From city Communications Director Av Harris:
Mayor Joe Ganim today announced that two key municipal bond rating agencies–Moody’s Investor Service and Standard & Poor’s–have both given the city of Bridgeport an “A” rating for the city’s General Obligation (GO) bonds about to go to market, while also reaffirming an “A” for the underlying long-term rating to the city’s current GO bond debt. In its report to the city, Moody’s said its A2 rating reflects a “strong management team … a stable but narrow financial position … the rating takes into account a large and diverse tax base with favorable development prospects.” Moody’s also cited the aggressive financial plan enacted by the Ganim administration in December 2015 to erase a $20,000,000 deficit inherited halfway through fiscal year 2016 that included cost cutting measures such as layoffs, refinancing of debt, spending freezes, and revenue enhancements such as one-time property sales.
“This very solid bond rating for Bridgeport will bolster all the steps we have taken to stabilize the city’s finances, and puts us in a fortified position as we go to market to fund much needed capital investments,” said Mayor Ganim. “What these two rating agencies confirm is that while fiscal challenges remain, the city of Bridgeport is a safe bet for investors as long as we continue to have sound management practices in place. We must continue to be aggressive about conserving spending, meeting our pension obligations, balancing the budget, and building up our financial reserves. These disciplined short term steps will reduce our borrowing costs and save our city millions for years to come, while at the same time funding badly needed improvements that will improve our community’s quality of life.”
In its bond rating report, S&P cited Bridgeport’s adequate management environment, budgetary performance, and liquidity, and reported that future credit ratings could be higher “… if the city were to significantly improve its budgetary flexibility and liquidity due to operational surpluses.” Mayor Ganim recently announced that he expects an audit to show that the city ended FY 2016 on June 30th with a surplus of $600,000 and is expected to end the current fiscal year 2017 with a balanced budget.
The announcement of Moody’s and S&P reinstating solid “A” bond ratings for Bridgeport comes as welcome news in Connecticut. Both agencies recently downgraded bond ratings in other Connecticut cities. Those ratings reflect ongoing challenges for municipalities to raise the revenues necessary to fund city services largely through locally levied property taxes. Cities face unique challenges funding local and regional services with relative scarcity of property wealth and higher concentrations of tax-exempt land. Mayor Ganim stands together with other municipal leaders throughout Connecticut in efforts to craft a statewide approach to strengthen cities as regional economic centers by stabilizing municipal finances and widening revenue streams.
See Moody’s report here.
Moody’s neither improved nor reduced its rating at this time. The rating still bears a negative outlook. What is the excitement about, please? Look at the things that can turn ratings higher as well as those that can reduce both rating and outlook. Which activities have been prevalent in recent years and budgets including the first Ganim2 budget? Remember, Moody’s and other rating agencies assume property taxation has no practical limit and no caps so the bonds themselves can be rescued by increased taxation. How does that sound to those who are paying for the 29% mil rate increase and a larger operating budget? Do specific thunderclouds on the City radar come into play like the tax case between City of Bridgeport and the waste burning facility? Or the next 14 years of Pension Plan A bond payments of $30 Million per year while less than $70 Million is retained in the body of the Pension A assets, and retirement income payouts are running close to $30 million per year? Just asking questions that Ganim2 nor Av Harris have mentioned for the past year. Or did I miss something? Time will tell.
Say what you want John, but it doesn’t sound like a city that is going bankrupt in a couple years either.
Bob, thanks, that was the mindset that was being put out there by a few people to push for bankruptcy that would destroy City employees’ pensions and health benefits.
I cannot separate the awful fiscal condition in Bridgeport from the generous pensions municipal employees enjoy.
Accounting is the language of business. In some instances, it’s where assets must exceed liabilities. That’s where Bridgeport is late for bankruptcy court and tilting toward default.
If bankruptcy is permitted only when “unlimited taxation” as a policy fails, then it is likely you are correct, Bob. But when have you seen me warning against bankruptcy? I do mention issues on the horizon (or radar) that may place us in more difficulty than we are today, but not specifically bankruptcy. The less attractive the City gets fiscally, the lower become values for property owners and the greater are their tax payments relative to value. Ron Mackey (and other OIB readers and commentators) should be more concerned with the handling of Pension Plan A assets and what happens to those City obligations when those assets disappear than with the specter of bankruptcy. Of course there are “guarantees” but how good are those “guarantees” when they force City taxpayers to shoulder an added burden of $20-30 Million annually? Time will tell.
One formula could be to find out how people’s lives have been saved by firefighters and how valuable those acts and action are plus the property that was saved to allow taxes to come from those properties. What is the price of a life?
Ron,
Happy to discuss “human life value” as subject matter when we are able to meet. But you cannot consider that value to justify unlimited pension benefits for all public safety officers, can you? If you do not believe that recent and near to retirement safety officers, some of whom may never have drawn a gun, or run into a burning building in years, are set to receive unlimited retirement benefits relative to those in Pension A, let’s also have a discussion. Who can tell us what formerly Plan B employees were set to earn in retirement while the funds were handled by City trustees for police and fire? And what is the actual situation for those retiring under the benefits provided by CT State MERS plans PAID FOR BY CITY TAXPAYERS AND NOT BY THE STATE OF CT??? Can we ask the accountants to present the answers? And with a drum roll, open the envelope? And the winners are? Time will tell.
