Redmond's credit rating upgraded to highest level
By MARY STEVENS DECKER
Redmond Reporter Reporter
August 25, 2008 · Updated 10:28 AM
Standard & Poor’s announced on Monday that they have upgraded the City of Redmond’s credit rating from AA to AAA.
This increase represents a jump of two rating levels, giving Redmond the highest rating granted to a city.
“This (rating) is consistent with Redmond’s strong institutional financial policies,” said Standard & Poor’s credit analyst Chris Morgan.
Standard & Poor’s also cited Redmond’s established economic base as a major employment center, financial flexibility and low debt burden relative to market value. The improved rating leads to lower interest rates for the city’s bond sales, which in turn will save the city money.
“S&P carefully scrutinized all aspects of the city and its economy,” stated Mike Bailey, Redmond’s finance director. “The analysts came to the discussions with many questions, all of which the mayor and staff were able to answer to their satisfaction. Mayor (John) Marchione and the City Council paved the way for this rating increase by maintaining strong fiscal discipline during uncertain economic times. I would also credit Microsoft, which worked closely with the city to provide the S&P analysts insights into their strategic relationship with the city.”
During the past five years, the city’s general fund balance has remained strong due to a combination of rapid tax revenue growth and recent cuts to expenditure growth. In his report, Morgan stated that the city’s management practices are “strong, well-embedded and likely sustainable." The city uses long-term planning to guide its operating budgets and capital spending, as well as monitoring financial performance quarterly.
There are only three other government jurisdictions in Washington State with this high a rating and they are all much larger than Redmond – Bellevue, Seattle and King County. Standard & Poor’s is a leading provider of financial market intelligence and the world’s foremost source of credit ratings, indices, investment research, risk evaluation and data.
“I am pleased that Standard and Poor’s saw the strength and quality of our community, staff and elected officials and reflected that in their rating,” noted Marchione.
He added, "One specific that the S&P Report mentions as financial discipline is the two-three percent reduction to expenditure growth the council made in the last budget; the budget still grew but the council slowed the rate of growth. The other example S&P cites as strong fiscal management is the city's policy to transfer five percent of general fund money for capital improvements. As you recall, both of these polices were highly debated and were issues in the mayoral campaign. It is great to see an outside financial analysis verify that the council made the right decisions."
One of Marchione's promises during his campaign was that the city would "live within its means." In this tough economy, just about everyone has had to cut some corners and make some sacrifices, whether it means eating out less often, forgoing vacations or shopping at thrift stores.
We asked Marchione how the City of Redmond has adjusted its spending to reflect these hard times and what steps might be taken to keep expenditures down in the future.
He replied, "The city's general cash fund balance will end over $14 million better than budgeted. This is due to the elimination of some positions, including two positions in the communications office, and strong revenue collections. Overall, managers evaluate purchases to ensure the city is receiving value for its dollar."
Marchione also stated that the city "will continue to live within its means in the next budget cycle. We are seeing more collaboration between departments to achieve better results. We will be investing our savings in innovation to bring long-term savings. Specifically, with Council approval, we will streamline the permit processing system, upgrade our zoning code to be more understandable and invest in technology to better communicate with citizens and to make the work process operate more efficiently."Contact Redmond Reporter Reporter Mary Stevens Decker at email@example.com or (425) 867-0353, ext. 5052.