Mayor Bill Finch announced on Tuesday the New York credit rating agency Standard & Poors has confirmed a stable outlook for city finances maintaining an ‘A’ credit rating for the state’s most populous city. See summary report here.
News release from the mayor:
“This healthy credit rating is further proof that Bridgeport is on the right track, with a disciplined approach to economic development and green job creation,” said Bridgeport Mayor Bill Finch. “Our increasingly stable financial situation positions us to obtain low, long-term interest rates, which in turn help us continue making smart investments aimed at moving Bridgeport toward a stronger future.”
In its report, Standard & Poor’s noted the positive impact of the city’s strong management practices, good financial policies, and an experienced and capable management team. The agency also pointed out that the city has strong liquidity.
“This independent review confirms that under Mayor Finch’s leadership, the City of Bridgeport remains on solid footing, with a responsible financial plan that allows us to invest in economic development, jobs, and better schools,” said Anne Kelly-Lenz, Finance Director for the City of Bridgeport.
The A rating is one notch away from a B+ per the rating guides.
en.wikipedia.org/wiki/Bond_credit_rating
At least the city did not pass the tipping point yet.
I can’t believe the Park City has an A rating. It produces no income on its own except what the State gives it. Mr. Walker, you are an economic guru and strive for political office, what is your comment on the rating and true outlook for the city?
An “A” rating is third from the top. S+P does a poor job of assessing longer-term fiscal sustainability, which is not good in Bridgeport absent significant reforms. The Finch Administration needs to cut the budget in order to avoid another tax increase. It also needs to significantly enhance economic development and restructure the City’s pension, health care and other employee benefit programs in order to avoid bankruptcy over time. Bridgeport is at risk and the Mayor needs to be honest with people about that fact. In addition, the state needs to take some steps to help the city help itself. That is one of many reasons I am running for Lt. Governor of Connecticut.
Mr. Walker, I will yield to your economic ability to foresee the future. If the current economics of the city continue: loss of taxable property, fewer or loss of business development with continued rising outlays, what do you see for the timeline to economic bankruptcy for the city?
S&P is one of several long-term debt rating organizations. Each has its own way of rating with alphabet letters and + or – icons or numbers to further grade differences as strengths decrease. S&P tops its grading with AAA, then moves to AA and then drops to A and finally to BBB. THAT IS WHERE NON-INVESTMENT GRADE RATINGS BEGIN. If you look for A+, it is a step higher than Bridgeport, but you are still several steps below AA+, for instance.
S&P comments “Adequate budgetary performance with a projected operating surplus for fiscal 2014.” The City has had windfalls from the State after they adopted their budget. Rather than readjust or amend their budget, AND RATHER THAN FUND THE MBR FOR EDUCATION (but perhaps rather pay for “access roads” in Stratford, an unbudgeted expense) they overtaxed the public last year. No comment about begging for a two-year postponement of the revaluation. Is that strength or evidence of “strong management?” We spent $280,000 with Vision Governmental to perform most of the revaluation and who gets to see the results? Do we have to FOI for the info? Will Vision respond to requests? Or do they have a “secrecy covenant” as a vendor?
Issuing TANs each year is called “strong liquidity” but need for this would reduce significantly if the City funds balance were not scraping the 2% level and were truly moving towards the 8% target in the City Charter the Mayor has been unsuccessfully chasing for six years. “Very weak debt and contingent liabilities position” is noted but because of the failure to mention the public safety personnel switch to MERF, I wonder what material the “rater” was reviewing? And what about the $8 Million negative variance in public safety overtime? Not mentioned at all. Did they look at the 2013 CAFR?
If you are a taxpayer, the sentence that will most disturb you from S&P is: “Management has demonstrated its willingness to raise additional revenue through tax levy increases to avoid financial stress.” S&P is oblivious of the condition of the City Council as the only “check and balance” governance structure, and of the reality of how poorly they perform their duties for a variety of reasons often discussed on OIB.
Read the SUMMARY from S&P and weep where their conclusions miss your personal sense of reality. Whose stress? Time will tell.
