[B]URLINGTON — Burlington’s credit rating has received a two-step increase from Moody’s, returning the city to the credit rating it held in 2009.
The city’s credit rating toppled six steps after it was revealed in 2010 that then-Mayor Bob Kiss used $17 million in taxpayer funds to keep Burlington Telecom afloat.
Moody’s Investors Services, one of the U.S.’ big three credit ratings agencies, upgraded the city from “A2” to “Aa3” last week, Mayor Miro Weinberger announced at a press conference Monday at City Hall.
Weinberger said the city had been working toward the goal of reaching the “Aa3” level for years and that the upgrade fulfilled a promise of his 2012 mayoral campaign to return the city to fiscal health.
“This means millions of dollars will stay here in Burlington, instead of being sent in the form of high bond interest payments to Wall Street,” Weinberger said. “And that money stays in taxpayer wallets and also stays here in the city with greater amounts of public infrastructure we are able to put in place.”
The city’s credit upgrades since 2014 have already saved taxpayers $17 million, according to a Fiscal Health Report prepared by the city clerk/treasurer’s office. This upgrade will continue that trend, Weinberger said.
Moody’s listed the city’s stable economy and tax base, strong reserve levels and cash position — and the elimination of the risks associated with the Burlington Telecom litigation — as credit strengths. The city closed the sale of BT in March after the Vermont Public Utility Commission approved it in February.
“The current management and governance team has a strong record of conservative budget management and proactive policies that have benefitted the city financially, evidenced by the resolution of the Burlington Telecom litigation and building of a strong reserve position,” Moody’s report states.
The BT sale, along with a $9 million Fiscal Stability Bond approved by voters in November 2012 and years of budget surpluses all played a part in the city’s financial turnaround, Weinberger said.
City councilor Joan Shannon shared Weinberger’s excitement about the expanded investment opportunities created by the credit rating increase.
“An improved credit rating allows the city to buy more in terms of infrastructure and services to protect our lake, meet the needs of our citizens and provide social programs for those of us most in need,” Shannon said.
Beth Anderson, the city’s chief administrative officer, said the credit upgrades would result in savings for taxpayers in their municipal rates and property taxes. But she said the city needed to continue its financial practices to retain the rating.
Moody’s noted that growing costs associated with an increasing debt burden, mounting pension expenses and an economy that may slow down all posed challenges to the city’s credit.
The ratings agency said the city could further improve its credit rating if it reduces its debt levels and pension liabilities. However, Weinberger said that further upgrades would be challenging, and that the Aa3 level is where the city was aiming to get.
“When you balance the benefits of further upgrades versus what are we investing those dollars on, we have real infrastructure needs,” Weinberger said. “I think this is going to be the credit level we are at for some time, and we’re going to be making sure there is no deterioration.”
A handful of major infrastructure upgrade projects are underway in the city, from the Burlington High School renovation to storm and wastewater system improvements.
The City Council approved a debt policy last fall which will allow the city to double the amount of “overlapping debt” between the city and school district while retaining its credit rating.
Weinberger said he hoped the rating upgrade would signal to businesses and residents that the city was well managed and worth investing in.
“I hope people see in today’s collective accomplishment some evidence that our community here in Burlington is healthy and able to succeed, able to make good on major goals we set for ourselves as a community,” he said.
