Press Secretary Carlene Orig
Milwaukee—Moody’s Investors Service announced on May 18th that it is affirming the City Aa2 credit rating. In addition, Moody’s revised its outlook on the City from “negative” to “stable”, which reflects its favorable viewpoint on the City’s “ongoing commitment to achieve budgetary balance.”
It is important to note that Moody’s continues to rate the City’s debt at a higher quality than it rates Milwaukee County and State of Wisconsin debt, despite the County’s and State’s larger and more diversified tax bases, and higher levels of personal income. The City’s “quality premium” reflects Moody’s positive assessment of the City’s financial management.
Moody’s initiated the “negative outlook” more than three years ago. Mayor Barrett stated, “The upgrade to a “stable” outlook is important because it removes the near-term potential for a credit rating downgrade. Credit ratings are a major factor in the cost of a local government’s debt; the higher the rating, the lower the interest rate, which results in relatively more affordable tax levies for debt service.”
Moody’s commented favorably on recent improvements to employment and the continued strength in the City’s housing market. Mayor Barrett’s initiatives to support development throughout the City will help to continue this positive trend. “My administration will continue to look for ways to attract and retain businesses spurring economic growth in the City. We must listen to and understand the needs of local employers. When City government understands the needs and concerns of employers, we’re in a position to determine how we can best meet those needs. We might meet needs by adjusting the way in which City services are delivered. We might meet needs by connecting an employer with local, state or federal resources that provide support to their companies.”
Another concern of Moody’s is the uncertain prospects for State Shared Revenue growth. Moody’s commented favorably on recent City efforts to diversify its own source revenue through expanded use of user charges and non-tax levy-supported debt. However, it is clear that Moody’s believes that a State commitment to Shared Revenue is an essential part of the City’s financial stability.
Moody’s also noted favorably on the City’s responsible use of its reserves, its well-funded pension obligations, and manageable debt levels. Mayor Barrett also showed fiscal responsibility by reducing the property tax rate and holding the line on the levy in his first budget. Mayor Barrett also held the line on spending in the 2005 City budget.
“We’re delighted to see that Moody’s Investors Service recognized the City’s success in meeting growing fiscal challenge by improving its bond rating outlook for the City,” stated Wally Morics,” Comptroller, City of Milwaukee. “Moody’s has always recognized the City as a high investment grade credit (Aa2). But in changing its City credit outlook from “negative” to “stable”, Moody’s has again rewarded the City for its conservative financial management practices while giving the taxpayer real value for each tax dollar. I congratulate the Mayor and Council and am glad to be a part of the City of Milwaukee’s excellent management team.”
Moody’s Investors Service is a respected, widely utilized source for credit ratings, research and risk analysis. In addition to core ratings business, Moody’s publishes market-leading credit opinions, deal research and commentary that reach more than 2,600 institutions and 16,500 subscribers around the globe.