The city’s credit rating has been affirmed at AA+ with a stable outlook, according to Standard & Poor (S&P) and Moody.
“It’s encouraging the credit rating agencies recognize the steps we’re taking in Phoenix to practice sound financial management,” said Mayor Greg Stanton in a statement. “Today’s report confirms what we already know: that the best way to improve our credit rating is to strengthen our economy. That’s why it is so important that we continue to invest in building the innovation-based, export-focused economy we need for long-term, sustainable growth.”
Phoenix’s credit rating is the highest of the six largest U.S. cities.
S&P cited the city’s adequate economy, strong budgetary flexibility and performance, strong liquidity, strong management conditions, and weak debt and contingent liabilities position. Moody’s Outlook said the city’s strengths are a large economy with low business costs and a solid fiscal position.
“These economic times over the last few years have been the most challenging times that I’ve experienced in my long history with the city of Phoenix,” said Councilwoman Thelda Williams, senior member of the City Council, in a statement. “But this confirmation of our strong credit rating from S&P and Moody’s confirms what we’ve been experiencing — Phoenix’s finances are strong and our economy is back on the road to recovery.”
Both reports came out just as the council voted to approve the 2014-15 budget. Employee concessions and a raise in fees were deemed necessary to make up a $38 million deficit.
“With the leadership of the mayor and City Council, employees and the community, Phoenix worked together to solve a $37 million deficit and reduce it to zero for 2014-15. This positive news about our credit rating confirms that our finances are strong, our economy is improving, and we are headed in a positive direction,” said City Manager Ed Zuercher.
Councilman Sal DiCiccio said while the report is positive for Phoenix he worries about the direction the city is headed in. He believes the city is using up reserve funds very quickly and that could put the credit rating in danger.
“It’s a good report because it’s going to allow us to refinance some debt and save us about $20 million, but it’s the next rating that is going to be problematic, I believe,” DiCiccio said. “They’re going to see the budget the city passed and the reserve. This is good now because it will allow us to get in there quickly and refinance some debt… We’re lucky. We dodged a bullet on this one. It’s the next report that worries me. It’s our No. 1 priority and it’s not even on the radar screen for city officials.”
DiCiccio said December of 2013 was the first time the city’s credit rating was downgraded and there is no plan in place to rebuild that credit rating.
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