From Brian Lockhart, CT Post
City officials–and taxpayers–got some good financial news this week, with two of the three key credit rating agencies boosting Bridgeport’s grades.
The news also comes as Mayor Joe Ganim prepares to run for a third consecutive two-year term in 2023.
In their latest reviews of Bridgeport’s finances, Fitch boosted the city’s rating from A to A+ while Moody’s Investors Service also moved the needle up a notch from Baa1″ to A3. The highest achievable rating is AAA.
That may all read like gibberish to some residents, but it ultimately can impact their wallets by potentially saving Bridgeport millions of dollars in interest payments over the long term when officials borrow for big projects like school construction.
“This is an affirmation of the strength of the city’s finances, fiscal health and this change will lead to lower interest costs for our bonding (borrowing), thus saving taxpayers money,” Finance Director Kenneth Flatto told members of the council’s budget committee earlier this week.
Full story here.
Lennie or JML, can we get an explanation as to what happened to the $9.1 million surplus reported in January 2022?
Four months later the City Council Budget Committee is unable to balance the budget after falling short $2.2 million. It took an infusion of $2.2 million by the state to balance the budget. Let’s no even get into the millions received in covid-19 funding. Is this what they call, “Improved Financing?”
Speedy, a finance guru I am not. In reviewing press releases from the respective agencies, they cite optimism for bond rating increases based on a number of factors including a higher percentage ratio invested into reserves, the so-called rainy day fund as a measure of fiscal health. It’s like applying for a loan, underwriters want to know the strength of your savings/retirement account to determine credit worthiness. Finance Director Ken Flatto has built up the city’s reserves. So maybe the extra moolah is applied to reserves for the next budget year. In addition, every budget built on the municipal level is a complete leap of faith anticipating passage of the state budget that wires money to Bridgeport. The municipal budget calendar is finalized before the state business is completed. Sometimes everything promised by the state doesn’t make the final cut. Uh oh…city bean counters must figure that out including an SOS to the city’s legislative delegation to rescue the municipal plan.
Lennie, when stepped down from the council in 2001, the reserve was at $52 million. What’s the reserve today?
Speedy, bond rating agencies cite a reserve fund of $42 million, more than double the amount when Ganim returned to the mayoralty in December 2015 with Ken Flatto as finance director.
Here’s why Bridgeport has a $44M surplus:
1) Intentional understaffing and
2) The CARES ACT (I and II ) which put millions at the Mayor’s discretion.
These are both fantastic ways to save money and prevent tax increases.
Joel, Wasn’t the surplus base on the $10 million gimmick sale of the Stratford Sikorsky Airport?
That money or some of it may have ended in reserve.
No. The airport sale is built into this year’s budget, not the last one.
Let’s stay on topic.
Fitch and Moody’s were among the biggest players in the GFC (Great Financial Crisis) of last decade.
Their approval doesn’t improve Bridgeport’s position one bit!
Fact: Bridgeport is one of the most expensive cities in America.
And that’s what’s keeping the city – and it’s bond ratings – afloat.
“…In their latest reviews of Bridgeport’s finances, Fitch boosted the city’s rating from A to A+ while Moody’s Investors Service also moved the needle up a notch from Baa1″ to A3. The highest achievable rating is AAA.
” That may all read like gibberish to some residents, but it ultimately can impact their wallets by potentially saving Bridgeport millions of dollars in interest payments over the long term when officials borrow for big projects like school construction….”
Yes, Lennie: It reads like gibberish because it is gibberish. Muni bonds are — inasmuch as municipalities as large as Bridgeport are never allowed to actually go bankrupt, or perpetrate a major default on investors (e.g., the quashing of Mary Moran’s noble attempt to unveil the fiscal truth and set things straight in Bridgeport in 1991) — so they are, in most cases, somewhat less risky than most investment instruments, with their de facto, state/federal “backing.” In this context, even “basket-case” municipalities of Bridgeport’s size/political importance are unlikely to get the real-world pariah rating that the socioeconomics of Bridgeport’s reality would indicate on an assets-value/performance/future-prospects basis… And let’s not forget that Moody’s and Fitch were not necessarily floating warning-buoys in a timely way prior to the 2007-2008 world financial melt-down…
Now; with Bridgeport running out of significant assets to liquidate, even as it attempts to balance its books via such a dubious modus operandi, how does one rationalize this rosy misperception of Bridgeport by these “rating” agencies?! Could it be that they don’t have to base their ratings of cities of Bridgeport’s size and political importance on a real-world basis because investments in political entities aren’t allowed (by higher levels of government) to move as real-world economic vicissitudes would suggest?!
It would be refreshing to have Bridgeport, and its “corporate executives” evaluated by the same yardstick as say, GE or Boeing…
And Joe Ganim should lose the next election just for the failure of Sikorsky Airport — let alone for our loss of People’s Bank, UB, the viability of the BPD, the unaddressed (City Hall-condoned!) overwhelming of our infrastructure and quality of life by the economic parasitism of our suburban neighbors (e.g., the pirating of Bridgeport services and infrastructure, to our detriment, by our neighbors for their own callous, greedy purposes)…
Dead city. Zombie leadership…