May 10, 2012
Bond rating agency Standard & Poor's today reaffirmed the City of Phoenix's AAA general obligation bond rating, with a stable outlook, making Phoenix the only city in the top six largest U.S. cities to offer this outstanding rating.
"Over the last two years, Phoenix has managed through a $277 million deficit to have a structurally balanced budget in 2012-13. It is because of the leadership and commitment of the Mayor and City Council, city employees, and the public that we have been able to maintain a strong and stable financial outlook," said City Manager David Cavazos.
By having a AAA bond rating, the city is able to secure lower interest rates when borrowing, ultimately saving taxpayers millions of dollars that can be used to provide important city services. Using today's rates, for example, a BBB-rated city would pay approximately 70 percent more in interest costs on their bonds than Phoenix.
"This organization has a tradition of strong fiscal management as I saw through my nine years on the city council," said Mayor Greg Stanton. "This includes making tough decisions to protect our AAA bond rating. I will continue that as Mayor."
In the ratings report, S&P outlined key factors related to the city's financial outlook including:
- Very broad and diverse economy at the center of the larger metropolitan region
- Maintenance of strong fund balances over many years and continued good operating performance, even while managing through recession linked revenue declines
- Continued maintenance of strong financial policies and procedures
- Moderate debt levels
"Leaders of this city understand we have many important priorities, but not as important as protecting our AAA bond rating," said Vice Mayor Michael Johnson. "It's what we owe the people of the city and what we owe future generations."
The report also emphasizes that the city has made a significant number of permanent expenditure reductions in the past few years by reducing staffing levels to the lowest per capita in 40 years; expanding the use of outsourcing; adopting a zero-based budgeting format; and increasing the contingency, or "rainy day," fund to the 5 percent level.
"When the economic downturn hit us hard, the city did something very unique by partnering with the private sector to develop ideas and strategies to create a more innovative and efficient organization. To date, we've saved more than $40 million through this effort and continue to move forward with ways to save taxpayers money, while providing the most efficient delivery of services possible," said Councilman Bill Gates, chairman of the City Council Finance, Efficiency, Innovation and Sustainability Subcommittee.