On Monday, Moody's Investors Service and Standard & Poor’s (S&P) rated the City of Hartford's series 2013 A general obligation (GO) refunding bonds and series 2013B GO (new money) bonds 'A1' and 'A', respectively. At the same time, the agencies affirmed the underlying rating on the existing GO debt and provided a stable outlook on the long term rating of the City of Hartford. According to Moody's the 'A1' rating incorporates the city's currently stable financial position with improving reserve levels and a well-funded pension plan.
The rating also incorporates the City's above average debt position, as well as its standing as the state capital and an important regional economic center. S&P emphasized that the City's strong financial management and recent track record of stable budgetary performance were the reason for affirming the City's "A" rating. The rationale for the stable outlook from both Moody's and S&P was based on how — despite two consecutive years of potential operating deficits — Hartford has maintained a balanced budget and in fiscal year 2012 ended with a $4.5 million surplus. This represents Hartford’s third consecutive year of undesignated General Fund balance growth, giving the City of Hartford the largest reserve of any major city in Connecticut which is $30.1 million dollars.
“I am extremely proud of our City’s strong track record of prudent fiscal management and continued progress despite tough economic times,” said Mayor Segarra. “Our pension fund is one of the top 10% in the country, and by working with our Treasurer, the goal is to reduce the burden on our tax payers and give sufficient confidence to investors to justify a future rating improvement."
The news comes on the heels of the latest Committee of the Whole (COW) budget discussion. During last week’s meeting, Mayor Segarra was joined by City Treasurer Adam Cloud, Peter Stevens, Chairman of the Pension Commission and Commissioners Frank Lord, Gene Goldman and Marc Nelson. The purpose of the presentation was to review investment performance of the Pension Fund which has a market value of $987 million dollars and produced a 13.2% return last year beating the funds benchmark return expectation of 8%. The Treasurer also provided recommendations that the Mayor and Council should consider to reduce certain costs that increase the pension fund's liability and encouraged them to fully fund the annually required contribution as recommended by the City Charter.
In addition to the Pension Fund presentation, Treasurer Cloud reviewed a debt restructuring plan that would reduce the City's debt service payment obligations thereby saving the City money in the future. “Given the historically low interest rate environment that exists today, it is prudent for the City of Hartford to restructure its outstanding debt,” commented Treasurer Adam Cloud. “This restructuring will provide significant positive cash flows to the City's budget and will assist in offsetting future deficits.”
The COW meeting also reviewed a number of Capital Improvement projects that will be included in Mayor Segarra’s FY13-14 Recommended Budget; the Westbrooke and Bowles redevelopment, further rehabilitation of the Capital City Parks System, and Quirk West, which will be the permanent home of HPD's Police Activities League. The Mayor will submit his recommended budget to the Court of Common Council on April 15.
The next COW budget meeting will be on March 21, 2013.