The city’s finances
Published 12:00 am Thursday, November 3, 2005
It’s likely Suffolk city officials were not surprised by the warnings issued by Fitch and Standard & Poor’s ratings agencies regarding the city’s finances.
It was reported Sunday that while Suffolk’s &uot;AA&uot; bond rating remained in tack, Fitch’s rating outlook for Suffolk dropped from stable to negative and S&P followed suit, dropping it’s outlook from positive to stable.
The reason for the somewhat more pessimistic outlook was because of the city dipping into its fund balance to cover some one-time expenditures and the use of reserves for &uot;an aggressive pay-as-you-go capital campaign&uot; over the past couple years.
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While one could make a case that expenditures associated with the Hilton – $3.1 million to fix the seawall and $2.4 million in designated reserves to fund debt-service reserve for $18.4 million in moral obligation revenue bonds – were extravagant, they were nonetheless essential to fulfilling council’s vision. Other use of reserves certainly seem reasonable.
The key now, and the reason for the &uot;warnings,&uot; is for the city to get back to living within in its policy of keeping at least 10 percent of its overall budget in reserves. We would hope that council is not just relying on ever-increasing property tax revenues to do that, but that a tighter control on spending is exercised.