Comptroller Green Responds to Credit Rating downgrade

Last week Moody's credit rating agency downgraded St. Louis' GO and lease revenue debt by one notch. St. Louis' GO debt is down to A1 from Aa3 and lease revenue debt ratings to A2 from A1 for essential purposes and to A3 from A2 for nonessential purposes. The city retained its stable outlook. 

The move to lower the bond rating by one notch is due in part to the rating agency's revised rating methodology. In addition, the city's high debt profile, low liquidity and reserve levels, and socioeconomic indices are factors as well. The city continues to manage these financial challenges in a fiscally responsible and prudent manner with strong financial management practices such as conservative budgeting. The city has taken steps to increase revenues and decrease expenditures in order to strengthen its profile and increase reserves.

Despite the downgrade, Moody's gives the city high marks for strong financial management practices, reductions in personnel and discretionary spending and revenue reallocations. The city's year-end surplus of $2.3 million signals a return to a positive growth trend, aiding the city's effort to increase reserve fund balances and ease liquidity.
The city believes that the earnings tax will pass again next year, since voters overwhelmingly approved it in 2011 by a margin of almost 9-to-1. The city has been proactive about planning for the future. The Comptroller's Office commissioned a 10-year long range plan that is meant to help ensure structural balance so that recurring revenues meet recurring expenditures and the city is able to meet its reserve targets and improve liquidity.

The city has a large and diverse tax base that has stabilized over the years. The private sector continues to provide a trend of strong economic development in the city with several large developments currently underway. The City of St. Louis continues to act as a regional hub in the Midwest for the healthcare, higher education, manufacturing and finance sectors—according to Moody's. 

In closing, the city is continuing to be managed prudently, is recovering financially and features vibrant economic growth.