S&P Global Ratings (S&P) and Fitch Ratings, Inc. independently assigned a “AAA” long-term rating to the City of Carrollton for a $24 million ($20.94 million par value) in general obligation (GO) improvement bonds, series 2020. The rating outlook is Stable.
S&P and Fitch also independently affirmed Carrollton’s “AAA” long-term rating for the City’s previously issued $174 million in outstanding GO debt, series 2010 through series 2019.
“S&P and Fitch’s reviews were very thorough given the current situation with COVID-19 and the resulting impact on the economy. I am pleased to once again report the confirmation of a AAA-Stable rating from both agencies,” Assistant City Manager for Finance Bob Scott said. “This is literally as good as it gets ratings-wise.”
S&P assigned the “AAA” scores based on a very strong economy with access to a broad and diverse metropolitan statistical area (MSA); very strong management with strong financial policies and practices; adequate budgetary performance with balanced operating results; very strong budgetary flexibility and liquidity with a low contingent liability; as well as a strong S&P institutional framework score.
“Carrollton’s strong financial position is a reflection of the City’s stable leadership and is the result of the vision and support of the City Council over a long period of time,” Scott said. “We are very pleased that S&P Global and Fitch, Inc. recognize the importance of strong financial practices that have been verified as effective through consistently strong financial results even in times of economic downturn.”
Fitch affirms the ratings reflect the City’s high level of demonstrated and anticipated operating financial resilience through the current economic downturn; substantial expenditure flexibility; solid revenue growth prospects with limited liability burden; and consistent strong operating performance.
“Strong financial management, robust forecasting, and frequent budget monitoring practices are the underpinning of an efficient, successfully-run City like Carrollton,” Mayor Kevin Falconer said. “The City Council regularly reviews rolling capital improvement plans, budgetary status reports, and quarterly investment reports supplied by City management. These practices along with strong financial leadership and fiscally responsible budgeting allows us to weather storms such as the one we are in today and ensure the City of Carrollton is primed for future growth.”
The City’s GO bonds are issued on a pledge of the continued direct annual ad valorem tax levied, within the limits prescribed by law, on all taxable property within the City. According to S&P, the City’s levy is well below the maximum and is on par with S&P’s view of Carrollton’s general creditworthiness.
The City of Carrollton will use the proceeds from the series 2020 GO bonds to fund $21.2 million in street improvements and traffic flow; $2.45 million in Parks and Recreation improvements; and $350,000 in public safety improvements.
S&P’s report states Carrollton has historically maintained strong budgetary performance tied to strong revenue growth and conservative budgeting and recognizes that the City will likely experience short-term revenue loss tied to the COVID-19 driven economic shutdown, but believe that its existing policies and budget monitoring well-positions the City to weather the temporary disruption and limit its exposure to economically sensitive revenues within the operating budget.
The Fitch report acknowledges that the City’s demonstrated willingness and ability to adjust spending when necessary has preserved a strong and stable reserve cushion, leaving the City well-positioned to maintain the highest level of financial resilience despite the sharper impact of U.S. GDP (gross domestic product) decline on city revenues assumed in Fitch’s current model.
For more information on Carrollton’s fiscal status, visit cityofcarrollton.com/finance.