Mayor Purzycki and Treasurer Jones-Potter tout Moody’s recognition of the City’s successes in managing its finances and its ability to rebound from unanticipated reserve fund expenditure
Wilmington Mayor Mike Purzycki and City Treasurer Velda Jones-Potter announced Tuesday that the City’s strong bond rating of Aa2 (double A 2) has been reaffirmed by Moody’s Investors Service. In issuing the affirmed bond rating, Moody’s said Wilmington’s local economy will likely remain stable due to the stability of the City’s status as a regional employment hub. Moody’s also noted that the City’s strong fiscal management practices are important factors in its ability to rebound from an unanticipated multi-million draw from its reserve fund in Fiscal Year 2017.
The Mayor and Treasurer said Wilmington’s bond rating is significant because it affects the City’s cost to borrow money for a variety of projects such as road repairs and water and sewer infrastructure improvements. The City government leaders added that a higher bond rating usually produces a lower interest rate on the money borrowed, which can decrease the overall tax burden on citizens and businesses.
“We’re pleased with Moody’s confirmation of the fact that Wilmington has a strong fiscal management process in place, which helped to affirm the bond rating,” said Mayor Purzycki. “The Treasurer and I, along with City Council, are committed to more effectively managing the City’s debt burden and keeping our City reserve fund solvent while encouraging new employment opportunities to strengthen the City’s tax base.”
Treasurer Jones-Potter said Wilmington’s fiscal future is bright, but like most cities, it must be prepared for all sorts of known and unknown challenges. “Rating agencies use a host of benchmarks in their annual evaluation of the City’s fiscal position,” said Jones-Potter. “The needle is always moving, but we can take great comfort in Moody’s recognition of our many credit-positives. Wilmington should expect no change to yield on our investment grade portfolio; however, we must be prudent in managing our exposure and long-term obligations to remain a strong credit.”
In addition to affirming the City’s bond rating, Moody’s issued a negative rating outlook due in part to what it said was the City’s need to tap into its reserve fund in Fiscal Year 2017 for an unanticipated and unprecedented $8 million in medical coverage for four firefighters who were injured during a house fire in September of 2016. Three of the firefighters died as a result of their injuries. In spite of the negative outlook moniker, Moody’s also said Wilmington’s anticipated Fiscal Year 2018 budget surplus will help the City restore its reserve fund status, which could lead to a review of the negative outlook tag.
Following the 2016 fire tragedy, the City took steps to limit its exposure to excessive workman’s compensation filings such as that which occurred with the injured firefighters. Wilmington has established a reserve fund to assist with workman’s compensation claims and has purchased excess liability insurance. Both actions will help the City manage costs related to extraordinarily large workman compensation expenditures.
Wilmington bond rating was last reviewed in late 2016 and a rating of Aa2 was issued in January of 2017. The Mayor, Treasurer and Chief of Staff Tanya Washington today expressed their appreciation to other City officials who have helped to keep the City’s bond rating strong including the City’s Finance Director Patrick Carter and his staff, and Budget Director Robert Greco and his staff.
Source: Wilmington Mayor