and sewerage, adequate fire and police protection, sufficiently maintained roads and parks, adequate levels of health and social services, among others without major interruptions or fluctuations in service. The city’s stable finances allow this consistency in the provision of services to our community.”
For the City to achieve and maintain its AAA bond status, its annual operating budget must be managed as efficiently as possible, allowing not only for recurring expenses such as payroll and maintenance, but also for the ‘unpredictable.
“The city has established financial policies that govern how the reserve amount of the fund balance is maintained to support city operations in the event of an economic crisis or emergency event, such as a bad hurricane,” he said. said Hansen. “Financial policies require the city to maintain a certain percentage of reserves in the fund balance, compared to budgeted expenditures. In the event of an event or economic disruption, the city has the ability to tap into reserve funds to ensure critical services continue without disruption and without incurring debt to fund ongoing operations.”
The city of Suffolk’s fiscal year 2022 operating budget is $698,200,696, compared to $767,571,838 for fiscal year 2023.