Rating agency cites sizable tax base, modest debt, regional economy
LOUISVILLE, Ky. (March 28, 2012) – Moody’s rating agency has affirmed the strong bond rating of Aa1 for Louisville Metro Government’s general obligation bonds.
The agency said the city’s strengths include a “sizable tax base, regional significant economy and modest debt burden.” The agency also said the city’s tax base is expected to remain stable, citing recent investments by Ford, GE and others to grow jobs.
Moody’s affirmed the bond rating with the knowledge that the city plans to dip into its rainy day fund for $7 million to help cover a $10.8 million settlement with the state retirement system over the firefighter pay. However, the rating agency said, a “further erosion of financial reserves” beyond that portion could affect future ratings. It also said “substantial increases in debt burdens without corresponding tax base growth” could also lead to a downgrading.
Mayor Greg Fischer said he was pleased with the continued strong bond rating, saying the city watches its finances closely and always balances the budget. Fischer said the city’s bottom line has remained strong, despite flat revenues and growing expenses, which have been creating an annual deficit in the budget.
Fischer said it’s his goal to eliminate that structural deficit in his first term.