JML, please, with all due respect please read what you wrote again and tell me that’s what you really think.
When there is great income uncertainty (in the context of nominal cash reserves) among a substantial percentage of homeowners/taxpayers, municipal bankruptcy is only a recession or financial market burp away. This is true in quite a few Connecticut municipalities, including Bridgeport, Hartford and Waterbury.
What’s the antidote to Bridgeport’s fiscal problems? Answer: a whopping annual tax increase. The kind that makes Moody’s give Bridgeport an A-rated credit rank.
Bridgeport retirees, relax. Here’s why: the only benefit from an “A” rating is Bridgeport can borrow more money. Between borrowing and a potential tax increase, budgets will be balanced and n-n-nothing will change.
Going concern is a basic underlying assumption in accounting. The assumption is a company or other entity will be able to continue operating for a period of time that is sufficient to carry out its commitments, obligations, objectives, and so on.
The rating agencies are basically defining the city of Bridgeport as a going concern. Some people want to ignore this very important accounting principle and go straight to bankruptcy based on a point in time.
I am surprised Dave Walker is not aware of this simple premise.
Bob, true and the same goes for whomever in hell BOE SPY is along with Walker and those anti-union people who post on OIB.
“Going concern” as a carryover concept from business accounting when applied to municipal affairs assumes the executive branch with all of his Charter-derived powers can increase taxes to meet any need or obligation.
The City has not been expert in showing its priorities for years as goals or objectives with measurements or metrics to show progress in attainment. Instead the City fund balance has steadily decreased well below the range enjoyed during Ganim’s first term. Ganim2’s way of “fixing” the problem is to sell off City-owned property? If assets are smaller in size than liabilities, how long will that strategy be practical? The greater our “negative net worth” due to bonding and unfunded obligations, the less attractive we are to long-term investors because of the risks presented. Who will begin to measure our efficiencies and priorities systematically? Time will tell.
Then you get an executive who picks his favorite flavor. He only subscribes to The City Charter when it works in his favor.
What Mr. Mackey calls anti-union, Paul Griffith calls pro-Bridgeport. Across America, pension obligations/promises are crowding out legitimate needs of the budget. Promises eliminate politics. Bridgeport needs to re-purpose its promises, IMO.
Bridgeport is a Going Concern based exclusively on its ability to borrow money and raise taxes!
Paul Griffith lives in Trumbull so he doesn’t give a rat’s ass if city services are cut to the bone, city assets are sold off or education is flat funded.
With mention of so many Connecticut cities facing the same problems, this is a state problem and needs a state solution.
“… this is a state problem and needs a state solution.”–Bob Walsh.
Yes, Bob; and the cities are going to be their own best advocates for devising and implementing a standard state approach, if such becomes a fruitful reality.
It is interesting to see how leaders in the City of Hartford are looking at it, see:
connecticut.crains.com/article/news/hartford-should-consider-bankruptcy-chamber-leader-says
A wise business person shared her thoughts with me on the city’s current credit ratings:
We can do nothing about the past and little about the present. It’s the future we need to shape and influence. Pay more attention to the outlook assessment from the rating agencies. That’s what counts … and that’s what we need to change.
Problem number #1
Bridgeport gets Bass Pro while Norwalk gets the So-No Collection with Bloomingdale’s and Nordstrom as its anchors.
www .ctpost.com/news/article/GGP-proposes-changes-to-SoNo-Collection-plan-10069080.php
In all likelihood those stores are also stocked with made in China, Bangladesh, Vietnam, etc. So they are just seemingly more refined Bass Pro. Perhaps the Taxidermy mounts there are also born, raised and stuffed in China? The do a great job of plasticizing human (dissident) remains for displays.
Awesomely grotesque displays obviously from the remains of Asian Bodies. Political Dissidents who Crossed the Tight Political Boundaries?
www .google.com/search?q=bodies
Problem Number #2
Even when the state of CT can help by influencing development “Connecticut Public Broadcasting to expand into Norwalk” it sits idly by and does not demand things in return.
“The project would require $2.5 million in bonding from the state.” Just think what might get done if the state demanded more from businesses that are demanding on the state; like locate in Bridgeport, not Norwalk.
The public television network would join NBC Sports, the YES Network and the WWE in the county’s marketplace of digital content producers, which have received millions in taxpayer incentives from the administration of Gov. Dannel P. Malloy.
These are good paying jobs going to Norwalk and not Bridgeport. Bridgeport needs to DEMAND MORE from the state.
www .ctpost.com/news/article/Connecticut-Public-Broadcasting-to-expand-into-10184283.php
Double down and look beyond the limited perspective of the parameters of the bond rating agencies. Bridgeport is broke, busted and bankrupt.