Mayor Rawlings-Blake Touts Baltimore City Bond Rating Upgrade to AA from AA-
Tuesday Jul 22nd, 2014
FOR IMMEDIATE RELEASE
BALTIMORE, Md. (July 22, 2014)—Today, Mayor Stephanie Rawlings-Blake and City finance officials touted a Standard and Poor (S&P) bond rating upgrade for Baltimore City to AA from AA-, signaling the city's first increase in seven years. The increase puts Baltimore in the same standing as other big cities like New York, and ahead of Philadelphia and Los Angeles.
S&P, one of the nation's three leading bond-rating agencies rated Baltimore City finances as "stable," citing "strong budgetary flexibility and liquidity due to its proactive management team and demonstrated willingness to cut expenditures to maintain balanced operations."
Under Change to Grow, the mayor's Ten-Year Financial Plan, Baltimore City has cut roughly $300 million from the City's long-term structural deficit of $750 million while making critical investments in education, infrastructure, and job creation.
"This is an affirmation of the economic progress the City has made in the last few years." said Mayor Rawlings-Blake. "When I came into office, Baltimore City faced historic budget deficits, with no viable plan to confront our long-term structural deficit, which continued to grow. Through hard work, we were able to make the tough choices necessary to return Baltimore City to balanced budgets and deliver a long-term plan for dealing with our structural deficit. Today's bond rating upgrade signifies that Baltimore City is a good place to invest, and it allows us additional flexibility to secure financing for capital improvement projects that are important to our residents."
"Baltimore is attracting new investments, as a strong, growing economy," said Brenda McKenzie, president and CEO of the Baltimore Development Corporation. "Standard & Poor's increased bond rating confirms that the City is fiscally strong and ready for even more investment. Baltimore is seeing significant growth citywide with exciting projects such as Harbor Point, Amazon, Horseshoe Casino Baltimore, Canton Crossing, Pandora Jewelry, and the new ShopRite supermarket in Howard Park."
City officials expect the upgrade to increase the marketability of the City's debt instruments and reduce borrowing costs.
"This upgrade is a result of the mayor making tough decisions regarding the budget and of the ten-year plan that has allowed us to keep our financial house in order," said Harry E. Black, Baltimore City director of finance. "Our very strong budgetary and debt management policies have contributed to the City's increased financial reserves and improved budget flexibility which are both critical factors supporting the upgrade."
The S&P report draws the following conclusions:
- The City's management conditions are very strong, including "strong" financial management policies under our Financial Management Assessment methodology, indicating practices are strong, well embedded, and likely sustainable.
- Very strong budgetary flexibility, with the City maintaining available reserves adequately above operating expenses over the past three fiscal years.
- Adequate budgetary performance with a diverse revenue stream, led by property taxes, income taxes, and state revenues.
- Very strong liquidity, providing very strong cash to cover debt service and expenditures.
- Adequate debt and contingent liabilities due to low carrying charges, low net debt, albeit with elevated pension and other post-employment benefits expenses.