The Rating Outlook is maintained at Negative.
The bonds are general obligations of the city and backed by its full faith and credit and unlimited taxing authority.
KEY RATING DRIVERS
FINANCIAL PRESSURE STILL EXISTS: Despite indications of more balanced financial operations, the maintenance of the Negative Outlook reflects Fitch's view that the city still faces financial pressure and limited flexibility. Challenges include statutory revenue limitations, a shortage of additional cost cutting solutions, and increasing employee benefit costs.
NEGATIVE GENERAL FUND BALANCE: The city's cash position and operating performance have improved with the establishment of new recurring revenue sources, but the city's cumulative general fund balance remains negative.
EFFECTIVE MANAGEMENT TEAM: Management has made notable progress in reducing prior year structural deficits and was successful in achieving savings from pension reform efforts. During the last two fiscal years, management has prudently budgeted an appropriation for partial replenishment of general fund reserves.
HIGH FUTURE RETIREE COSTS: The city has growing and severely under-funded pension and other post-employment benefit (OPEB) liabilities, although funding of the annual required contribution for its pensions is at or near 100%. Approved changes to retiree benefits should control growth in both near term costs and future liabilities.
ECONOMIC STABILITY FROM INSTITUTIONAL PRESENCE: Long-term economic stability is derived from the city's position as the capital of the state and its large educational and healthcare institutional presence.
WEAK DEMOGRAPHICS: Demographics are weak with low wealth levels, improved but still high unemployment and slow growing assessed values.
RESTORATION OF RESERVES: The rating is sensitive to management's ability to maintain stabilized operations with recurring budget solutions and a restoration of satisfactory reserves.
FINANCIAL CONDITION SHOWING IMPROVEMENT
The financial condition has improved markedly from fiscal 2012 when the city faced a sizable structural imbalance of
Beginning in fiscal 2013, management took steps to partially restore fund balance by including a
With better than anticipated tax collections and state aid combined with continued monitoring of expenditures the city was able to achieve a modest net operating surplus (after transfers) in fiscal 2013 of
CASH FLOW PRESSURES SUBSIDE
Beginning in fiscal 2012, management prudently implemented both increased budget monitoring, with monthly cash-flow reports provided to city council, and multi-year financial forecasting.
Fitch has reviewed fiscal 2014 cash flow projections which appear reasonable, and once again show adequate cash flow throughout the fiscal year. No cash flow borrowing is anticipated.
BALANCED BUDGET FOR FISCAL 2014
The fiscal 2014 general fund budget of
According to management, general and school fund operations are ahead of budget expectations by
LOW DEBT LEVELS; HIGH FUTURE RETIREE COSTS
The city's debt ratios, net of the state's reimbursement for school projects, are below average with debt to market value at 2.4% and debt per capita at
The city's pension and OPEB costs continue to be a concern to Fitch as their unfunded levels are very high. Based on the most recent valuation report for the city-managed employee retirement system, dated
However, the decline in the actuarial value of assets of
The city's pension contributions were
OPEB contributions were
BELOW AVERAGE SOCIOECONOMIC INDICATORS
The city, with a 2011 population of 178,316, is the capital of
Management reports that new development and the opening of new retail stores continues to occur, but overall economic growth is expected by Fitch to lag that of other major metropolitan areas in the northeast.
Helped in part by a reduction in labor force, unemployment levels have improved slightly but continue to exceed state and national averages with the city rate at 9.9% in
Additional information is available at 'www.fitchratings.com'.
In addition to the sources of information identified in Fitch's Tax-Supported Rating Criteria, this action was additionally informed by information from Creditscope, S&P/Case-Shiller Home Price Index,
--'Tax-Supported Rating Criteria' (
--'U.S. Local Government Tax-Supported Rating Criteria' (
Tax-Supported Rating Criteria
U.S. Local Government Tax-Supported Rating Criteria
Source: Fitch Ratings
Most Popular Stories
- Top Hispanic Tech Companies Push for the Top
- 5 Notable Hispanic Technology Executives
- Taco Bell Rings Up Breakfast Menu
- Russia, Crimea Discuss Referendum
- California Establishes Center for Coffee Study
- 'Holy grail of guitars' OM-45 Deluxe Available in in NY Auction
- China Urges Malaysia Flight Emergency Response
- For Obama, a Last Stab at Improving Ties with Capitol Hill
- Justin Bieber Loses Cool Over Selena Gomez
- Sunday Starts Daylight Saving Time