In spite of all those public masturbators, Guelph continues to hold a very strong AA+ credit rating in the newest evaluation from Standard and Poors. In their humble estimation, Guelph looks very financially stable for the next few years, and, if we play our cards right, we might even get our credit status upgraded.
The annual report came out yesterday, and in it S&P’s analysts offered a number of reasons for their cheery conclusion. Long story short, Guelph has healthy liquidity, and a better than expected budget performance from 2017 with “stronger operating margins and after-capital surpluses.”
In other words, “The stable outlook reflects our expectation that, in the next two years, the city’s robust budgetary performance results will help it maintain a healthy liquidity position and its tax-supported debt will be less than 30 per cent of operating revenues,” according to the report.
Among the rating factors, Guelph gets “strong” or “very strong” on economy, financial management, budgetary flexibility, and budgetary performance. Guelph’s liquidity is “exceptional,” and our contingent liabilities and debt burden is “low” and “very low.”
S&P also credits an “experienced and qualified” civil service that provides stable management, and develops budgets that are “detailed and realistic.” Guelph itself “benefits from its advantageous location close to the Greater Toronto Area and along the Highway 401 corridor”, a growing population, and a good employment balance between private and public sectors.
“This is great news for ensuring the long-term prosperity of Guelph,” said Mayor Cam Guthrie in the City of Guelph press release. “This rating not only reflects the City of Guelph’s solid financial position and practices, it also speaks to our vibrant economy, ability to attract new residents, employers, and investment opportunities.”
“Our ability to meet our financial obligations is paramount for both Council and staff,” added Chief Administrative Officer Derrick Thomson. “A great credit rating is our financial foundation that allows us to strategically plan for the future, and a testament to continuous good work.”
There are some warning signs according to S&P. The report notes that Guelph’s rating could be lowered if “deteriorating financial management practices lead to aggressive capital spending that pushed Guelph’s tax-supported debt to more than 30 per cent of operating revenues,” over the next few years. S&P does say that such a scenario is “unlikely.”
The City of Guelph is also betting on not being downgraded. As discussed last month at Committee of the Whole, the City is moving to a multi-year budgeting process starting in 2020, which may show the type of commitment to long-term fiscal planning that Standard & Poors looks for when handing out their AAA rating. Time will tell.