Annapolis is Financially Sound
Here is my recent Guest Column in the Capital Gazette focused on how Annapolis is currently in a strong financial situation. Don't believe it? Ask the experts. Moody's and Fitch gave the city very high ratings, just short of the highest possible. Instead of listening to political rhetoric, let's listen to what the professional bond rating agencies say.
Mayor Mike Pantelides: Annapolis is financially sound
Some are holding press conferences trying to make you believe we in the City of Annapolis are borrowing too much money, not paying our bills and drowning in debt. That is just not the case.
Think of the city's debt as if it were your own. The city relies on the bond rating agencies, whose evaluations mean to it what credit scores mean to an individual. If you pay your bills, manage your debt and have enough income to support the amount you are spending, your credit score will be higher.
The city issues two types of debt: General obligation, or GO, bond debt is supported by property tax revenue, while revenue bond debt has a dedicated revenue source to pay it off — for instance, the water and sewer charges that pay off bonds issued to build and repair water and sewer lines and construct the new water treatment plant.
We borrow for the long term to support the annual capital budget, and also to complete major projects like the water plant and the City Dock bulkhead. Some of this is paid for with GO bonds, some with revenue bonds. This is where our past financial restraint and our ongoing debt management pay off, as these are looked at by the rating agencies, along with the area's economic outlook, to determine if we are a "good risk" to borrow money. Good ratings mean lower interest rates.
Moody's and Fitch gave the city very high ratings, just short of the highest possible. Moody said its Aa2 rating "reflects the city's recently improved financial position supported by proactive management and conservative budgeting despite a planned reduction in reserves. ... We believe that the city's debt burden will remain manageable given management's policy to maintain debt service costs below 12 percent of annual expenditures."
Fitch wrote that the city has a "strong financial profile (reflecting) ... positive revenue growth prospects from an improving property tax base, manageable expenditure growth and a demonstrated ability to reduce expenditures during economic downturns."
The city also ensures its stability with a healthy fund balance — comparable to an individual's saving account. This is currently nearly $38.6 million.
Fiscal responsibility has been a hallmark of my administration. In four years my budget has increased by about 8 percent, compared to 28 percent for Josh Cohen and 24 percent in Ellen Moyer's second term. In fiscal 2010, the last year of that second term, the general fund balance was down to less than $3.8 million — a 61 percent reduction during Moyer's last four years.
Many will try to say my administration has incurred $60 million in debt over four years, but 75 percent of that was incurred by prior administrations.
In fiscal 2005 the city entered into a tax-incremental financing agreement with the county for the Park Place project. At the time, $21.6 million of debt was not put on the city's books on the advice of the city's auditor and previous finance director. In fiscal 2013, on the advice of new city auditors, this was added to the city's books. The water treatment plant accounts for some of this debt — about $23.2 million —but has a dedicated revenue stream to pay it off. It is funded through Maryland Water Quality Loans and revenue bonds, not property tax- supported GO bonds.
I did not "kick the can down the road." In fiscal 2015, $6 million in GO bonds was borrowed for City Dock bulkhead replacement project and $4.5 million for the Department of Public Works maintenance facility. In fiscal 2017, $5 million was borrowed for the Energy Performance Project, which is guaranteed to pay for itself with its energy savings.
Through hard work and strong financial management, the city had an actual budget surplus of more than $3 million in fiscal 2016.
This is an election year, so many will try to twist the truth about what we are spending and what we are accomplishing with your taxpayer dollars. But since my first day in office, I have treated the city finances as if they were my own and have been prudent and conscious of your money, despite what others are saying.
To read this article in its entirety please click on this link.