Wall Street lauds City of Worcester's financial stability
Photo | Grant Welker
The City of Worcester was assigned a 'AA' rating for its bonds and finances situation.
The City of Worcester has been assigned a ‘AA’ rating for its $208 million general obligation municipal purpose loan of 2022 bonds, which were scheduled to sell competitively on Jan. 24, according to a report from Fitch Ratings Inc., the New York credit rating agency.
Worcester is likely to maintain a high level of financial flexibility throughout economic cycles, according to the analytical conclusion by Fitch. The ‘AA’ rating also reflects Worcester’s positive revenue growth prospects from a growing property tax base.
Fitch’s rating system spans from ‘AAA’ at the best and ‘D’ at the worst and is based on historical performance. The positive rating for Worcester will help keep the city's cost of borrowing low and offers a third-party assessment of how the city government is performing.
In its analysis, Fitch discussed Worcester’s public schools and Polar Park ballpark projects. With regard to Polar Park, the report said, “Projected shortfalls, which Fitch considers to be manageable based on cashflows provided by management, would be subsidized by the operating budget and not result in a material financial impact to the city.”
The city received ‘AA’ ratings for its revenue framework, expenditure framework, and long-term liability burden. It received a ‘AAA’ rating for operating performance due to its steady revenue growth combined with prudent fiscal policies and conservative budgeting practices over the past 10 years.
The analysis predicts long-term liabilities for debt and pensions to increase over time but remain moderate. Potential factors negatively impacting Worcester’s financial performance include a sustained reduction in reserve levels.
Worcester ended fiscal year 2021 with an unaudited net operating surplus of $17 million, per the report. The city’s fiscal 2022 general fund budget is $734 million, up 4% over the prior year’s original budget.
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