Only our Mayor would tout having the sixth-highest possible bond rating! Yeah, way to pat yourself on the back for barely treading water!
Do you know Stockton CA had a Moody’s Aa3 bond rating (higher than Bridgeport’s S & P “A” ) and less than 18 months later, they were on the road to bankruptcy?
So Mayor, keep crowing about our great “A” rating. It makes for great press for those who just rubber stamp your tax increases keeping the wolves at bay for another year.
How come we didn’t get the press release on this:
www .moodys.com/research/Moodys-downgrades-Bridgeport-CTs-GO-rating-to-A2-outlook-revised–PR_280489
Bill Finch says:
“This healthy credit rating is further proof that Bridgeport is on the right track, with a disciplined approach to economic development and green job creation,” said Bridgeport Mayor Bill Finch. “Our increasingly stable financial situation positions us to obtain low, long-term interest rates, which in turn help us continue making smart investments aimed at moving Bridgeport toward a stronger future.”
The summary reads:
Weak economy
“We consider Bridgeport’s economy weak, with its projected per capita effective buying income at 69.1% of the U.S.and per capita market value of $69,197.”
Weak budgetary flexibility
“The city’s budgetary flexibility remains weak with 2013 audited available reserves of $12.57 million (assigned and unassigned funds) equal to 2.3% of expenditures. The city hopes to build reserves to stronger levels in the coming
years, but we believe a material improvement in operating flexibility will be challenging given the current budgetary environment. Management has demonstrated its willingness to raise additional revenue through tax levy increases to
avoid financial stress.”
Read the last sentence three more times. The only time Bill Finch loses his “willingness” is when he is close to re-election.
Strong liquidity
“We consider Bridgeport’s liquidity strong. Total government available cash was at 7.6% of total governmental fund expenditures and at 80.2% of debt service. We note in our calculations that we excluded restricted cash in both total governmental funds and the city’s enterprise fund. We believe the city has strong access to external liquidity as it regularly issues TANs and is a regular issuer of bond anticipation notes and GO bonds. We expect liquidity to remain strong given management’s projection of an operating surplus for 2014 and the projected decrease in TAN issuance.”
Notice Bill Finch selected only the portion of the summary where the word “strong” was used to highlight his great achievement of showing weakness. Did anyone remember to tell S&P about the recently issued $110,000,000 TAN?
Strong management conditions
“We consider the management environment strong with good financial practices and policies and an experienced and capable management team. We understand management provides elected officials with monthly budget updates and investment reports. Under the city’s charter, management also maintains and updates a formal five-year capital improvement plan that is annually approved by the council. The city maintains a formal long-term financial plan but not a formal debt policy aside from state guidelines. Although Bridgeport lacks a formal fund balance policy, officials conducted a formal analysis to target available reserves at a maximum of 8% of expenditures.”
There was an official fund balance policy mandated by Bill Finch like 6 years ago. Did S&P bothered to check if the City ever hit or went above the 8% target for the reserve? The city has fallen short on the reserve by 6% percent of their target for almost seven years.
Very weak debt and contingent liability profile
“In our opinion, the city’s debt and contingent liability profile is very weak, with total governmental fund debt service at 9.5% of total governmental fund expenditures, and direct debt at 94.6% of total governmental fund revenue. Bolstering the city’s debt profile is that amortization of principal debt is aggressive at 72.7% over 10 years. As for long-term liabilities, pension and OPEB costs account for about 8% of the general fund expenditures. Bridgeport administers four single-employer defined-benefit pension plans that cover substantially all of its employees. All plans combined for a funded ratio of 74.8% as of July 1, 2012, although the city’s largest plan, Public Safety Plan A, was just 43.8% funded. Bridgeport funded about 91% of its annual required contribution (ARC) for Public Safety Plan A as it was permitted by the state legislature to limit its pension contribution. Police Retirement Plan B was also only funded at 75.7%. Combined, the total ARC for all plans was roughly $20.2 million (about 3.1% of budget). Total contributions were about $17.3 million, about 85.8% of the ARC. The city has provided the state with a plan to fully fund the ARC.”
