City Waits on Bond Rating Report

During the week of April 8, the finance director, city manager and I traveled to New York to meet with the three major credit agencies: Moody’s, Standard and Poor’s and Fitch. This is the third time this administration has visited the credit rating agencies, focused on rebuilding the City’s finances.

All three of us felt the meetings were quite positive.   It is hard to predict the final ratings, but the feedback at the meetings was very encouraging.

For those who are not familiar with how the credit agencies functions, below is a brief overview as reported by Rebecca Marston, reporter for Business BBC News:

Credit-rating agencies are Private-sector firms that assign credit ratings for issuers of debt. A credit rating takes into account the debt issuer’s ability to pay back its loan. That in turn affects the interest rate applied to the security, for example a bond, being issued. A credit downgrade can make it more expensive for a government to borrow money, whereas an upgrade can make it less expensive.

I believe the rating agencies recognize and value the approach we have been taking. We have recovered from the City’s fiscal crisis by addressing our fiscal challenges head-on. By reducing expenses and increasing revenues we have achieved three consecutive balanced budgets. By restoring more than $22 million into our fund balances, we have fully repaid all of our short-term lines of credit and tax anticipation notes. And even while addressing our immediate budgetary needs, we have still managed to allocate millions of new dollars towards our long-term liabilities. City Manager Mike Mallinoff and Finance Director Bruce Miller have guided us well in our policy decisions, overhauled the City’s internal processes and controls, brought transparency to our finances, and played a critical role in getting our fiscal house in order.

Annapolis has a stable outlook from all three major rating agencies, with the current rating for its long-term debt and restructuring plan:
• Moody’s Investors Service Aa3
• Standard & Poor’s AA
• Fitch Ratings AA+

The City is expeting the rating report from all three agencies in May.

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Video Update March 2013

The mayor shares his State of the City address and the highlights of his FY 2014 Operating and Capital budgets. He also comments on the new Hillman Garage Study and explains how easy it is to enjoy the City by “Walking Annapolis.”

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Video Update April 2013

Mayor Josh Cohen discusses the concept of a Central Maryland Regional Transit Authority and encourages residents to watch the City Council work session video. During the work session leaders from Annapolis, Howard and Anne Arundel Counties explain the need for the regional effort. Also in this month’s video, the mayor talks about proposed changes to the capital facility charge, the Forest Conservation Act Working Group’s Report, and he talks about a recent report showcasing Annapolis’ sustainable efforts. The report highlights savings of more than $460,000 and shows a 20% increase in recycling.

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Fy 2014 Proposed Operating Budget

Click to view FY 2014 Proposed Budget

Click to read Mayor Josh Cohen’s State of the City Address

Click to watch Mayor Josh Cohen’s State of the City Address

Click to read FY 2014 Budget Press Release

The operating budget is largely a level-service budget, with $94.6 Million in expenses, a 1.4 percent increase over FY13.

The budget projects revenues of $97.1 million, yielding a surplus of $2.5 million across all funds. The budget proposes to allocate this surplus into our fund balances, with the understanding that the Council at its discretion may choose to utilize some of that as part of the collaborative Interest Based Bargaining process we have underway with our employee collective bargaining units.

In terms of taxes, this budget will maintain flat property tax revenues for the second consecutive year. Due to residual adjustments in our assessable base, the budget increase the property tax rate by 1.04 cents, from 64.0 cents to 65.04 cents. Because of individual variations in the assessments which are outside the City’s control, some taxpayers will pay slightly less and others will pay slightly more, but again, overall this budget maintains flat property tax revenues for the second year in a row.

What about the size of our workforce? Even though we have had to increase expenses in order to fund neglected liabilities, the size of our workforce today is smaller than it was three years ago when we began our term of office.

A comparison of apples to apples, in which we account for all City employment – full-time, part-time, exempt, civil service, seasonal, permanent and contractual –indicates that the FY2010 budget when we took office had a workforce of 667 Full-Time Equivalent employees. Today, in the Fiscal 13 budget, our workforce is 618, a reduction of more than seven percent.

The proposed Fiscal 14 budget creates a small handful of essential new positions, and reclassifies some existing positions to increase their effectiveness, but due to other reductions the FY14 budget has fewer net employees than FY13 – it reduces, not increases, the size of our workforce.

Capital Improvement Program

Click to view the proposed CIP FY 2014-FY 2019

Our Capital Improvement Program in many ways is a catch-up year. For much of FY14 we will still be expending bond money that we had allocated for FY13. Still, the proposed $10 million FY14 CIP includes some new funding this coming year for essential and urgent projects.

The major new expense is $7.5 Million to commence flood mitigation and bulkhead work as recommended by the City Dock Advisory Committee. The CIP also includes in FY14:

  • Three-quarters of a million dollars to begin design and engineering for the Hillman Garage. The structural analysis has just been completed, and the Hillman Garage Advisory Committee will hold its first meeting later this week.
  •  $220,00 to begin implementation of the beautiful new Wayfinding signage master plan, to enable visitors to efficiently get around and navigate towards parking facilities and major destinations.
  •  Roughly $150,000 each for the new community park at Kingsport, and for engineering for the long-overdue replacement of the Truxtun Park swimming pool.
  •  The CIP also proposes a new $250,000 project to enable the City to construct new sidewalks in areas where they are lacking. The sidewalk fund we established last year allows the City to repair and replace existing sidewalks, but it does not address the need for infill pedestrian sidewalks along major pedestrian arteries.
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