Glendale receives AAA rating
Wall Street’s biggest credit rating agency, Standard & Poor’s, has affirmed Glendale’s AAA rating, citing the city’s strong financial performance and management practices.
The stable outlook puts Glendale’s credit worthiness higher than that of the federal government, which was downgraded by the S&P; in 2011 from AAA to AA+.
In a statement, City Manager Scott Ochoa said the rating was “a reflection of the sound financial fundamentals adhered to by the City Council.”
“Little long-term debt, sufficient cash reserves, a lean organization and a promising future of economic development opportunities afford Glendale the promise of being viewed as a premiere municipality in [Los Angeles] County,” he added.
According to the S&P; report, Glendale has properties with assessed values into the tens of billions of dollars, reserves of at least 30% of the operating budget and a low overall debt burden of $1,396 per capita.
The stable outlook, S&P; reported, “reflects our anticipation that the city’s financial performance will likely remain strong, based on a diverse and broad local economy, as well as sound financial management policies and practices.”
The ratings agency also noted that Glendale’s per capita retail sales are 20% above the average for the county.
In addition to an anticipated rise in sales and property tax revenues, the city has reduced expenditures by cutting personnel through a mix of layoffs and early retirements — moves that were cited in the S&P; report.
Although the revenues the city had to cover its General Fund obligations — which include police, library, parks and other public services — fell below the amount it made in Fiscal Year 2011-12, officials transferred money from other funds to close the gap.
While moving money around to cover shortfalls has bolstered the overall financial health of the city, transferring funds from Glendale Water & Power to the General Fund has prompted other agencies to issue the utility negative outlooks or ratings downgrades in recent years.
City officials said this week they plan to reduce the utility transfer from $21 million to $19 million over a number of years to improve the financial health of Glendale Water & Power, which was tens of millions of dollars in the red until after the city issued capital improvement bonds.
City officials stopped a water-fund transfer about two years ago because continuing it could have put Glendale at risk of a legal challenge under state law.
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