There is a man named David Walker who has been saying this for a few years. If Bill Finch stops listening to Ron Mackey, we can start fixing this. Notice the information provided to S&P is almost 2 years old and we still haven’t heard or seen this plan that the city provided to the state to “fully fund” ARC–that would be an additional 14.2% (Not of budget) in contribution or $3 million to fully fund all pension plans.
Paging Dave Walker and John Marshall Lee. Your homework is to write CT Post editorials pointing out these and other issues with Bill Finch’s take on this S&P rating. Dave Walker, you owe me some make-up assignments so you must send editorials that will reach at least 50 Towns and Cities in Connecticut. You’re out of the OIB minor league.
Joel,
You are commended for reading about City finances from a variety of sources and your ability to identify problems. (Walker, or you or I can write OP ED pieces ’til we are red in the face, but until taxpayers read and then put their outrage to work, that seems a poor use of time as an assignment.)
More importantly, please begin to think of Bridgeport’s budget in two parts: CITY SIDE and BOE SIDE.
City Council may vote on the whole thing, but have no oversight or line item or real power on the education budget. (They could task the Education committee to attend BOE Finance meetings and contemplate problems, issues and concerns, but they do not have a real mission for that CC group. Of course, no power.)
The CITY SIDE is what the B&A will review in the next 5-6 weeks. That budget extends to less than $300 Million of general budget funding though it would be good to have Grants info included as well as departmental employee levels at all times.
My point is when you begin to compare $20 Million of pension costs to the operating budget rather than the total budget, it is no longer only 3% but a larger percent. That is the reality for all to consider, and why real review of our situation, including OPED and Internal Service Fund expense, and reformed approaches may be in order. Seen any schedule for Budget sessions? Capital budget hearing? General budget hearings? Public comment that gets a response? Time will tell.
JML, you write: “No comment about begging for a two-year postponement of the revaluation. Is that strength or evidence of “strong management?” We spent $280,000 with Vision Governmental to perform most of the revaluation and who gets to see the results? Do we have to FOI for the info? Will Vision respond to requests? Or do they have a “secrecy covenant” as a vendor?”
My question is, do WE as taxpayers and property owners have a right to the new valuation (that WE, as TAXPAYERS, paid for) of our property? Don’t we “own” it, since we paid for it? Is there legal recourse?
Dear “homeowner,”
Please call the City Tax Assessor’s office and ask for the information politely as I am sure you would. If it is not made available to you promptly, ask where it exists and when it will be ready for you.
Assuming you failed there, the same questions might reasonably be asked at City Finance office. Assuming you are no more satisfied after this second attempt, perhaps you might call the Mayor’s Office. Question? Answer? Satisfied?
Assuming you are getting frustrated, contact your Council person, the one who is chair of B&A, and ask what she knows about the subject. For instance, did she get to see the data for any properties? What reason can she provide to defer the revaluation (aside from the hope the economy and values improve)? Has any thought been given by the administration to the likelihood market volatility does not affect all neighborhoods evenly and the postponement may accelerate “unfair” or “unequalized” values in the City?
OK, assuming you do not have your answer yet, perhaps you will reach someone at Vision Governmental to ask your question of. Will they provide the data? Or will they tell you a story about how they agreed to say nothing other than call the City? Did you have any idea the City has asked at least some vendors to maintain all information regarding their relationship secret?
If you get to this point, perhaps you will have time to join me for a cup of coffee and volunteer for BOB-2015. (And to the extent you get an answer at any step, let the rest of us know, please. I will readily apologize for exagerating the difficulty in “getting what we paid for,” if necessary.)
Or talk to an attorney about courses of action. Or maybe call some folks at the State level. Maybe Representative Grogins or Senator Musto might have sympathy for your plight. Time will tell.
Unfortunately, I work more than 50 hours a week (to pay my ever-increasing property tax bill) and have other important family obligations that take up my tiny amount of free time. (I need to sleep sometime!!!) I have lived in this city for more than 30 years, have done almost all of the things you suggest and have been answered with threats and ringing telephones. I was simply asking if you knew whether the information was owned by the taxpayer.